Whitepaper — Altacoin: Towards A More Efficient Centralized Cryptocurrency
This is the technical whitepaper. For info aimed at a general crypto audience, go to altacoin.io.
One of the persistent drawbacks of Bitcoin and many popular cryptocurrencies remains the difficulty in scaling and the slowdown in network processing times as transaction load increases. Traditional distributed systems gain their advantage by breaking up a large chunk of work and handing those chunks to multiple individual processors (“nodes”) to compute, then gathering the results and aggregating them. The individual nodes can perform these tasks in parallel, thus taking a large task that would typically take time T to compute and completing it in time T/n, where n is the number of nodes.
In contrast, Bitcoin and other cryptocurrencies upend this by requiring every node to recompute every part of the blockchain, which causes the time needed to complete task to remain a constant T, which multiplying the amount of computation involved from T * 1 to T * n. Additionally, in order to confirm transactions across the network, some overhead is incurred that scales with the size of the network in order to confirm with multiple nodes before a transaction is accepted. This means that if processing a transaction is our desired task T, it will end up taking more time roughly proportional to T * n. Even with technical advancements on the horizon such as Lightning Network, the intrinsic need to confirm transactions across all nodes imposes a severe upper limit to the scalability and speed of the Bitcoin network.
These drawbacks have become glaringly obvious as BTC has climbed in price and popularity in the recent months, first passing $10,000 USD and briefly even reaching $20,000 USD. At the time of this writing, the price of Bitcoin is hovering around $14,000 — $17,000 USD. While the rise in asset value is exciting, transaction costs have averaged as high as $40, and the time to confirm a transaction has reached several hours. This is slower than almost any modern electronic payment system, and all indications are that it will get worse, not better. It all but eliminates any hope of Bitcoin (or any other cryptocurrency that reaches a similar level of popularity) being the medium of exchange for small microtransactions, as well as transactions that need to be concluded in a relatively short timeframe. What can we do about this problem?
An Alternative Cryptocurrency
We propose to leapfrog this problem by creating a new cryptocurrency using dramatically different architectures that combine the most recent innovations in electronic payment and internet technologies. These technologies have been proven at global scale by internet giants such as Google, Facebook, Twitter, Microsoft, and Amazon, as well as numerous fast-moving and disruptive startups. We now believe the time has come to apply them to the exciting world of cryptocurrency. Applying these technologies yields a number of benefits, with the most significant among them:
1. Efficient and fast transaction processing
We are able to drastically reduce redundant processing across the entire network by offloading blockchain computation and transaction verification from individual mining nodes and collecting them onto a set of dedicated servers running on optimized hardware. Since these servers are optimized, enormous economies of scale can be realized, while freeing literally teraflops of previously redundant computation resources of mining nodes worldwide. The electricity savings alone provides immediate and direct benefit to any user who transitions their cryptocurrency portfolio to this system. Having developed a prototype, we have named the early version of this technology the “Altacoin Currency Transaction Engine” or ACTE. Under heavy load-testing, we have observed that ACTE will be able to achieve transaction confirmation times of well under 30 seconds, faster than almost every cryptocurrency operating at scale today.
2. Proxy Mining with Lower Energy Costs
Using similar technology to the ACTE, we are able realize tremendous energy savings across our entire mining network by to migrating responsibility for mining the currency itself to a centrally-colocated “Ultramine.” Much like the ACTE, the Ultramine again benefits from economies of scale by proxy-mining on behalf of user’s mining machines, utilizing a “Ultramine Proxy Agent” (UPA).The user’s machine simply registers its available processing power to the UPA, making an initial proof-of-work “investment” to the UPA, whereupon data representing its processing power is added to the pool employed by the Ultramine. In turn, the Ultramine proxy-mines new coins at a rate proportional to the miner’s registered processing power and returns the results to the user, directly delivering the coins to the user’s wallet.
One significant benefit to our proxy-mining architecture is that the UPA enables for the first time energy-feasible mining on mobile devices. Users will be able to utilize the Ultramine from mobile and other low-energy devices and mine for Altacoin on a level on par with sophisticated GPUS and specialized ASICs. For the first time, users can mine cryptocurrency using their phones and participate in the cryptocurrency economy on the go!
