A Decentralized Exchange Platform for Cryptocurrencies. Envisioned in Germany, Made for the World.
Today, I’m very happy to announce the Herdius ICO! It’s been a journey to get here. Over the upcoming weeks, I will tell you more about that journey. But today, let me explain what Herdius is and why we are doing an ICO.
The idea behind Herdius is as simple as it is bold: We want to provide a badly needed piece of infrastructure for the cryptocurrency and blockchain ecosystem.
I have been closely following the space since 2012. Since then, a lot has happened and many useful innovations were created. Yet, some of the most pressing challenges are still unsolved, giving us headaches over and over again. The recent segwit2x debate about whether to fork or not to fork is a good illustration — and directly related to one of the issues Herdius intends to address:
- Scalability and confirmation times
- Blockchain interoperability
- Handling private keys
Before I tell you how Herdius aims to tackle these issues, let me briefly explain how I evaluate the current situation.
Scalability and Confirmation Times
The question of how we can effectively scale blockchain systems without compromising on decentralization has been around for a couple of years by now. It is certainly one of the most critical issues in the space. While the dream is to build the second generation internet in a distributed manner, the infrastructure itself isn’t quite ready for mainstream adoption yet. In the time of on-demand and instant everything, the average confirmation time of a bitcoin transaction looks almost like a relic from the past:
To overcome that issue, many solutions have been proposed and several are being implemented and tested. They range from segregated witness, over lightning network, to increased block sizes, proof-of-stake validation, and even entirely new chain architectures a la IOTA.
But when it comes to implementing these solutions, it’s not that simple. The established legacy chains — Bitcoin in particular — can’t simply roll out an update. They rely on the support of their community. That complicates things. The other approach we see: the release of entirely new chains that aim to establish their own cryptocurrencies. While some of those projects have built interesting architectures indeed, they are still overshadowed by Bitcoin. After all, Bitcoin is basically synonymous with cryptocurrency — at least in the perception of large parts of the public.
On top of that, many of these projects have chosen a model that gives their creators an outsize influence over the system. That might be be an understandable choice. But at the same time, it is inconsistent with the idea of decentralization that is very much at the heart of this movement of ours.
There won’t be one blockchain to rule them all. There is a plenitude of use cases for public blockchain architectures; and if you add private and consortium chains to the equation, the number gets even bigger. As a result, we at Herdius fully expect to see the continuous development of a flourishing ecosystem of different blockchains. Not to mention decentralized applications (dApps) running on top of those chains.
This, however, introduces additional complexity. If users want to exchange an asset on one blockchain for another one on a different chain, it’s a hassle. Basically, the only reliable option today is the use of a centralized exchange. This in itself requires trust in the entity that operates it — and as we have learnt over and over again, even the best ones suffer from attacks and bugs. Moreover, the user experience is further worsened by additional confirmation times which result from the fact that both involved blockchains need to validate the transactions.
On top of that, the protocols of different chains don’t follow the same standards. That makes it rather difficult, if not impossible, to move additional data attached to an asset on one chain between different chains. For instance, it would certainly be useful to people if they could attach an invoice number to ETH, then convert it to BTC and still maintain the invoice number attached to your BTC. Yet, it can’t be done, at least not in a convenient way.
That lack of interoperability is certainly holding back the ecosystem. While it is no problem to imagine many fascinating use cases in a world of seamless inter-chain transactions, there is no solution in place that enables these.
Handling Private Keys
Imagine walking into a conference of computer scientists and presenting the idea of bitcoin, knowing what we now know about how it works. “See, it’s a currency. You write a number on a piece of paper, and then you bury it in your backyard. No, you can’t really spend it, but you have it in your backyard.” The bleeding edge!
Well, indeed cryptocurrency users today have a rather binary choice when it comes to storing their private keys: security or convenience. If they pick security, they store them offline in hardware wallets or on paper. Or they use an online wallet but risk losing (some of) their assets.
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Frankly, it is little surprising that most people don’t have any crypto assets. It’s simply too complicated for them. Even a revolution needs to be convenient if it wants to get traction.
