18 min readNov 3, 2016

Unified Digital Currency

UNIFIED DIGITAL CURRENCY

A Digital Currency for Unifying Global Commerce

THE CONCEPT

Unified Digital Currency, or UDC for short, is a cryptographically protected digital currency, pegged to the 10 most important physical currencies, whose fundamental goal is help to facilitate international, and local, commerce by becoming the most commonly used exchange medium at both levels. It operates on a multi-level network, that is both decentralized and distributed, aiming, by design, to provide faster transaction processing than other common cryptocurrencies enabling real-time commercial applications. A central bank, that serves as an initial backbone, helps deliver an extrinsic value by maintaining fiat reserves equivalent to the monetary volume in circulation and guarantees continuous exchanges.

UDC differs from existing digital currencies on a few key points and it is able not only to offer new perspectives to some limitations and unsatisfactory elements that are recurrent, but also provide a new framework for an ecosystem. Bringing an expanded set of features intended to reach more traditional applications and democratize the adoption of a digital currency globally.

Issues Resolved

No pre-minted amount of currency or monetary upper limits.
Transactions don’t require additional confirmations when published, reducing the processing time to mere seconds.
No Proof-of-Stake or Proof-of-Work required, reducing the energetic waste caused by the ever increasing mining requirements.
Lengthy and incomprehensible addresses replaced by short, easy to remember, account numbers linked to ECDSA public keys.
Pegging to fiat currencies, gives it an extrinsic value with low volatility and reduces the propensity for speculation.
Mining rewards and fees replaced by transaction, network and service fees, redistributed evenly across working nodes.
No chain forks due to auto-correcting network mechanisms.
Diversified decentralization of nodes to avoid majority control risks of the currency by the same organization.

New Features

Currency’s value backed at all times by reserves of fiat currencies and with guaranteed exchanges.
Central bank called WorldBank which can issue currency and provide a scaffold for the network.
Support for multiple types of transactions, third-party commercial services and decentralized autonomous organizations.
Ledgers that provide, hourly, a complete overview of the currency and transactions.
A secondary blockchain, Network Management Blockchain, for managing the network autonomously.
A currency created for both facilitating international commerce and improve local ubiquity of digital currency.
Entities can manage Slots of accounts with custom, local or brand prefixes, with the possibility of reserving them for their own organization.

THE CURRENCY

Unified Digital Currency

UDC for short, is a digital currency cryptographically protected, whose fundamental goal is to facilitate international, and local, commerce by becoming the most commonly used exchange medium. Its monetary unit is called Uni which, like most fiat currencies, is composed of a subunit called Unicent, with the common ratio of 1 Uni = 100 Unicents. UDC is pegged to a basket of 10 existing fiat currencies, chosen for their international importance. Together they represent more than 70% of the world GDP and are involved in over 90% turnover of the global foreign exchange markets. Each currency proportion is determined by weighting their respective economic importance and international trading volume and their sum, 100%, is equivalent to ten monetary units, 5 Uni.

As of 1st October 2016, the informal exchange rates sof UDC with regards to each pegged fiat currency, with 2 decimal cases, is as follows:

United States Dollar: 1 Uni = 0.2912$ | 1$ = 3.4345 Uni
Euro: 1 Uni = 0.2590€ | 1€ = 3.8606 Uni
Japanese Yen: 1 Uni = 29.5054¥ | 1¥ = 0.0339 Uni
British Sterling Pound: 1 Uni = 0.2245£ | 1£ = 4.4552 Uni
Swiss Franc: 1 Uni = 0.2828Fr | 1Fr = 3.5360 Uni
Australian Dollar: 1 Uni = 0.3802$ | 1$ = 2.6301 Uni
Hong Kong Dollar: 1 Uni = 2.2584$ | 1$ = 0.4428 Uni
Canadian Dollar: 1 Uni = 0.3823$ | 1$ = 2.6156 Uni
Singapore Dollar: 1 Uni = 0.3969$ | 1$ = 2.5194 Uni
Chinese Yuan Renminbi: 1 Uni = 1.9426¥ | 1¥ = 0.5148 Uni

