Skycoin Wikipedia Entry

THIS IS A RECORD OF THE OFFICIAL SKYCOIN WIKIPEDIA PAGE AS IT APPEARED IN 2018 BEFORE WIKIPEDIA ADMINISTRATORS DELETED IT
SOME CONTENT ON THIS PAGE MAY NO LONGER BE UP TO DATE


Subunits Droplet (one millionth of a Skycoin)
White paper skycoin.net/downloads
Website skycoin.net
Block explorer explorer.skycoin.net
Supply limit 100,000,000

Skycoin is a third-generation cryptocurrency platform created by some of the early Bitcoin and Ethereum developers. The project is led by Brandon Synth. Compared to first-generation cryptocurrencies, the Skycoin ecosystem incorporates several architectural differences which the creators claim improve its speed, scalability, security, flexibility and decentralization. These differences include dedicated hardware nodes, a new consensus algorithm, and the inclusion of an inflationary parallel currency that functions alongside the primary deflationary currency.

The Skycoin platform was recently discussed in a positive light at a United Nations blockchain conference in Geneva.

Contents

History

Skycoin has been in development since 2011 (shortly after Bitcoin was released), and was originally created to resolve several alleged problems inherent to Bitcoin. Some of the original developers who worked on the Bitcoin project foresaw multiple issues with Bitcoin’s architecture that they believed would limit the potential of the cryptocurrency. These issues include:

  • Bitcoin’s Proof-of-work system consensus algorithm rewards miners for solving complex math puzzles to create new blocks and validate transactions. This induces miners to combine forces and create large centralized pools that leverage high-speed Application-Specific Integrated Circuit (ASIC) processors in a race to create the next block. As a result, China-based Bitmain controls more than 40% of the world’s Bitcoin mining power, according to Blockchain.info, which is contrary to Satoshi Nakamoto‘s vision of decentralization.
  • Bitcoin and most other cryptocurrencies rely on the existence of the Internet. The Internet is another point of centralization that can be shut down, censored and monitored by ISPs, corporations and governments, thus making all cryptocurrencies reliant on centralized infrastructure.
  • Bitcoin can handle a maximum of seven transactions per second. This Bitcoin scalability problem means it can’t compete with the likes of Visa and PayPal which handle thousands of transactions per second. When the Bitcoin network becomes congested, transactions become slower and more expensive.
  • The fact that Bitcoin has a maximum supply of 21 million coins encourages hoarding of coins and therefore upward pressure on prices. As Bitcoin’s price rises, holders are discouraged from spending their Bitcoin because they believe the coins will be worth more in the future. The combination of slow, expensive transactions and hoarding of coins goes against Satoshi’s vision of a peer-to-peer digital currency.

Architecture

Skycoin

The supply of Skycoin is fixed at 100 million coins, and all coins were created in the genesis block. 75 million coins are timelocked and 25 million are currently unlocked. The timelocked coins cannot be distributed until the first 25 million have been distributed. After that, for each subsequent year, 5 million coins are unlocked via unanimous consent of a group of developers (one vote against distribution can stop the process). Unlocking the total supply takes a minimum of 14 to 25 years.

The Skycoin blockchain does not involve traditional ‘mining’ for coins, meaning control of the network cannot be concentrated into a few large mining pools. Skycoin transactions complete in seconds and are effectively free, requiring only one Coin Hour to make a transaction. Skycoin includes an anonymity feature with the use of the CoinJoin protocol which enables the platform to mix transactions from multiple wallets so they are indistinguishable from one another. The platform is private enough that IP addresses cannot be traced.

Coin Hours

Coin Hours are the ‘fuel’ for the Skycoin ecosystem.

Coin Hours are a parallel currency generated by holding Skycoins in a wallet. One Coin Hour is generated each hour for every Skycoin held. For example, holding 10 Skycoins would generate 10 x 24 = 240 Coin Hours per day. Coin Hours are also earned by running a Skyminer node. Users who run Skyminers are paid in Coin Hours for providing bandwidth, storage and computing power to other users of the network. In the future, Coin Hours will be tradeable on exchanges for Skycoins and other cryptocurrencies, and will also be used to access distributed applications and services such as VPNs or bandwidth on Skywire.