This is where Herdius comes in. The platform we are proposing in our whitepapers aims to tackle the above issues by building new infrastructure that fills a critical void in today’s ecosystem.
How do we do it?
Herdius is meant to be a decentralized exchange platform. The best way to think about it, is as a new transaction layer in the cryptocurrency space: Herdius will sit between the users and the root blockchains of all relevant cryptocurrencies (or tokens). In blockchain terminology, it is essentially envisioned as a sidechain. A highly performant and scalable sidechain, that is.
Why is a transaction layer necessary?
A sidechain like this would enable fast and seamless cryptocurrency transactions and peer-to-peer trading — even if the original chain is subject to long confirmation times. By establishing Herdius as the transaction layer, the original root chains could approach development at their own pace while Herdius would take care of the user experience.
Moreover, our team wants to build a few additional protocol-level innovations that are designed to increase interoperability. Most notably, Herdius’ augmented information layer would enable cross-chain communication and information exchange. It would also allow users and developers to expand the native capabilities of any token and build more sophisticated applications.
How does it work?
As we explain in our technical whitepaper, Herdius would be powered by a native proof-of-stake blockchain with several innovative features. Most notably, we are looking to introduce a new block architecture which we call Blocks-of-Blocks (BoB). Without getting too technical here: BoB blocks are “stretchable” as they can contain so-called child blocks. This enables parallelized block validation — which goes a long way when high transaction volumes needs to be handled. But that’s only one of many interesting features under Herdius’ (so far theoretical) hood. To learn more about the others, I recommend you read our technical whitepaper.
Once running, the Herdius blockchain would act as the foundation of the Herdius network. End users would be able to join by creating a distributed virtual wallet (more on that in a second), while other services and applications could link into Herdius on the protocol-level by using APIs.
From there on, it would be really simple: users could transfer their crypto assets to their Herdius wallet and instantly begin transacting and trading on the Herdius network. Fast, secure and fully decentralized.
Didn’t you mention private keys?
Herdius is envisaged as a truly distributed system. That goes for the wallets as well. Instead of building a centralized wallet, we had to find a different approach. For one, a decentralized exchange platform should be decentralized. But there is also a technical reason: we had to find a solution which makes sure that wallets are online even if their owners are not. That’s why we created the concept of DIVIWA: distributed, virtual wallets.
Here’s how the (so far theoretical) DIVIWA works: Once you put a token into your DIVIWA wallet, the private key will essentially be sliced into encrypted pieces which are then distributed across nodes in the network. Whenever your private key is required, it will be reassembled from the parts.
Thanks to state-of-the-art cryptographic security procedures, we are confident that this would make keys stored in DIVIWA wallets just as safe as offline storage. But a lot more convenient.
The Big Picture
We believe that a great user experience is one essential ingredient for the growth of the blockchain ecosystem. Alas, it’s mostly missing. And not only in the case of end users. Even large scale financial service providers and other potential ecosystem participants refrain from joining so far. Robust infrastructure is integral to a good user experience, for individual and professional users alike.
So, if you’d ask me what I envision Herdius to become, I’d tell you: A building block of the ecosystem and an advocate of user experience. In doing so, we aim to considerably lower the barrier-of-entry and help to make the world of crypto assets accessible to the public at large.
In order to turn that vision into a reality, we will start our ICO on December 11, 2017. It’s going to be one of the first ICOs run from Germany. We have invested a lot of time and effort into making this possible while complying with all local laws and regulations. After all, I want Herdius to live up to highest standards — on all levels.
This is just the beginning.
In the upcoming days, we are going to release a lot of content on here. We will tell you why Herdius is designed as a true community project. We will get into more detail about our ICO, explain why we picked Germany as our location, and will explain the einvisaged Herdius system in-depth. So, if you’re interested to follow us on our journey, subscribe to our publication.
In the meantime, check out our website and join our community.
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Disclaimer: Herdius is a project by the Berlin, Germany-based Herdius GmbH. Balazs Deme is the CEO of Herdius GmbH. Herdius will start its initial coin offering (“ICO”) in Q1 2018. All relevant information regarding Herdius and the initial coin offering can be accessed at www.herdius.com