WORLD BANK

The WorldBank is the highest authority of the UDC and is owned by the founding company and creators. Its roles comprise acting as a limited central bank: it can print or remove currency from circulation, making it possible to control inflation and guarantees value by keeping monetary reserves equivalent to the total amount in circulation relatively to the pegged fiat currencies. Hence it cannot create currency through interest-rate policies, and adding or removing currency is a transparent process, as it is made with standard transactions registered in the same Ledgers, exclusively using the WorldBank base account UDC0000000, reserved only for these kind of operations.
Additionally, it is responsible for managing the account Slots and leasing them to independent Managing Entities. It has authority over the official Slots, and complete discretion over the allocation of reserved and normal Slots. However, a Managing Entity has total control over its allocated Slots, including the possibility of subleasing one or more.
Other functions of the WorldBank include:

Trading pegged fiat currencies with UDC;
Managing the registration of external participants, and attributing them official identification codes;
Providing its own Signing Node;
Providing basic network services for users such as but not limited to: account attribution, transactions submission, balance viewing;
Maintaining and updating the source code of the Validating Nodes;
Providing Validating Nodes in order to ensure the stability of the network;
Maintaining a Data Tracker, offering unrestricted public access to accounts, transactions, Ledgers, Network Management Blocks, DASs, DAOs, exchange rates, et al;
Resolving disputes over slots allocations and unethical or illegal managing practices, such as but not limited to lies, misrepresentation or disinformation about transactions fees;
Vetting third-party services and DAOs with the community and help integrate them into the network;
Provide certification by creating and maintaining the UDC’s Public Key Infrastructure with its own root certificate.

As intended with the network structure, the WorldBank does not have the permissions to execute, validate or register any transaction without the proper signatures nor, just like any Entity managing the Slots, change public keys linked to activated accounts, which are safeguarded by the Network Management Blockchain. The financing of the WorldBank will come mainly from the leasing of accounts Slots, fiat trading fees, fees collected from transactions involving accounts from managed slots or donations of investments made to the UDC.

Account & Slots

Each account is a 10-character long easily identifiable alphanumeric key, composed of 3 uppercase letters, A to Z, and 7 digits, 0 to 9. It is permanently associated with a unique unchangeable ECDSA cryptographic key using a prime-based elliptic curve of at least 256bits, to be set when activated and registered into the Network Management Blockchain. The accounts range from AAA0000000 to ZZZ9999999, meaning the currency is able to support up to 175.760.000.000 different accounts. More than enough to accommodate a vast number of public and private applications of the network and with the possibility of easily extending that quantity if required in the long term.
In turn, they are organized into 175.760 Slots, where each Slot is represented as the first 4 characters of an account, regrouping therefore 1 million accounts, and managed by an Entity, mostly an independent third-party or sometimes the WorldBank.

The Network

Passports

Passports are the most basic form of identification of a network’s participant. They are submitted unto the Network Management Blockchain and are used to communicate the necessary information about a participant and establish an authentication medium trusted onwards by all, by associating an ECDSA public key, sometimes even a full digital certificate. With a Passport, an organization can then be linked to any other component of the currency’s network he was authorized to operate or wishes to engage in, and is also able to submit Network Management Entries unto the Blockchain.

Managing Entities & Signing Nodes

A Managing Entity is an external company, or organization, which can lease and manage one or more accounts Slots. It has full authority over its managed slots and respective accounts, with the clear exception of changing or deleting a public key linked to a used account, which is made impossible with the structure of the Network Management Blockchain. Another privilege is the total discretion over the outbound and inbound transaction fees, however such fees have to be up-to-date and available to the managed accounts users, either publicly or privately (allowing a relative confidentiality between the entity and a customer). Non-compliance or actions purposely made to trick users or unethically stop exchanges with accounts of other slots would lead to the immediate revocation of the managed slots allocation. A Managing Entity is obligated to provide its own Signing Node. Such Node can be a separate server or incorporated into other services provided by the Managing Entity, leaving the choice to each Entity. However, in both cases, the network protocol for Signing Nodes must be completely implemented. As well as keeping a permanent access to the activated accounts and their respective public keys. Another requirement is the necessity to operate a Validating Node which software is provided and maintained by the WorldBank and the network participants, in order to help grow and decentralize the network. A Managing Entity is allowed to directly provide and create services to end users surrounding its allocated slots, e.g. Payment services provider, merchant services, wallet services, et al…). Though, all exchanges involving this currency and fiat currencies must follow the rates provided by the WorldBank. Therefore, prohibiting for now Foreign Exchange Markets or trades using floating rates. Just like any physical representation of the UDC, i.e. physical coins, tokens, notes, et al. But trading fees are permitted for fixed rates trades, unless used as disguised variable rates. Furthermore, a Managing Entity can submit buy and sell orders to the WorldBank with better access and conditions than end users.
The functions of a Signing Node are to sign and authorized requests for transactions received from end users or other Signing Nodes, insert the transaction fees information and transmit to the Inbound or Outbound Entity, or directly to a random Validating Node. A Signing Node can also implement an extra layer of security for the network by already making certain verifications about the signatures, balances and duplications. However, it is a redundant layer only intended to reduce the number of to-be-rejected transactions for the Validating Nodes to handle. Therefore, overall computation time should be kept in mind since it could also saturate and slow the Signing Node. Additionally, it has to maintain a key database of all the activated accounts he manages, offering to all peers the possibility of requesting the public key associated to a given account. Furthermore, it is through this Node that a Managing Entity broadcasts the activation of new accounts, change Slots attributions, alter the used public key or any other kind of relevant update that generates a Network Management Entry. It also receives those same requests from any other Node and should participate into the Network Management Blockchain consensus as to create Network Management Blocks twice an hour.

