Blockchain technology has come a long way in the last few years, and increasing regulation has offered some degree of user protection. But it’s still seen as the Wild West, and there’s only so much that regulation alone can achieve. By offering the right tools and network structure within the right regulatory setting, VPLedger will provide powerful safeguards against misuse.
Just like the Wild West, to which it is often compared, blockchain has thrived in a climate of regulatory neglect. Left to their own devices, the innovators and entrepreneurs were free to build whatever they wanted. The result was the rapid acceleration in the growth of the technology, albeit at the cost of hacks and scams too numerous to mention.
This Wild West phase is now coming to an end. It may have served a purpose, bringing the technology to a point where it was capable of sustaining mainstream applications, but it’s not fit for the future of blockchain adoption. The lack of user protections and guarantees about the stability of the software are two of the major issues now preventing businesses from integrating blockchain into their processes.
First Danish blockchain
While blockchains operate on decentralised networks, most are launched by registered companies. VPLedger is the first blockchain to come out of Denmark, and is built by OpenLedger ApS on the same democratic values for which the country is known.
Denmark operates within the framework of a Parliamentary Representative Democracy and Constitutional Monarchy. With many political parties of different sizes, broad consensus across parties is typically sought for politics and governance. A high degree of importance is placed on the protection of citizens’ rights, with personal freedoms actively defended.
Denmark has worked for centuries to establish and maintain these rights, and it is only natural that the question should arise: how should the same principles of democracy, freedom and accountability be enshrined in a blockchain platform — offering a powerful yet protective framework for decentralised services?
It’s interesting that the idea of consensus is critically important to both blockchains and democratic processes. In both cases, a referendum or vote should ideally result in overwhelming consensus. If not, the outcome is polarisation and division — either to society (for example, the divisive Brexit referendum, or the Trump election, both of which split their countries down the middle), or in the form of a blockchain fork. Either way, the rights of those on the ‘losing’ side are often undermined.
VPLedger’s consensus model and structure are designed with the aim of protecting the rights of its users, while understanding the need for regulatory oversight. Within this framework, users are free to undertake any legal activities they want, using all the advantages of blockchain technology.
Separation of powers
One way in which this is achieved for VPLedger is the separation out of the consensus layer from the userbase and any economic considerations. Proof-of-work consensus requires a community of miners, with expensive hardware; Proof-of-stake uses the network token as a ‘lottery ticket’ for deciding block creation. Both are forms of oligopoly in which the wealthy few make decisions on behalf of the many.
While a ‘one user, one vote’ approach sounds attractive, it is impossible to organise on an open blockchain platform due to the ability to create any number of accounts (opening the network to a Sybil attack). Because VPLedger requires KYC as a condition of entry for every user, the blockchain’s governance can be a true, direct democracy. Every user who purchases membership can have a say in the way the blockchain is developed and run. Additionally, the requirement that only known individuals and entities have access to the blockchain cuts, at a stroke, the scope for illegal activity.
The network itself is maintained by a limited number of approved validators. The nature of such a permissioned network, built using Graphene 3.0 technology, is that it can be extremely fast and reliable — capable of supporting up to 100,000 transactions per second. VPLedger’s Software-as-a-Service model means users won’t need to help maintain the network, but can nevertheless have a voice in how it operates.
Compliance with local regulation
Additionally, it is important to give all VPLedger users the confidence that the products and services they use are safe and compliant. Therefore all decentralised applications (dApps) on the platform will be able to operate only with a certificate issued by the local regulatory entity — just like ordinary businesses need a certificate issued by a local company registry.
In practice, this means businesses operating on VPLedger will need to undergo KYB (Know Your Business) just like individuals need to undergo KYC. Users will have an encrypted digital version of their identity, and businesses will have the same. They will be required to supply a copy of company registration documents, notarised in most cases. Therefore users will have confirmation that the entity is a registered company, that is solvent and legally allowed to operate.
This may seem counterintuitive for a decentralised blockchain network, but there is a difference between decentralisation of development, marketing and regulation, on the one hand, and decentralisation of infrastructure, on the other. VPLedger’s approach provides the benefits of blockchain products and services, without ignoring the user protections that must be present for any business to integrate these features with confidence.
For more information, visit www.VPLedger.com.