Startup Launch Series Ep.19.01 — GeeqChain AMA

We were joined by John Conley, Professor of Economics at Vanderbilt University, for a Live AMA with the Paperstreet Telegram community.

On Thursday, January 24th, we were joined on the Paperstreet Telegram channel by the team from GeeqChain for a live Telegram AMA. Representing Geeqchain for the AMA was John Conley — Co-Founder & Professor of Economics at Vanderbilt University.

Please note that some questions and or answers may have been edited to account for grammatical errors and appropriate presentation. This summary does not include all questions asked and answered during the event.


Intro / Elevator Pitch

Dave (Paperstreet)
First of all, some of the community may not have heard of your project. Would you mind introducing it and talk about each of your motivations for building Geeqchain?

John Conley
We are trying to prove that we have a flexible public blockchain platform with higher security and lower costs than anything else available. Here are what we see that that makes Geeq unique:

Security: 99% Byzantine fault tolerance, plus an auditing mechanism that brings give strategically probable security. How? Almost all other platforms rely on PoW, which can only give 50% BFT, or variations of PoS, which can only give 33% BFT. This comes out of basic theorems in computer science. We use a new game theoretic approach called Proof of Honestly that enlists users to verify the honesty of the validating nodes. This means that those CS impossibility theorems don’t apply. The details and proof of this assertion in contained in the technical paper on Geeq.io.

Cost: Geeq has a decentralized network or federated chains. We can validate transactions for 1/100th of a cent each. This enables entirely new use cases.


Re: Geeq’s unique approach

Telegram user virtualjohn
How will software inspect the chain? How will users know that the software they use is inspecting the chain correctly? What exactly is the software inspecting? Also wondering about scenarios involving software as a bad actor…since most users are not tech savvy enough to do blockchain analysis on their own, they will have to rely on 3rd party software. There are most likely only going to be a few available softwares built. What could happen if the software distributors formed a dishonest coalition? What would they be able to achieve?

John Conley
Our approach is to have a user client that automatically does due diligence on behalf of the user. The user can set the level of due diligence that he wishes. The genesis block of each geeqchain has the complete code that the validators use to run the system that includes various applications. Nodes will have to provide proofs of various kinds, recent blocks, hashes of the current ledger state, Merkel proofs of the existence of certain transactions and so forth. if they fail to do so, they are per se dishonest and the user client will suggest to users that they ignore such nodes.

The key to the whole validation structure is what we call Proof of Honesty. The blockchain is visible to everybody. Nodes must provide the information or else they’re not behaving honestly. Users can validate for themselves automatically whether or not the chain and ledger is correct and can choose to interact only with nodes that have proven themselves honest. As a redsult, if there is an honest node in the network, that node is keeping an honest chain.

Telegram user smithjason
Having troubles understanding how you programmatically code in “honesty” as a consensus mechanism. Can you detail that?

John Conley
Honesty is defined as following the protocol precisely. It is encoded in the genesis blocks and signed by the Geeq corporation and that software/protocol/algorithms are ingested by the user client when it interacts with geeqchains. To determine honesty, your user client, knowing exactly what a node should do, knowing what the current ledger state is, and being able to see what blocks of transactions contain, can verify that the transactions are correctly validated and then are correctly appended to the chain and also reflected correctly in the current ledger state.

Telegram user smithjason
So how do you detect dishonesty?

John Conley
False dishonest involves a lot of things. One of the difficulties in every blockchain and distributed data system is the problem with the dog that doesn’t bark. You can’t prove that something didn’t happen. If you can’t prove that you’re not dishonest, then you’re not dishonest. So we have to build a system that is robust to exactly that sort of thing.

Telegram user smithjason
What if the bulk of nodes in Geeq’s network are dishonest and try to perform malicious behavior? How are their actions countered if they’re the majority of the network of nodes?

John Conley
First, I must refer you to the technical paper and whitepaper. Our system is 99% Byzantine fault tolerant, meaning that all we need is a single honest node. You can see who is honest and dishonest. A majority of dishonest nodes does not damage our system.

Telegram user ansteadm
Since there’s a ton of new genesis blocks, how can these branches of chains communicate with each other since they’re spliting constantly? Do each genesis blocks contain all the data from the previous blocks? would make for auditing the data on there a bit troublesome

John Conley
No. Chains are not directly aware of one another.They are only aware of their own ledger state. There is a system of interchange transfers that involve Merkel proofs of the destruction of tokens. It doesn’t involve an approach like ION where you have a small network that validates the escrowing of tokens on one chain and the creation of tokens on another chain. This is a challenge but it is a challenge we believe we have solved.


Re: Current development status

Telegram user skrim_flimmer
Is there an available test net?

John Conley
No test net yet. We’ve been working for 1 year. What we’ve done is work out the technical details of how the algorithm works; that’s Proof of Honesty and catastrophic dissent mechanism. We’ve also partnered with a few developers and are trying to partner with more. We are in the midst of writing a demo that shows what the project does. That should be out in about 2 weeks. We have a CTO and Chief Architect on board. We are specifying the right foundational structure, for example the right language and how the VM is going to be set up. The test net is the next stage after the demo is done.