Validating Nodes

The Validating Nodes are the currency’s workers and form the inner layer of the network. They are responsible for accepting or rejecting transactions, creating the Ledgers, providing access to the third-party services and enabling DAOs to operate. Together with the Signing Nodes, they validate Network Management Entries and create the resulting Network Management Blocks. Though, all decisions are made by reaching a consensus, thus avoiding malicious or faulty operations and allowing not only separation from the rest of the network but also the distribution and decentralization of the currency’s core operations. Therefore, a published transaction is already proof of a validated and accepted transaction, leaving the Ledgers simply as a tool for overviewing the current state of the network and synchronization between Nodes. An additional, and redundant, security feature can be, for a Data Tracker, to track the number of Nodes that published a given transaction. Validating Nodes can be run and maintained by other parties other than the WorldBank and Managing Entities, enabling support from any external organization that wishes to help grow and decentralize the network, ensuring its independence from. As a mechanism of protection, such organizations simply need to register for a Node identification number, which allows to properly identificate and authenticate itself with the remaining Nodes. In order to reach decentralization, each Node maintains internally multiple large key-value databases and structures, for public keys, funds, Slots and transactions; and local data about all known network actors and peers. Thus, allowing them to become independent, while also maintaining all Ledgers and Blocks as a backup measure. Finally, each owner is free to manage the Node’s direct subscribers in order to obtain in real-time all new validated transactions, Ledgers and Network Management Blocks.

Distributed Automatic Services

Distributed Automatic Services, or DAS for short, are vetted services created by third-parties which become fully integrated by the Validating Nodes such as to autonomously provide them within the network. Those services are vetted by the community and registered into the Network Management Blockchain by the WorldBank, however they are overviewed by a manager, the company or individual that created the DAS, whom defines the service itself, the transaction types and logical processes, and all necessary documentation. A new module is specifically created for each DAS, establishing the implementation of the logical processes and support of the new transactions, to be deployed to all Validating Nodes. Each DAS becomes then usable by the network through any Validating Node running the updated network protocol version. The manager of the service can set how, when and if fees are incurred into the available transactions, these fees are then automatically transferred to the assigned DAS account, which can be from any of the reserved accounts Slots DAS0 to DAS9. Although, since the services’ transactions are processed by the Validating Nodes, thus using network’s resources, a compensation or incentive as to be rewarded. Therefore, a flat rate, common to all services, is levied based upon all actual transfers of monetary funds, deducted directly from the fees collected and credited into the base DAS account, DAS0000000. A manager should then take this into account when defining his fees structure. All fees credited into the base DAS account, are then evenly redistributed across all Validating Nodes and into the accounts indicated by their owners, at every hour. Thus fairly compensating the actual workers of the network. Although, the allocation is not done globally but rather separately for each DAS, rendering this redistribution the most fair it can possibly be. In essence, the proportion of the network’s fees for a given DAS is divided into equal shares among the Validating Nodes operating a version which supports that DAS at the time of the redistribution. Therefore, avoiding rewarding Validating Nodes which didn’t actually contribute towards the execution of those Services. However, there’s a possibility that sometimes the funds are indivisible by the given number of Validating Nodes, since the smallest currency unit that can be transferred is a unicent. In these cases, the remaining unicents are reported onto the next redistribution, though, all reported amounts are then aggregated and divided equally amongst all existing Validating Nodes, regardless of the version they are running.

