Alloy (XAO) is relatively young cryptocurrency, introduced to cryptoworld about 6 months ago. We have just recently introduced a specific description of our future goals to the community.
Our main future goal is mobile peer to peer, easy to use, anonymous trading on top of decentralised exchange, based on private and secured CryptoNote blockchain protocol. We believe in the fundamentals of cryptocurrencies, which puts decentralisation in its core!
Bitcoin, the first blockchain-based cryptocurrency, was created as a peer to peer payment system that allows its users to transfer value with no central authority or third party involved. However, we have become somehow detached from the primary goal of Bitcoin, to return the control of money to its owners, and we entrust our Bitcoin with third party services daily. The most popular of these services being centralised exchanges.
Using Alloy you can share value on mobile, and later convert your Alloy in whichever currency you want, using our decentralised exchange, and all this happens completely anonymous. With this we return to the basics of cryptocurrencies, and that is why we, at Alloy Project, believe in it.
With cryptocurrencies and Bitcoin slowly evolving, it is becoming more clear, that Bitcoin will struggle as being mode of payment for small transactions. Admittedly, it is not the most practical method if you want to pay for an icecream or a cup of tea. That is primarily because all transactions made using bitcoin compete against one-another to be picked up by miners. The miners, meanwhile, tend to prefer the bigger payments as they offer bigger fees. This essentially means that the smaller a transaction, the more it needs to wait to be processed by a miner. In other words Bitcoin is slow and expensive when it comes to small transactions, so not very practical. There are some solutions being developed, but are far from being mainstream.
When it comes to use of cryptocurrencies in real world for small transactions, we, at Alloy Project, want to fill this gap. Alloy was created with exact features as payment method requires — private, secure, untracable, anonymous, fast with practically zero fees. The possibilities for the use of Alloy are limitless. It can be used by you and me, if I sell you my running shoes, for example. It can be used by a farmer who is selling blueberries on the market, or a small local shop. The only requirement is that, you and me, we both have Alloy mobile wallet on our phone, and we simply scan qrcode and payment is done, completely anonymous, without anyone knowing about it. There are even more ways for broader implementation. One would be traditional implementation, where Alloy takes role of currency, and is implemented and accepted by broader real-world community and companies. These accept/allow the payment to be made in Alloy. Other would be to implement Alloy as utility token to be used within individual real-world companies, for inside payment of services (the best example would be casino). In connection with our decentralised exchange payee can than easily convert Alloy to preferred currency.
What is decentralised exchange
A decentralized exchange is an exchange market that does not rely on a third party service to hold the customer’s funds. Instead, trades occur directly between users (peer to peer) through an automated process. This system can be achieved by creating proxy tokens (crypto assets that represent a certain fiat or crypto currency) or assets (that can represent shares in a company for example) or through a decentralized multi-signature escrow system, among other solutions that are currently being developed.
This system contrasts with the current centralized model in which users deposit their funds and the exchange issues an IOU that can be freely traded on the platform. When a user asks to withdraw his funds, these are converted back into the cryptocurrency they represent and sent to their owner.
Benefits
The most obvious benefit to using a decentralized exchange over a centralized one is their “trustless” nature. You are not required to trust the security or honesty of the exchange since the funds are held by you in your personal wallet and not by a third party.
Second very important aspect is security, where decentralised exchanges successfully eliminate the “honeypot” problem: Today, most financial exchanges are centralised. This means that money deposited by users is often held in one location. For hackers, that location is known as a “honey pot” — the sweet spot they aim to attack. Centralised exchanges have a history of poor security, and they haven’t performed particularly well in recent years. In the past year alone, the token economy has seen over $1 billion in funds stolen. As a result, centralised exchanges are becoming more of a structural risk to the global financial infrastructure. A decentralised exchange would disintermediate funds, leaving no honey pot to be targeted by hackers.
Another advantage of the decentralized model is the privacy it provides. Users are not required to disclose their personal details to anyone, except if the exchange method involves bank transfers, in which case your identity is revealed only to the person that is selling or buying from you.
Next area decentralised exchanges address is so called “middleman problem”. Having a middleman involves a host of issues: they can be slow, unavailable, and expensive. True, there are centralised exchanges like GDAX which are able to remove exchanges fees. But the point is that most centralised exchanges cannot negate the costs incurred by having middlemen. On that same note, downtime can also be an issue. This was demonstrated earlier this year by the #7 crypto exchange, Kraken. On January 10th, Kraken was scheduled to go down for 2–3 hours of maintenance work. In relentless and volatile crypto markets, 2–3 hours would have been troublesome for many users. The exchange was instead down for 40 hours. In centralised cryptocurrency exchanges, the private key to all of your funds is held by that exchange, so if the exchange goes down, you cannot touch them. This is roughly the same amount of time it took for ripple’s price to half on the same exchange. Though decentralised exchanges can also experience downtime, funds are not locked up and can be transferred at any time. In short, because decentralised exchange operations occur primarily on smart contracts, there are no middlemen involved. As a result, in decentralised exchanges, any “middleman”-associated issues in speed, unavailability, and fees disappear.
For the most part, centralised exchanges are great. Yet, they have fundamental flaws which result from having everything in one place. These issues are addressed by disintermediating and automating the process. This must surely make decentralised exchanges an idea worth pursuing, right?
Downsides
Despite their benefits, decentralised exchanges remain underutilised. This is because decentralised exchanges introduce useful new features, but they are forgetting to combine with what competitors are offering (how else do you expect people to move from their trusted service providers?). With this in mind, decentralised exchanges currently face some fundamental issues preventing institutional adoption: insufficient infrastructure, lack of liquidity, a lack of custodians, and the lack of a user-focused interface (UX/UI).
There is a clear demand for such features which decentralised exchanges offeres, and few projects are currently aiming to bridge the gap. Many ideas are currently in play to address most obvious downsides of centralised exchanges : “hybrid exchange”, “DLT-based transfers systems”, “crypto dark pools”, “anonymous custodianship” to mention just some of them.
At Alloy Project, we haven’t clearly decided which approach we will choose, to tackle this most obvious decentralised exchanges downsides, but we are closely observing what are the demands of the market on one side and inventions and development solutions on the other side.
Two, Three part future
At Alloy project, we didn’t decide to limit ourselves with only one big future goal. Well, yes mobile peer to peer trading in connection with decentralised exchange is for the most part our primary and biggest goal, but there is more to come.
We want to keep all our development open-source, with intention to encourage other developers to join us and use our blockchain and possibly our decentralised exchange to work on top of it. We will create good environment for other developers to work on their ideas and therefore extend use cases of Alloy cryptocurrency.
The team of Alloy Project is motivated and is standing behind the project. Even in this »dark« times for cryptoworld we never stopped working on our project, and we are there for our community every day. We have alot of developement to do, and we do not want to rush with our work. I do understand people would like to see big development results on daily basis, but it doesn’t work this way. All big achievements require time and effort. We have set high goals and high standards for Alloy Project and we will stick to it!