The Hidden Pleasure of Blockchain-Free Cryptocurrencies
Many people believe that cryptocurrencies such as Bitcoin are the next revolution. How can you blame them? Perhaps they began hearing about crypto and Blockchain during the Bitcoin gold rush over the last years.
However, Bitcoin isn’t the only cryptocurrency in high demand right now. Thousands of alternative currencies have dramatically improved alongside Bitcoin’s 2017 Epic Bull Run. Some of the most fascinating examples are also among the most uncertain in the cryptocurrency space. The best examples are Holochain (HOT), Stellar, IOTA, Dash, and Zcash. Since their inception, this class of crypto has continued to gain mileage, acceptability, and trust over their rival Blockchain altcoins.
But wait, that isn’t what makes it interesting. Actually, what makes it interesting is that it isn’t based on a Blockchain at all; instead, it’s something totally different.
What are Non-Blockchain Cryptos?
Just as the name suggests, Non-Blockchain Cryptos forgo the “Blocks” and “Chain” entirely and design a truly Distributed Ledger Technology (DLT) focused on a lean graph of cross-authenticating transactions. As a result, the design became the primary and only objective in the platform.
A wholly distributed consensus mechanism focused on continuing authentication of work with expected incentives, ensures fast convergence even across a vast network of unequal users. The same users also get appreciated for operating at their pace. Graph-based affirmation encourages valuable feedback via automatic scaling. Additionally, application-agnostic design helps all modern cryptocurrency features. This includes multiple smart contracts, scripting, securitisation, swaps, and denominations.
However, in a layman's terms, Blockchain-free cryptos can be defined as an agent-centric peer-to-peer scalable system. The system allows the application designers to settle issues such as decentralisation, p2p connectivity, privacy, and value creation.
Short Case Studies
Although it may be difficult to accept that cryptocurrencies are many years older than Blockchain technology, that’s the sad reality. Several people view Bitcoin as the first cryptocurrency, although it’s really the first Blockchain-based currency. Digital currencies such as BitGold and B-Money existed even before Bitcoin; however, these didn’t last, especially when compared against Bitcoin. E-Gold was the first attempt at a digital currency backed by physical assets (gold).
The issues with cryptocurrencies developed before Bitcoin was a centralised structure. In the absence of Blockchain technology, there was unavailability of “decentralised, immutable, transparent” ledgers, on which transactions could be recorded, resulting in centralisation. Yet it appears that Blockchain may not be the be-all, end-all of virtual money technologies.
In recent years, an innovative type of crypto has unfolded, which leverages the Directed Acyclic Graph (DAG) institutional structure for the creation of its decentralised ledger. Hence, enabling traditional issues to be settled and the latest features to easily incorporate.
Although the implementations of the innovations are new, the concept isn’t. In 2013, "Accelerating Bitcoin’s Transaction Processing - Fast Money Grows On Trees, Not Chains” authors, Aviv Zohar and Yonatan Sompolinky, launched the GHOST protocol. GHOST suggested a change in Bitcoin’s structure from a Blockchain into a tree, decreasing confirmation periods and boosting security. Although this shift hasn’t been executed in Bitcoin, other cryptocurrencies are utilising the DAG-based system effectively.
The creation of IOTA, for instance, began after the German nonprofit, IOTA Foundation, announced it was partnering with many heavyweight technology companies to design a “decentralised data marketplace.”
How Non-Blockchain Cryptos Work
Now, here’s where things get fascinating. Instead of the Blockchain, Non-Blockchain cryptos use different techniques to drive their operations. For example, Byteball is a DAG-based cryptocurrency. The very first of its nature, Byteball is shared via an airdrop technique in which GBYTE, the native currency, depends on the consumer’s Bitcoin holdings. Of late GBYTE distribution has also started to occur via cashback collaboration with engaging merchants. Although it’s interesting to view ICO-less crypto, its administration technique is one of the least attractive natures of Byteball.