Decentralized Autonomous Organizations

Decentralized Autonomous Organizations, or DAO for short, are partly inspired from the recent experiment by the same name, which ultimately, and regrettably, failed due to certain unintended flaws. DAOs differ from their services counterpart, as they are intended to be more complex and allow for more advanced interactions through the network, which aren’t necessarily made public or open access, nor constrained to commercial operations. Even their organizational structure may be freely defined, since there’s no manager but merely a supervisor, as some human resource will most likely be required initially as to define all the specifications and provide documentation, thought the goal should always be to bring complete autonomy to the organization. Much like with Distributed Automatic Services, DAOs are vetted and incorporated into the Validating Nodes following the same process. The accounts Slots, DAO0 up to DAO9, are reserved and each is assigned one of those accounts. Network compensation is reached the same way, from the fees collected, the network’s global DAO fee rate is levied and transferred into the base DAO account DAO0000000, to be then redistributed equally into all Validating Nodes. Similarly, the distribution is done DAO-wise, dividing the compensation funds among the Validating Nodes which can operate the DAO and reporting the indivisible surplus.

Data Trackers

Data Trackers are used to provide, public or even private, services for accessing all the data about the network. These can be operated independently by any willing organization, but they should normally be subscribed to at least a Validating Node in order to receive in real time all the latest transactions, Ledgers and Network Management Blocks. In the beginning, only the official tracker of the WorldBank will be inserted into the Validating Nodes, as an additional source of information, allowing for a quicker synchronization of the required data if necessary. But in future versions other reliable trackers could be hard written into the source code, not only to render the network more independent, distancing itself from the WorldBank, but also to reduce, if beneficial, additional strain put unto the Nodes due to those exchanges.

Network Organization

Ledgers

The Ledgers are the data structures governing the currency. Through them the current state of the currency, balances and transactions, can be easily disseminated, archived and analyzed. They are interlinked, forming a hierarchical chain alike the traditional blockchains, which start with a Genesis Ledger and cannot be altered ulteriorly or deviated from. Each Ledger encompansates a fixed period of 1 hour, regrouping all the validated transactions that were published during that time, meta information about it, all the accounts’ balances at its closing and a link to its predecessor Ledger. The duration of a Ledger is quite long compared to other existing cryptocurrencies, this is due to how UDC protocols and consensus are, enabling transactions to be completely confirmed upon their publishing by the Validating Nodes, whitout requiring to wait for the Ledger they belong to. Each is identified, either by a numerical ID, 0 for the Genesis Ledger, and a RIPEMD-160 hash. The hash computed from the concatenation of 4 of its parameters: the ID, the hash of the previous Ledger, the Merkle root of the transactions hashes and the hash of the accounts state. These parameters guarantee that all the essential information is valid, while permanently adding a new link to the Ledger chain.

Transactions

Transactions are compact JSON objects, identified by a RIPEMD-160 digest of their complete contents, which allow accounts to transfer monetary funds across the UDC network. Usually with such transfer, the transaction will have to go through an Outbound Entity, the Managing Entity of the sender’s account Slot, which then transmits over the network to the Inbound Entity, the Managing Entity of the receiver’s account Slot. In each side, transfer fees might incur and are appended by each Entity onto the transaction, although this doesn’t occur with DASs or DAOscustom transaction, since they have their own network and service fees. Furthermore, as implicitly stated, there’re multiple transaction types and within each type, DAS or DAO multiple events can exist. Currently, only 5 different types are defined, although more are being studied and will be added if deemed useful:

Basic: most simple transaction, enables the transfer of currency between two accounts.
Delayed: allows for the execution of a simple monetary transfer at an ulterior date.
Future: authorizes pre-signed one-time transfers of currency at an ulterior time by a, possibly restricted, third-party of up to a pre-defined amount.
DAO: subset of all transactions and events defined by the DAOs.
DAS: subset of all transactions and events defined by the DASs.

All transactions submitted to the network are processed, registered and published by the Validating Nodes in real-time following the UDC’s consensus, allowing for quick validation and public dissemination under few seconds, which enables the currency’s use to time-sensitive real-world applications.