Coin Hours are accumulated on the blockchain, so a wallet does not need to be open to generate Coin Hours. This is similar to the way in which the NEO (cryptocurrency) generates GAS. Coin Hours are required to make transactions on the network. Each time a transaction is made, 50% of the Coin Hours in the sending wallet are burned, and another 25% are sent to the receiver. This Coin Hour burn fee prevents transaction spam by rate-limiting the number of transactions a single entity can make. Anyone who attempts to spam the network with transactions will quickly run out of Coin Hours and must wait for another Coin Hour to be generated before making another transaction.

Since Coin Hours are generated continually, and there is no maximum limit to the number of Coin Hours in existence, this mean Coin Hours are an inflationary currency. In economics, Inflation encourages spending rather than hoarding of a currency, meaning users will be more likely to spend Coin Hours for services on the Skycoin platform, rather than hoarding Coin Hours in anticipation of a future rise in value.

Skywire

Skywire is a blockchain-based network consisting of nodes that connect to each other directly for forwarding and routing of traffic, creating a decentralized Internet. This Skywire mesh network uses Multi-Protocol Label Switching rather than TCP/IP for transport. MPLS routes are predetermined and each node can only see the previous node and the next hop for the data packet. This is more secure and private than the IPV4 and IPV6 protocols, in which anyone can view the origin and the destination of the data.

Skycoin’s Skywire network is in the early stages of deployment, with over 7900 active Skyminer nodes currently running on the test net which was launched on 22 May 2018.

Skyminers

Skyminers are dedicated hardware nodes, but they don’t mine coins in the traditional sense. Instead, all Skycoins were created in the genesis block, and the Skyminer nodes are rewarded with payment in Coin Hours for providing services to other users, rather than for solving complex math puzzles as is the case with Bitcoin and other Proof of Work cryptocurrencies. [21] The services provided by Skyminer nodes includes providing bandwidth, storage and computing power to users of the network. Skyminers may be purchased directly from Skycoin, or they may be built using commonly available components by following one of several online DIY guides. Skycoin chose this approach to avoid the centralization of mining pools that has occurred with Bitcoin, Ethereum and other cryptocurrencies.

Sky Fiber

Decentralized Internet via Skywire is just one part of the Skycoin ecosystem. The platform also enables other projects to use the Sky Fiber environment to launch their own decentralized applications, similar to the way in which Ethereum enables other projects to launch an Initial Coin Offering. The key difference is that Skycoin’s Fiber architecture allows each project to own its own blockchain, wallet and coin, rather than sharing a single blockchain. This architecture ensures that congestion on one blockchain does not impact applications on other blockchains, as occurred in 2017 on the Ethereum platform when the CryptoKitties application caused all other Ethereum applications to slow down.

Sky Fiber was originally known as Skyledger.

Obelisk

Skycoin’s consensus algorithm is called Obelisk. The Obelisk protocol distributes network influence through a ‘web of trust’ architecture and does not require any form of coin mining. Each Skyminer node has a list of other nodes that it subscribes to. The density of a node’s network of subscribers determines its influence on the network. This approach removes any incentive for centralization of consensus nodes and eliminates the risk of a 51% attack or majority attack.

Team

Skycoin is a private company that provides blockchain application platforms, cryptocurrency trading and other related services.

The Skycoin project includes the following team members.

  • Brandon Synth (Founder): Early developer of Bitcoin who also sits on the advisory boards of multiple cryptocurrencies.
  • Huowu Chen (Founder): Early developer responsible for the Ethereum’s python implementation and development of Skycoin’s Obelisk consensus algorithm.
  • Steve Leonard (Founder): Involved in cryptocurrency since the early days of Bitcoin. Steve developed most of the original Skycoin software.
  • Mike Doty (Advisor): Co-founder of the Ark and Bitseed cryptocurrencies.
  • Michael Terpin (Advisor): Founder of CoinAgenda conference series.
  • Patrick Dai (Investor): Founder of the Qtum cryptocurrency.

