Skycoin solutions to 5 fundamental blockchain problems

Part I — Censorship resistance of payments

The first question for any company, organization or entrepreneur introducing a new product into the market should be ‘What problem(s) does it solve?’. Unless it offers a 6–10x improvement over the incumbent, it will not be able to overcome the inertia, activation energy and switching costs from the status quo.

Bitcoin answered the need for a digital money with no trusted 3rd party, a method of transferring value electronically beyond the oversight and censorship of corporations and nation states. This is a role that it continues to fill extremely effectively, allowing billions of dollars unhindered global monetary flow every day.

Bitcoin also spawned thousands of imitators and competitors. In the past decade, the vast majority of altcoins have failed at offering any incremental real-world value improvement over BTC, and consequently we have learned much about the (lack of) effectiveness of different blockchain design features.

Skycoin’s r’aison d’etre is to succeed Bitcoin in its core function — a supra-national digital currency for all earth’s 7.5 billion people. To have a shot at global adoption, the Skycoin devs saw that a complete coin re-design was required — to create a money unencumbered by the initial design specifications of Satoshi’s monumental, but embryonic creation.

Later, they learned that a coin re-design on its own would be insufficient to bring into reality the decentralized future envisioned by Satoshi and the earliest cypherpunks, and a whole ecosystem would be required — the Skycoin ecosystem.

In this article series, we identify a range of key blockchain design problems, and Skycoin’s answer to those problems. This is the rationale behind the Skycoin ecosystem design, and how it can achieve a 6–10x improvement over the Bitcoin status quo.

The problem with the ‘clearnet’

The wider crypto community is only beginning to understand the implications of broadcasting cryptocurrency transactions through the ‘clearnet’ — the standard, unencrypted, corporate ISP-controlled internet.

The reality is that Bitcoin, Ethereum, Monero or Dogecoin transactions can and will be censored if they are transmitted through the internet because the data packet themselves and the connection are unencrypted. This has enormous implications for transaction censorship, because the entire value proposition of cryptocurrency is invalidated if payments can be blocked.

Various forms of attacks are possible running crypto networks on the clearnet:

  • The stealth ‘shadow node’ attack where an adversary surrounds a node with fake Bitcoin peers, feeding the node fake blocks. The user could be connected to this shadow network without knowing.
  • Direct censorship, where ISPs seeing Bitcoin traffic coming from a specific IP address leads them to throttle or block the connection.
  • Country-wide internet shutdowns, as frequently occurs in developing countries, where the entire internet infrastructure is taken down the behest of the dictator in power at the time.

The consequences of these attacks are severe and open to imagination. Needless to say they are highly undesirable, and reveal a key weakness in the effective real-world use of cryptocurrency.

Wireless mesh networks are the solution to a key blockchain design problem — that of censorship of payments.

Privacy networks to the rescue

The solution is twofold, and should be familiar to the Skyfleet as well as anyone following Synth for the past several years:

  1. A high-speed encrypted internet protocol/privacy network (TOR successor)
  2. A wireless mesh network that can relay traffic of said privacy network beyond the control of corporate internet infrastructure owners
  3. A monetary reimbursement scheme that aligns incentives to ensure profit-driven individual actors create and maintain both 1) and 2).

This is the Skywire protocol in a nutshell — a new encrypted internet protocol running on an un-censorable wireless mesh network that cannot be shut down come war, famine nuclear attack, EMP strike or military coup. A network that pays people to operate and maintain it by creating a marketplace of encrypted bandwidth.

When successfully implemented, Skywire could be the most elegantly designed incentive system in the history of computer networking. It will use Coin Hours, the Skycoin derived currency, to pay for bandwidth on the network. We have written extensively about Skywire, and for more information, check out Telegram, Reddit and the Skyfleet Captains Log.

Implementation stage

After a long period of testnet, the mainnet software for Skywire was recently open-sourced on GitHub, and is open for community developer contributions, commentary and bug-fixing.

As of May 2019, we have also seen images of the WiFi antennas that will form the hardware of this mesh network, motorized to allow direct point-to-point connection with other Skywire nodes in the local area.

Progress/ future direction

The next steps in the creation of the Skywire network will be shipping of DIY antenna kits to the Skywire community around the world. Skyfleet will put antennas on their roof, connected to their Skyminer device and begin sharing bandwidth.

The Skywire mesh network will then take shape. It stands as the best opportunity to preserve the censorship resistance of all cryptocurrencies. Keep a close eye on its development.

This is not investment advice. Always do your own research.

Previous articles on the need for censorship resistance — BTCPay Server, Skywire and the quest for censorship-resistance