The other thing we’ve done is lay out the legal foundation with our lawyers in Canada. We want to be 100% compliant and even though we know that the coin is a utility token, we assume that we’re going to be deemed a security token by the SEC and want to be prepared.


Re: Raising funds versus open-source development

Dave (Paperstreet)
How much have you raised so far?

John Conley
For the first year, most of this was bootstrapping. Terrapac, our Canadian IOT company, has put in in-kind resources of about $400,000. Here in Tennessee, I hav taken a leave of absence from Vanderbilt. We’ve put in a couple hundred thousand of sweat equity. I have put in $100,000 or more. That brought us to our initial point. Since then, we have raised about $300,000 in initial rounds. All together, there is about $1,000,000 in this project. We’re now at the point where we’re going to have the demo ready and we’re ready to raise money to write the code in earnest.

Telegram user virtualjohn
Why raise money at all? Hypothetical blockchain systems don’t seem interesting. Why not open source it and build it with a community? I think Grin is a good example of taking a theoretical idea (mimblewimble), building it, and letting the value be found naturally. Just seems like a ton of unnecessary risk from an investor perspective.

Telegram user ansteadm
I was sort of thinking something similar- I know that FLO is doing that and has been doing fairly well with their blockchain. I do know that in the US that immediately means it will fail the Howey Test.

John Conley
I’m a big fan of that kind of project. I’m communicating with a Linux laptop at the moment. The chain that we write will be open source. If it’s not open source, how can you trust us. However, open source does not mean that it is free. We have invested time and effort. There is intellectual property. There are patent applications that are in process right now. So while you can read the code, it would be illegal to copy the code.

The reason we take that approach is that we believe in incentives. Getting people to contribute enough in a timely way that is verifiable and of high quality is very difficult. It is nice, but not a good foundation. I don’t really believe that you should rely on writing a secure foundation on that basis.

We are, however, trying to build community. We want as large of a developer base as we can. We are also not looking for control. What we are looking for is a way to guarantee security of the system. Once that system is guaranteed as secure and we can generate the interoperability, the genesis blocks that we issue have a life of their own. Once they’re issued and the protocols are locked into those genesis blocks, there is nothing we can do to stop it. We can be ordered by the FCC or SEC to take down one and we simply would have no way of doing it.

Telegram user skrim_flimmer
RE: Having proprietary patents, what is stopping someone from a country that doesn’t believe in IP and patent law, or anyone whom successfully remains anonymous for that matter, from launching up a competing Geeqchain platform? If they’re unable to be punished, how would you stop it?

John Conley
Nothing. If someone steals from us in a place that we can’t take action, then they steal from us. We are really doing something that is completely different from what other projects are doing. To take our approach, somebody would have to entirely reorient their thinking, do something very different, understand what is is we’re doing, and they would also have to build up an ecosystem that was sufficient to takeover from Geeq.


Re: Comparison to Hashgraph or IOTA

Telegram user Brianbtcbrain
Can you compare yourself to Hashgraph and say why you are better than their concept?

John Conley
Hashgraph and IOTA are not really blockchains. They depend on having users come in and connecting with various etches and existing transactions, basically creating a trail of hashes that is difficult to ex-post alter. It is an entirely different approach and has many flaws. Among the flaws is it tends to be centralized and there tend to be trust authorities. There are no incentives for users coming in to randomly choose randomly edges and ins to which to attach their transactions. It generates forks by intention. It not really clear how quickly you’ll get finality. The stochastic math is not very good either according to people I’ve talked to. It’s lack of incentives, its mathematical structure, and even its structure of data make it something that is not very trustworthy and has limited application.


Re: Geeq Corp buying/selling tokens for price stability

Telegram user skrim_flimmer
Can you comment on the legality or illegality of using revenues from token sales on the platform for stabilization / manipulation of your cryptocurrency?And also how these revenues will be generated — is it project by project as they approach you to spin up a geeq chain (since geeqcorp needs to create the genesis block for each chain)

John Conley
It’s a moving target with what the SEC will allow. In terms of how we’re going to run the monetary policy, the answer is that we will buy tokens if the price drops and we will sell tokens if the price rises, not with the view of keeping a single price but with a view to making the token value more stable. This might require us to only sell tokens to a group of addresses that have passed KYC/AML. After that, whoever purchases tokens as a secondary sale can use them in whatever fashion they are normally used. This is a moving target and we are going to keep up with the regulatory structure and we have a team of lawyers who are making absolutely sure we are compliant.

Telegram user skrim_flimmer
Have you spoken with the SEC about this? What happens in the event that Geeqcorp doesn’t have the revenue required to stabilize the coin’s price? In this situation the coin will merely float. Is it not better to let the market decide the value of the coin?

John Conley
The fraction of the money that Geeq gains from selling coins is put into a reserve account that is specifically designated to buy tokens if the price drops. The algorithm automatically funds whatever we need to fulfill the promise to buy the tokens if the price happens to drop.

The market decides the price of the token. The way the algorithmic contract works is that there is a series of bids and asks that are automatically created at various price points. At any point, anyone is allowed to go ahead and whatever the most recent price is the current price of the coin.

