The new Skycoin Whitepaper is very detailed and we are very proud of its all-encompassing scope! We highly recommend you do invest the time to read the full whitepaper as well as our additional Skycoin whitepapers. Knowledge is power after all, and we want our Skyfleet to be powerful. However, if you are on-the-go and only have a couple of minutes, we are thrilled to provide the TL;DR here for your perusing pleasure.
The Cryptocurrency Powering Web 3.0
The Skycoin Project is one of the oldest blockchain projects in development, and Skycoin is its first creation. Built as an infrastructure project rooted in the founding concept of decentralization, Skycoin runs on a completely different consensus algorithm called Obelisk, which can be described as a “web-of-trust”. With Obelisk, Skycoin is not susceptible to the weaknesses of Proof-of-Work (PoW) and Proof-of-Stake (PoS).
Lightning Fast Transactions take as little as 2 seconds. With no bottlenecks or fees, Skycoin (SKY) is faster than other cryptocurrencies and competitive with credit cards and Apple Pay.
Zero Fees Skycoin transactions are funded by Coin Hours, a separate currency issued to SKY holders for each hour they hold a coin.
Secure Built from the ground up in Golang, Skycoin makes full use of time-tested cryptographic standards to ensure transactions can’t be tampered with. Skycoin renders useless such threats as 51% attack, reversal, duplication, and malleability.
Private Skycoin’s transaction structure was designed to seamlessly adopt the CoinJoin protocol. Once integrated, Skycoin mixes transactions from multiple wallets to ensure they are indistinguishable from one another.
Sustainable Without the enormous computational energy requirement typical of PoW and PoS processes, Skycoin can run on a low-wattage microcomputer (Pi board) processor.
Incentivized Skycoin is more than a cryptocurrency. It derives inherent value from the Skywire mesh network. Users earn and use Skycoin for providing and consuming network resources within the Skywire ecosystem.
Utility Backed Skycoin’s practical application means it is backed by a real asset: bandwidth.
Supply and Distribution
Skycoin’s total supply is capped at 100 million, and coins cannot be created or destroyed. Distribution is an open process. As more coins reach the public, the rate of distribution will slow. This approach puts Skycoin in the hands of users and community members instead of miners and speculators.
Distribution is hard-coded into the protocol and time-locked so that 5% of the coins are unlocked per year after the initial 25% is distributed. By creating a hard-coded, time-locked distribution policy, Skycoin ensures several things: a fair process that does not deviate from the team’s original intent, a rate of distribution aligned with user growth, and the protection against inflation. Read the whitepaper or check this link to learn about the Skycoin distribution model.
Obelisk Consensus Algorithm
Obelisk is the consensus mechanism that Skycoin uses in order to validate its blockchain. This technology leapfrogs cryptocurrencies like Bitcoin and Ethereum with Proof of Work (PoW) and other coins attempting to utilize Proof of Stake (PoS). Both the PoW and PoS approach to consensus are flawed at their core, and will lead to issues down the road.
Obelisk distributes influence over the network according to a web-of-trust model. Basically, instead of hardware miners, the web consists of software nodes (run on a computer or in a Skyminer) and each node subscribes to a list of trusted nodes.
Every action of every node is recorded and can be easily audited for malicious behavior. When the network finds one of these nodes, they can cut connections from it, and those bad actors will lose their influence over the network immediately. Incorporating this transparency confirms that the network is highly democratic and decentralized at all times.
A very quick rundown of the features of Obelisk:
• High scalability, low energy consumption
• Robust defense against coordinated attack
• Protection against “51-percent attacks”
• Hidden IP addresses
• Independence of clock synchronization
• Two types of nodes exist: Consensus and Block-Making
At this point, if you’re thinking “Hey wait a minute! You didn’t even explain those features!” remember, this is the TL;DR. All of the detailed information is available in the full whitepaper! Also you can find out more here and here, if you are one of the more intrepid Skyfleet explorers.
Coin Hours are the fuel of the Skycoin ecosystem. Coin Hours will allow users to access resources over the Skywire network, send SKY for free to others without dipping into their own wallet to pay transaction fees, and much more.
With no SKY transaction fees, the incentive for miners to drive up the fees at the cost of the network is eliminated. We believe the network should be virtually free for everyone to use, and Coin Hours are that solution.