Network Management Blockchain

The Network Management Blockchain is a secondary blockchain used to complement the currency’s Ledgers and allow further transparency, autonomy and greater independence from the UDC’s WorldBank. As the name portrays, its functionality is to regroup and corroborate all of the diverse information required for the UDC network and its participants to fully operate. It is composed by Network Management Blocks, created every half hour by both Signing Nodes and Validating Nodes, containing pieces of data, where a single one is called a Network Management Entry, submitted or transmitted by those Nodes. Similarly to Ledgers, each Block is identified by a numerical ID and a RIPEMD-160 hash computed by the concatenation of 3 parameters: its ID, the hash of the previous Network Management Block and the Merkle root of the Network Management Entries hashes.
A Network Management Entry is a JSON object with pre-defined format, regrouped into categories called Resources and can be of 4 different types: create, update, renew and cancel. In the current network version, there exists 8 distinct resources:

RESOURCE: used to manage the resource categories, containing general information about them and itself.
PASSPORT: the most basic source of information and identification about any participant of the network.
ENTITY: gathers the data about the Managing Entities and their Signing Nodes.
NODE: regroups all the data about Validating Nodes.
DAS: contains information about the Distributed Automatic Services provided by the network.
DAO: contains information about the Decentralized Autonomous Organizations that exist within the network.
SLOT: specifies the attributions and leasing of the accounts Slots to Managing Entities.
ACCOUNT: used to activate accounts and associated their ECDSA public key.

Their format is quite simple and straightforward as they contain top attributes to designate the resource they belong to; a data sub-object pertaining to the resource in question; a meta sub-object which indicates the Entry type, creation timestamp and version; the network ID of the signer, which is the legitimate participant that submitted the Entry; and the signer’s signature of the Entry’s first three attributes.
Unlike with Ledgers, the Genesis Network Management Block, which starts this blockchain, contains actual Entries, which are used not only to establish the network’s initial participants, including a self-signed Network Management Entry for the WorldBank’s Passport and thus creating a trustable base for the network; but also, regulate the resources themselves, as each resource can have one of three protection levels, alongside other parameters, indicating which participants can used and in what conditions. Furthermore, it also activates the currency’s minting account, UDC0000000.

Protocols & Consensus

The UDC network defines its own communications protocols, specifying how the essential participants can interact with each other in a standardized, secure and rapid way, using TCP packets with one-way transmissions, with some exceptions when dealing with Data Trackers exchanges. Specifically, the protocols provide all the messages between Signing Nodes, Validating Nodes and their subscribers, Data Trackers and the WorldBank, required for identifying each other, synchronizing from each other, operating the network, dissemination the latest data and more:

Validating Nodes: transactions broadcast, synchronization and consensus, Ledgers synchronization and consensus.
Signing Nodes: transactions transmission and signing requests.
Signing Nodes and Validating Nodes: identification, connection management, transactions submission, public key requests, Network Management Blockchainconsensus, synchronization and Entries broadcast.
Signing Nodes and Validating Nodes with Data Trackers: Ledgers and Network Management Blockchain synchronization.
Signing Nodes and Validating Nodes with the WorldBank: initial first-time registration if it wasn’t done previously by the WorldBank at the moment of attributing its network ID.
Validating Nodes and their subscribers: subscription and publishing of the latest transactions, Ledgers and Network Management Blocks.

Managing Entities communicate with each other and the other participants solely through their Signing Nodes, which are effectively their entry-point to the network.
UDC’s network consensus differ from common cryptocurrencies blockchains as it doesn’t use either “Proof-of-Work” and “Proof-of-Stake” methods. Rather, it implements a qualified majority mechanism which allows the network and its Nodes to automatically correct themselves, thus discarding the risk of forks of either chain, while reducing the total workload since not all Nodes will have to process every single piece of data submitted to the network. Although, normally a majoritary consensus would lead to the same existing problems present in “Proof-of-Work” blockchains, where an entity who has processing power, or in this case owns enough nodes, could control the currency. however, it is not the instance with UDC because hand-in-hand with the currency‘s goal of having a decentralized network comes also the quest for diversity of that decentralization, where a participant or even the WorldBank can’t control a substantial proportion of the network. Thus why, coupled with the necessity of high-performing Nodes capable of handling the network operations with high-throughput, emerged the purpose of using identifiable network IDs.