Telegram user skrim_flimmer
What if the price never goes over $1, and instead just dumps out, and you can’t make any revenue by selling supply over $1, because if you do sell, it will just further depress the price, so you just drain your balance trying to support the price?

John Conley
The monetary policy kicks in at a price of $3. The issue price is $1. If the price never goes above $3, no new coins are created. Stabilization starts at $3.

The reason that we believe the coin will have value is that we look at the quantity theory of money or the Fish equations. The way that you calculate the value of money depends on the velocity of currency and the value of the transactions. Our methodology of calculating the likely value depends on how much usage there is and how fast the currency transacts between nodes.

Telegram user skrim_flimmer
Skrim Flimmer, [Jan 24, 2019 at 4:18:13 PM]:
So if it never goes over $3, there’s no price support, but if it does go over $3, the team can mint coins to sell on the market taking revenue, and then lower the coin price? So the upward limit on price appreciation in this system is max $3

John Conley
We’re not issuing coins to keep the price at $3. We’re issuing coins to create a reduction in volatility so the price will not go up as quickly, but at the same time it will not go down as quickly in the event of a decrease in price.

A great deal of the volatility in cryptocurrencies is on the back of an extremely thin market. If you are not sure about where the bottom is for Ethereum or where the price support will be, no one demands any until the price stabilizes. In our case, there is significant demand at every price point, so if the price is going to be forced down, it can only be done if someone is willing to sell those coins back to us.


Re: Revenue share

Telegram user smithjason
Can you describe the function of the base chain’s (I’m assuming) tokens (GeeqCoins) in relation to side chain tokens?

John Conley
We don’t have a base chain and we don’t have side chains. We have many instances in a federated structure. All of those chains are created equal. The Geeq coin itself is primarily used to pay validators. We don’t have mining, but the transaction fees are set at $0.0001 and all the chains independently validate transactions.

Telegram user ansteadm
With this being so secure, how does it fair in terms of scalability?

John Conley
We have a federated structure. The way that new instances of the chain is created are two: 1) the Geeq corporation issues a new genesis block that includes any of the application code that a developer wants to use that is locked into the genesis block along with the validation code. That code can never change. That instance is something that has it’s own existence after it is created. Geeq corporation cannot modify it. 2) There is a system whereby a particular instance of a geeqchain, if it runs into a situation where there are more transactions than the validation network can handle, it automatically splits into two identical chains with half of the nodes and accounts being in each and we can split as many times as we like to achieve the level of transactions per second needed.

With the federated structure, in principle, we can do any number of transactions per second that are demanded. Our job is to actually generate those transactions through the use of IOT and micropayment transactions. As the platform gets adoption, the Geeq Corporation only really profits as value is created.

Telegram user skrim_flimmer
How exactly are the validators compensated? Is it programmatic based on how many tx’s they validate? Or is it block by block set reward over time

John Conley
We don’t do mining. We pay for work. We set a price of $0.0001 for validation. If you want to have a transaction on geeqcoin, you submit that transaction and $0.0001 is deducted from that and distributed to the nodes.

Telegram user skrim_flimmer
So $0.0001 divided among all nodes per tx? Doesn’t sound like validators will make much revenue unless there is massive tx volume

John Conley
Our focus is on high volume, low value transactions. Take IOT for example. You may want to record the telemetry every minute, hour, day, etc. in order to create an audit trail, to protect yourself from liability, to do monitoring and analytics. Having that data recorded in real time as it is created creates something that is credible, which can protect you and let you fix the system, and hold you accountable if you don’t do things correctly. We’re going to be building these fundamental applications to record IOT telemetry which we think is going to be a very large market.

The other large market is microtransactions. We can validate for $0.0001 which makes it possible to pay someone a penny, which means you can buy content, have p2p markets of various kinds and most interestedly, you can have machine-to-machine markets. The go-to example is your solar panel can sell power to your neighbor. Your machines can operate as agents on your behalf through the geeqchain and everything they do is verifiable and the payments are finalized.


Re: Legal representation

Telegram user smithjason
Who is your counsel?

John Conley
Our counsel is Gowlings, a law firm based in Toronto with offices in many countries.


To learn more about Geeqchain

Learn more about Geeqchain at geeq.io. Follow Geeqchain on Twitter, Facebook, or YouTube. Join the Equibit community on Telegram to engage with the team.


Paperstreet and its executives do not have any investment in GEEQ tokens or Geeq Corporation as an entity. Paperstreet did not receive compensation for conducting this AMA. Paperstreet may engage in business with Geeq Corporation to provide software services on a flat fee basis per usage in the future.

Geeq is offering the GEEQ utility token under the laws of Canada. The offering is not available to US investors who do not satisfy the requirements laid out by US law to be an accredited investor. Investments in cryptocurrencies and utility tokens involve a high degree of risk and those investors who cannot afford to lose their entire investment should not invest. Investors should review the risks and disclosures in an offering’s investment documentation. Before making an investment decision, investors should review the company’s Whitepaper and Slide Deck for a complete description of its business and offering information.

The material contained in this article is not to be regarded as an recommendation to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information on this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.