3. Transaction Reversibility
The third breakthrough feature enabled by our architecture is the ability to reverse transactions. One of the biggest drawbacks and most-often requested features of cryptocurrencies is that accidental or fraudulent transactions are irreversible. Funds that are stolen or inadvertently sent to the wrong address cannot be recovered.
Our crypto network encodes all transactions in a fundamentally different fashion, enabling any mistaken or invalid transaction to be reversed upon mutual agreement of the sender and receiver, thus reducing the incentive for fraud and improving safety for usage. This in turn yields greater confidence for users in transactions using our cryptocurrency, speeding adoption by buyers and merchants alike.
4. Inexpensive Hardware Wallets for All Users
Finally, our unique cryptocurrency infrastructure allows us to provide hardware wallets to all users who elect to do so. For major cryptocurrencies, offline hardware wallets are one of the most preferred methods for long-term secure storage of cryptocurrency. Funds placed in hardware wallets are more secure and difficult for unauthorized users to access.
Unfortunately, most hardware wallets cost $80–100 USD or more, and thus are not affordable to many people. However, the encoding scheme used by our crypto network for transactions allows us to provide centralized hardware wallet storage for every user, on their behalf, if they elect to do so. Users no longer have to record or store cumbersome lengthy keys that are prone to error or loss, and can instead make use of cloud-enabled hardware wallet storage of their funds and private keys, on state-of-the-art hardware residing in advanced datacenters. Best of all, the funds in these hardware wallets remain conveniently accessible only to the user via industry-standard authentication methods. This makes every individual user’s funds much more secure, as well as improving the integrity of the overall network, leading to better trust that enables faster commerce.
What Does This Mean For You?
These features enabled by our technology enable several things:
- If you want to pay someone on the internet, you can do so quickly and with minimal fees!
- If you want to mine this currency, you can do so without incurring heavy electricity costs!
- If you don’t have the funds for expensive mining rigs, you will be able to mine cryptocurrency using your phone!
- If you accidentally pay the wrong person or have funds stolen from you, the payment can be reversed!
- If you don’t want to pay for or maintain your own hardware wallet, you can maintain your funds and private keys easily in the cloud!
We believe that by bringing together multiple new proven technologies, we can finally create a cryptocurrency with a supporting infrastructure that fulfills many of the promises of Bitcoin and make it available to everyone!
Where We Are Right Now
We are very excited to introduce the innovations made possible by combining blockchain with the latest internet technologies (many of them were generously open-sourced by the successful internet giants listed earlier) to build a new brand-new cryptocurrency network that we believe can transcend many of the intrinsic limits holding back today’s most popular cryptocurrencies.
Of course, without today’s leading cryptocurrencies and Satoshi Nakamoto’s great work this also wouldn’t be possible, so we intend to retain backwards compatibility with Bitcoin, Ethereum, Litecoin, and other major cryptocurrencies so that users can smoothly elect to transition onto using this one or between multiple cryptocurrencies.
We plan to introduce reference implementations of user wallets and miners within the next few weeks. Prototypes have been built and are being tested but we want to make sure the bugs are worked out.
We do not intend to pre-mine any coins!!
We believe in this project and want to give back to the cryptocurrency community, so we have only tested out our mining using a test network only. When we release the mining software to the public, it will be with the instantiation of a brand-new currency network, so that early adopters will be the true early beneficiaries. Users will be able to use a blockchain explorer to verify that no pre-mined coins exist, and the first coins will be mined by real people who choose to adopt and help grow this currency.
How You Can Help
After many months of work, we believe we are almost ready to launch. Please help spread the word by tweeting about us or sharing this whitepaper. We want to distribute our miner as broadly as possible before launch so that the early adopter base is large, so we can avoid coins being concentrated in only a few peoples’ hands.
We are looking for experienced crypto programmers and designers to join the effort. If you want to help, contact us at firstname.lastname@example.org.
If you would like to contribute monetarily to this effort, you can send crypto to the following addresses:
Litecoin: MVmFG1BXhJpKQt44KkQXF3Gkd792pbrKes (see here if the LTC address doesn’t work for you)
Anyone who sends any funds will be contacted first when we release our miner for download!