Recognition by the United Nations

In 2017, the United Nations used the Ethereum blockchain to distribute funds from the World Food Program to 100 people in Pakistan, with further plans to use the same system to distribute funds to over 10,000 people in Jordan. This pilot program aims to demonstrate the power of blockchain technology for distributing aid to those who need it. This is a strategic investment for the UN, since the digital infrastructure could enable such charitable services to outlive the UN itself. World Food Program financial officer Houman Haddad believes the power of blockchain could enable the WFP to help 80 million people each year.

In May 2018, Professor Stefan Brunnhuber presented a talk to the United Nations in Geneva, in which he singled out Skycoin’s Skyledger (Sky Fiber) and Obelisk platforms as a potential solution to global financial inequality and a way of easing world hunger (Skycoin technology is discussed at 9:50, 14:20 and 17:30 in the referenced video).

Binance trading competition

In June 2018, cryptocurrency exchange Binance announced a Skycoin trading competition, the exchange’s largest trading competition to date, with a total prize pool of 50,000 SKY plus ten Skyminers.

References

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07 “Skycoin – A Beginners Guide Project”. CoinCentral.
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10 “Crypto’s 32-Year-Old Billionaire Mining King Considers an IPO”. Bloomberg. 7 June 2018.
11 “The Complete Satoshi”. Satoshi Nakamoto Institute.
12 “Past and Future Distribution of Skycoin”. Christian Ott.
13 “13 Blockchain Companies By Industry That Will Have Your Cauldrons Bubbling For 2019”. Forbes.
14 “Skycoin Coin Hours – The Fuel for Skywire”. Medium (website). 17 March 2018.
15 “Coin Hours – Parallel Currency of Skycoin”. Christian Ott.
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31 “Obelisk – The Revolutionary Skycoin Consensus Algorithm”. Medium (website). 7 May 2018.
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38 “Past and Future Distribution of Skycoin”. Christian Ott.
39 “13 Blockchain Companies By Industry That Will Have Your Cauldrons Bubbling For 2019”. Forbes.
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41 “Coin Hours – Parallel Currency of Skycoin”. Christian Ott.
42 “How Skycoin is Set to Revolutionize the Internet”. ZYCrypto. 21 Jan 2018.
43 “Skywire by Skycoin: Democratizing the Internet, Launches Testnet Service”. Digital Journal. 30 May 2018.
44 “Skywire Nodes – Google Maps”. Google Maps.
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46 “Skywire Node Discovery”. Skywire.
47 “Skycoin’s Free Internet Service Rewards and Empowers Netizens for Sharing”. News BTC. April 2018.
48 “Even Though Bitcoin Wastes Power, Blockchain Can Be Sustainable”. Sustainable Brands.
49 “Skycoin: A D.I.Y Miners Guide”. Steemit. April 2018.
50 “Bitcoin and Ethereum have a hidden power structure and it’s just been revealed”. MIT Technology Review. 18 Jan 2018.
51 “Understanding Skycoin cryptocurrency”. Forex News Now. 24 May 2018.
52 “NASDAQ TradeTalks: Decentralized Internet”. Nasdaq, Inc. 21 May 2018.
53 “Complete Overview of Skycoin: The Greatest Threat to ISPs”. CoinBureau.
54 “Millennials, Here’s How Cryptocurrency Could Transform Your Future”. Forbes. 8 January 2018.
55 “CryptoKitties craze slows down transactions on Ethereum”. BBC. 8 January 2018.
56 “Skycoin Fiber – Blockchain Platform for Applications”. Christian Ott.
57 “Obelisk – The Revolutionary Skycoin Consensus Algorithm”. Medium (website). 7 May 2018.
58 “The Blockchain Protocol That Puts the Technology back on Track”. Inside Bitcoins. 16 June 2018.
59 “Skycoin Obelisk Protocol Review: Blockchain Consensus Algorithm?”. Bitcoin Exchange Guide. May 2018.
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61 “The UN Could Help 80 Million People Each Year With Blockchain”. Futurism.com. 3 May 2018.
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