Byteball has no blocks. Instead, the transactions are connected directly to each other, and every transaction has one or more hashes of initial transactions. The category of links between the transactions creates what is dubbed as the DAG, which is different from Blockchain structure utilised in Bitcoin and other altcoins.
There is no Proof of Stake or Proof of Work in Byteball. As opposed to acquiring the next blocks to confirm initial ones, new transactions emerge after they verify transactions. But this form of “verification” is only a justification that the transaction is available, not that it isn’t double-spending.
Another example is the IOTA. IOTA utilises a “tangle” that is dependent on a mathematical concept, which is known as an acyclic graph.
Now let’s dive into another protocol known as Git. Git is mainly used for source control management. So in short, Git is a DAG, but it isn’t controlled in a data-centric manner. Instead, let’s assume that you have three crypto developers, and each individual is running their own version of the code.
When Developer (A) is happy, he commits his code into Git. When Developer (B) is happy he also commits his code, Git automatically unites (A) and (B) since there isn’t any controversy. However, when the Developer (C) comes in, conflict arises. Therefore, all three developers have to come to a consensus on their data.
The interesting suggestion here is the distinction of shared consensus. In the example above (A) and (B), initially, have shared consensus since they needed to agree. However, Developer (C) didn’t require consensus from (A) and (B) until he did his commit. This is what Non-Blockchain cryptos are attaining. Each node can accommodate its own sources of truth and only if this needs to be shared with another.
But one thing for sure is that Non-Blockchain cryptos operate slightly similar to Blockchain with bottles-necks when it comes to incorporating validation terms and conditions. Besides, Blockchain Cryptos are developed to be entirely distributed via sharding each node, which only requires to contain a portion of the data as opposed to a full copy of a worldwide ledger. This makes it viable to manage Blockchain-like applications on the device as lightweight as mobile phones.
For instance, when it comes to individual cryptos, “a Holochain is a ratifying Distributed Hash Table (DHT) where each node enforces ratification rules on data against the deligated chains where the data emerged". This is different from the consensus; hence, the reason it’s “blockchain-like.”
Therefore, it means that every person has their individual copy of the hash chain. So if I intend to transfer cash to you, we both sign this in our own local copies, and then share to everyone else.
The concept here is that not all data demands to be shared with every party. If (A) and (B) opt to transfer value, and they agree, (C) doesn’t have to be concerned. This is a brilliant idea for structures where it isn’t mandatory for all parties to participate, such as p2p platforms, chat programs, social networks, and things like shared document updates. It’s fundamentally a massive-scale hosted, shared git repository for unity.
Pros and Cons to Blockchain-Based Cryptos
Non-Blockchain cryptos outweigh Blockchain Technology in two significant ways. First, it can assure the integrity of collected data by protecting it in a tamper-proof decentralised ledger. Second, it allows feeless transactions between data owners and any individual intending to purchase it. Interestingly, several firms expect to dip their feet on data.
Bitcoin and other Blockchain systems depend on a distributed network of “miners” to verify transactions. Conversely, Blockchain-free cryptos have dispensed with miners. Therefore, when a user provides a transaction, they are also certifying two randomly chosen previous transactions, each of which refers to two other past transactions, and so on. As new transactions emerge, a “tangled web of confirmation” develops.
Bitcoin is a structure of storing value and gambling as opposed to a structure of community engagement or value creation. On the other hand, Non-Blockchain cryptos allow humanity and electronic devices to engage in a post-monetary society which values community, contribution, merit, and services to others. It’s a structure developed for both personal integrity and data integrity.
The available Distributed Ledger Technology driven by Blockchain like Ethereum and Bitcoin, struggles from scalability challenges and also consume vast amounts of energy. Blockchain-Free Crypto is an energy-efficient post-blockchain ledger structure and decentralised application system that incorporates p2p networking for consensus between consumers and processing agent-centric agreement.
