Piecing it Together Pt. 1 — XDB, TNCS & Multi-Hop

Exploring some of the core components of the DigitalBits protocol.

XDB — The Native Token of DigitalBits

The XDB token, also referred to as a digitalbit, serves three main functions on the DigitalBits blockchain.

1. Protective Security Feature — every account on the DigitalBits blockchain is required to stake 20 XDB. This ensures authenticity and enables the account to send outgoing transactions. Each transaction is also subject to a minor transaction fee of 100 nibs (0.00001 XDB). Together, these features create a financial disincentive for malicious users that may look to flood the network.
2. Enables transactions among non-native tokens — XDB operates as a bridge currency to facilitate trades between pairs of digital assets that may not have a large direct market.
3. Leveraged for fast and low-cost payments and remittances

Token Name Certification Service

Asset tokenization refers to the process of converting the rights to an asset into a digital entity that exists on the blockchain. Blockchain technology ensures that asset ownership is immutable, and the digitized representation of the asset enjoys increased transferability and portability. However, in order to effectively create an economy in which digital assets can flow back and forth, we need to ensure that the specific tokenized asset actually represent the associated real-world asset. Imagine buying a house, and realizing that the real world asset was in-fact a landfill!

Enter the Token Name Certification Service (TNCS), a tool that allows for the validation and authentication of asset providers. The TNCS will help to prevent malicious entities from issuing tokens that represent brands or companies that they are not associated with. Service providers within the DigitalBits network may provide services similar to SSL certificate authorities that maintain a mapping between smart contract addresses and the identities of token issuers. Being able to prove that digital assets are effectively bound to their real-world counterparts is integral to the development of a token economy.

The TNCS is currently in development, with further details to be outlined in the 2019 roadmap.

Multi-Hop

The multi-hop feature is a key component of the DigitalBits protocol. Multi-hop allows for up to six intermediary hops before final conversion, and will significantly increase the liquidity of tokenized assets, even in the absence of a direct market. Ultimately, DigitalBits aims to create a dynamic token economy in which users:

1. Never have to exchange currency except for at the point of sale.
2. Users aren’t required to hold unwanted assets just for payments. They can hold their wealth in their preferred assets, only cashing out as they need to pay for things.

Multi-hop creates a flexible trading environment, considering multiple asset pairs and moving the pieces around to enhance liquidity. Al Burgio, CEO of DigitalBits said, “the consumer doesn’t want to become a day trader, that will never happen.” Instead, a consumer can go forth with the simple intention of, “I have asset A, and I would like asset B.” This allows for direct access to liquid value, regardless of what asset it is originally held in.