You can earn Coin Hours by parking your Skycoin in the Skycoin wallet. It really is that simple. You earn Coin Hours at a rate of 1 Coin Hour per Skycoin per hour.
That’s the gist of Coin Hours, of course there is a lot more to them than that. To learn more about Coin Hours, check out this article. You can also earn Coin Hours by running a Skyminer and participating in Skywire when the mainnet goes live. What’s a Skyminer? Glad you asked!
Skyminers are the backbone of Skywire.
These bad boys are hardware units that will be providing resources like bandwidth, storage, and computing power to the Skywire network.
Skyminers are completely open source, allowing anyone to build one and to participate in Skywire by providing resources to the network. They are also low cost and very energy efficient. Each Skyminer acts as a node in the Skywire network, creating a mesh network of nodes.
Skyminers make Skywire, and even further, the whole Skycoin ecosystem, available to everyone regardless of technical knowledge. In addition, “plug-and-play” functionality is being developed for Skyminers, so anyone will be able to easily deploy nodes on the Skywire network.
Skywire is an incentivized mesh network that is faster, more affordable, more accessible, and offers higher Quality-of-Service (QoS) than the current Internet.
How is that achieved? In order to meet those goals, a mesh network needs a:
Communication Protocol that can bypass the limitations of TCP/IP.
Payment Protocol that compensates operators for resources they provide the network.
Hardware Platform that is able to provide resources to the network (Skyminers).
Application Ecosystem that drives adoption of the network and demand for resources (Fiber).
These core necessities of a decentralized mesh network get tricky very quickly. Here’s a high-level rundown:
The new Communication Protocol used by Skywire is called Multi-protocol Label Switching (MPLS) and it allows highly-scalable and high-performance transport of any data across any medium. Routes are determined before sending traffic with MPLS, making it more efficient.
Imagine that your postman delivering a package to you did not have access to GPS. They would have to use a map and hand-trace the route to take in order to get the package to your house. That’s essentially how TCP/IP currently functions.
MPLS would be like utilizing GPS for the postman, so that the package could be routed to you as quickly and efficiently as possible.
A Payment Protocol is absolutely necessary to ensure the success of a mesh network. Current Internet alternatives are operated by unpaid volunteers. This means that the majority of users access network resources without any contribution to the network’s operation, which makes it difficult if not impossible to scale. Skywire has an embedded payment protocol which solves this issue, making every node act as a micro-ISP capable of automatic metering, billing, and settlement, and provides a built-in incentive for sustainability and growth.
The Hardware Platform consists of the Skyminer devices, which contain dedicated nodes that provide functions and resources to the network.
The Application Ecosystem is another core pillar of the Skycoin ecosystem, Fiber.
This is a very high-level overview of the core components necessary for creating a successful mesh network, as always, more information can be found in the full whitepaper.
Fiber is a launchpad for scalable, secure, and decentralized applications by 3rd parties, and is a necessary solution as more enterprises seek to adopt blockchain architecture.
With better speed, security, and privacy, blockchain architecture with Fiber will finally reach its potential as a reliable, lightning-fast, versatile foundation for modern business.
Through Fiber, customers have a private chain that is fully customizable to their needs and equipped with all the benefits of Skycoin technology:
• Low energy consumption
• Near-instant transaction times
• No transaction fees
Skysuite, CX, and CXO
Skysuite is a portfolio of self-contained applications which run natively on the Skywire network. These native applications, along with the combination of third-party applications developed for Skywire, will drive adoption through the natural demand for the applications hosted on the network.
CX is the programming language developed by Skycoin, which will be used to develop Skysuite applications.
CX can be used to create decentralized applications, or video games, and even program FPGA chips. For those technically-minded, a detailed overview of the language can be found on the Skycoin blog.
CXO is the CX Object System.
In effect, CXO combines the immutability associated with blockchain and the scalability of a content distribution network (CDN). This is useful in cases where content needs to be easily available and verifiable, but not necessarily stored on the blockchain. For example, storing all of the content for a social media platform directly on the blockchain would lead to bloat as the platform gains adoption. Using CXO to store and distribute the content completely solves this problem.
That’s about as condensed as we can get without losing the value of the whitepaper. We hope that this post is useful for the community, and will serve as a quick and easy method of digesting all of the information that is presented in the complete Skycoin whitepaper.