Cryptocurrencies Have a Major Problem
Few would argue that Satoshi created Bitcoin primarily for speculative purposes. Despite this, a number of mechanisms were incorporated into its design to improve its value over time, such as limiting its supply to 21,000,000 and setting its minimum spendable unit to 8 decimal places, thereby allowing each unit of BTC to grow with the market’s demands.
However, since its inception, Bitcoin and many other cryptocurrencies have become speculative instruments, rather than the successor to fiat currency. The ‘hodl’ mentality is rampant and though it may decrease the circulating supply of a cryptocurrency and hence increase its perceived value, it also limits its utility as currency due to having very poor commercial transaction volume.
To date, few cryptocurrencies have been accepted by any major institutions or corporations, and many cryptocurrencies and tokens fail to fulfill their intended function within their own system, due to having very poor real-world usage.
It is no secret that the vast majority of cryptocurrency transactions are related to speculative trading, rather than commercial use.
Older Consensus Mechanisms
Traditionally Proof-of-Work (POW) and Proof-Of-Stake (POS) have been used as the consensus mechanism behind many of the more popular blockchains. However, both POW and POS have a high barrier to entry, with the cost of purchasing ROI-capable mining equipment running into the several thousands, whilst operating a node on a popular POS blockchain can cost tens, to hundreds of thousands of dollars. Because of this, the distribution of cryptocurrency units in POW and POS blockchain favors those with big pockets, eventually leading to a scenario where a select few ‘whales’ hoard far more than their fair share of the total supply.
Both POW and POS are tools that aim to prevent centralization of the blockchain network by either distributing the work required to discover new blocks, or financially incentivize node holders through a dividends system. However, when you break down the costs of running such systems, it becomes clear that we need to look for an alternative, as POW uses more energy than many small countries to solve meaningless cryptographic problems.
While POS may not suffer from the same energy burden as POW, it still suffers from its own problems. Unlike POW which uses computing power to secure the network, POS uses staked collateral to secure and process transactions on the network via nodes, increasing the centralization of the system, and hence undermining the very purpose of cryptocurrency.
TAU attempts to address both of these concerns by removing the financial incentive to hold for the long term, instead substituting it with a system that rewards users for regularly transacting. By incorporating an entirely new consensus mechanism termed “Proof-of-Transaction (POT)”, TAU is able to achieve a similar level of network security and scale without being unnecessarily energy intensive or unfair.
The Importance of Transaction Velocity
One of the major issues not addressed by many modern cryptocurrencies is the velocity of money, which for most cryptocurrencies is very low.
Definition: Velocity of money is the rate at which units of currency are exchanged between people.
For the most part, many new cryptocurrencies aim to be the direct successor to fiat currency. However, few of these cryptocurrencies provide any reasonable incentive to drive consumer, merchant or retail adoption. Part of the problem is the low rate of turnover of these digital currencies, with the general consensus being that these currencies are typically not being used for their intended purpose, with investors instead simply holding their coins/tokens until the right time to sell out at a profit.
Here at the TAU foundation, we believe that the velocity of money is one of the critical prerequisites for widespread adoption. To achieve this, TAUcoin promotes the rapid turnover of value-based transactions, simultaneously increasing the circulation and distribution of TAUcoins. To do this, TAU uses POT to allow harvest clubs to “harvest” a new block consisting of historical transactions, and the transaction fees used for these transactions are distributed back to the successful harvest club.
We expect that this system will produce a fair, equitable environment for all parties involved, without giving any single group too much of an advantage over another.
Community Driven
TAUcoin is still under development. As with all growing projects, we understand that there are likely to be flaws, technical issues and challenges along the way that will make us rethink and refine the TAUcoin concept. We encourage the blockchain community to analyze, scrutinize and pick TAUcoin and the Proof-of-Transaction consensus mechanism apart. In doing so, we hope to build a pure cryptocurrency with all of the strengths blockchain technology offers, with fewer of the drawbacks suffered by POW and POS-based coins.
We ask that you join us on this journey to produce something truly worthwhile — an egalitarian cryptocurrency that is genuinely fair to all parties involved. Our code is available for review in our Github repo, feel free to explore, and if you have any questions, we’ll be available on Telegram to help out, or simply comment below and we’ll get back to you.
If you liked this article and would like to see more from us, please do subscribe or leave us a few claps, we appreciate every single one :)
➤ Check us out on Github
➤ Follow us on Twitter
➤ Ask us questions on Telegram,
Find out more on: https://taucoin.io