The primary merit of Blockchain cryptos is that every device on the network receives its own safeguarded ledger. It can also operate independently while relating to all the other devices on the system for a genuinely decentralised edge computing solution.
The existence of Byteball plus its DAG-based platform makes the platform a viable option to Blockchain technology and can even handle some of the most notorious shortcomings present in the technology like legal compliance, privacy, security, scalability, sustainability and speed.
If the technology becomes broadly used, transactions become continual, indicating that they can be verified in a few seconds, rather than the 10-minute wait in Bitcoin. In terms of sustainability, the witness technology incorporated by Byteball provides a security model in which no Proof of Work mining is needed. In other words, electricity isn’t ignorantly wasted to secure it. Since Byteball lacks blocks, there isn’t a block size challenge either.
When compared with Blockchain altcoins, especially Ethereum, Byteball smart contracts are neither robust nor complete. But they are simple, enabling them to be shown in a human-readable form. This indicates that ordinary customers can view what is going to occur to their cash for themselves. Interestingly, the prediction markets are so far functioning based on these contracts. Furthermore, its standard oracle feature enables any individual with no technical knowledge to operate a prediction market.
In terms of privacy, other cryptos such as Dash and Zcash have already created innovative techniques for securing consumer’s privacy. Nevertheless, it’s imperative to understand that you can maintain this privacy in a network that doesn’t require a long verification period or wasteful Proof Of Work mining. Byteball enables value to be moved privately via an asset dubbed “blackbytes.”
Another advantage Blockchain-free cryptos, especially with those built on IOTA, is that it charges no fees at all, no matter the amount or size of the transactions. Instead, nodes are encouraged to engage in the design and verification of transactions by other nodes which will do away with nodes if they don’t make transactions frequently.
The absence of fees solves two crucial challenges in the eyes of the IOTA designers as described in this white paper.
Blockchain-free cryptocurrencies built on IOTA also distinguish themselves by their unique focus, the Internet of Things (IoT). The notion includes an international network where devices such as vehicles, and home appliances can communicate and exchange data, enabling them to be remotely supervised and managed.
IOTA’s mission is to enable data and value to be transferred and exchanged freely between these components, allowing any IoT-enabled car, appliance, or device to be rented or used in a trustless and efficient way. The data issued by the device can also be purchased and traded via IOTA technology.
This idea enables the distributed economy movement to develop in such a way that any individual will be able to create the most out of their assets. In other words, IOTA is the solid backbone for the exchange of value on the IoT model in which devices generate value for the owner as opposed to the other way round.
While the mainstream media might persuade you that the Blockchain and Bitcoin are a promising future, they may be wrong. The truth is that Blockchain is a decades-old technology that its future is hanging in the balance. Furthermore, cryptos such as Bitcoin are designed to emulate the available corrupt finance structure.
The future of technology shouldn’t be about linking people to billion-dollar mega-corporations and pressuring them to depend on platforms such as social media giants that steal and monetise the existing data. After all, no one would want to be a victim of what happened between Cambridge Analytica and Facebook in 2017. The future of technology should be about enabling people to connect with others in a way in which they accepted to be connected, and not be victims to unnecessary and corrupt intermediaries.
Blockchain-free cryptocurrencies are the foundational technology to spearhead decentralisation to the moon. It’s real, and you can easily download it and begin building right away. It has the potential to revolutionise the world.
Therefore, with all that said, the choice is yours. Whether you fall in love with Blockchain-free cryptos or remained conservative with Blockchain cryptos, the truth is in the eye of the beholder - cryptocurrencies could be utilised both for better or for worse.
About the author:
Verolian Opiyo is a former teacher of English turned content strategist. He specialises in
writing about FinTech and next-generation technology.
The above references an opinion and is for informational purposes only. Do not take this as personalised financial or investment advice. The views expressed by the author do not necessarily represent the opinion of BitPrime.
Last updated: 10/10/2019