ICO Analysis: Internet of Coins
There is an ongoing crowdsale of the “Internet of Coins (IoC).” IoC is one of the competitors in this budding space of networking various blockchains mentioned in our last ICO Analysis, regarding Cosmos.
IoC differs from Cosmos significantly. For starters, while Cosmos uses hubs and zones to interconnect assets, IoC uses a somewhat novel concept of “hybrid assets” to interlink coins. According to IoC themselves, they have been at work on the project for two years prior to launching the crowdsale, whereas Cosmos has not actually done any of the work on the Cosmos part of the Cosmos project. IoC aims to take the most direct approach to usability, by stating plainly:
Existing wallets need no changes or adaptations to allow their blockchains and value systems to be hooked into this autonomous decentralized network.
It seems that IoC’s fundamental goal is the ability for all cryptocurrencies to be able to speak to each other on a peer-to-peer basis without the need of middlemen. The only reasonable way to achieve this at present is to conduct a trade through a cryptocurrency exchange. Atomic Cross Chain trading/transfers are a concept that have existed since not long after alternatives to Bitcoin started springing up. The concept is that, without the requirement of a third-party middleman, coins on different blockchains can be transferred between wallets on different blockchains.
Decentralization is as important to the Internet of Coins as it is to most Bitcoiners. They state clearly that they are working toward allowing alternative cryptocurrencies and established ones to autonomously connect to the network. The way this is done is through the establishment of “hybrid assets” on the network. It is explicitly clear that nothing about the coins themselves will have to chain. Adapters will have to made for a few of the bigger ones, and then their forks will have an easy time of making such adapters work. This means that this project has a high potential of achieving its technical goal in a relatively short amount of time, since nearly all cryptocurrencies share the Satoshi codebase.
Who Is Behind It
Joachim de Koning is the founder of the IoC, with Robert de Groot as co-founder. A number of others are also involved, including a financial consultant and a blockchain expert. Koning has a couple of known successes under his belt, including his still-primary duties to Metasync, a sort of general purpose cryptography and security services firm. He is also the inventor of the NetAidKit, a USB powered device which provides network security for both wired and wireless connections.
The two primary developers, Amadeus de Koning and Steffen Hoffmann have previously worked in the sphere, with de Koning’s development efforts still aimed at Metasync. Hoffman has worked on a Python-based client for Monero, which is not a Satoshi-based coin, as well as several other projects over several years. In short, it appears the development team, plus some hired help, are likely to have this project well in hand if given the greenlight.
How Hybrid Assets Work
According to the IoC whitepaper, hybrid assets are to be issued across blockchains involved in a transaction. Tradeable assets on the Internet of Coins can have inherent value by either destroying coins from other chains or providing proof of stake in a given blockchain, to whit:
The asset may gain a form of inherent value if its issuer decides to prove the asset’s contextual value by either proof-of-burn or proof-of-stake. Asset holders on the hybrid network have either issued the asset themselves, or have obtained it on a decentralized asset exchange. Our proposed network daemon (hybridd) ’glues’ cryptoassets and coins together by passing around datasets or tables – utilizing a FIFO (first-in-first-out) blockstream for sharing and verifying data – that contain identification information about each invidual blockchain-based asset, and rulesets that govern their relationship to form a hybrid asset.
What this is meant to amount to in practice is that upon entering the IoC, a trader first creates (or acquires) an asset that is agnostic of the blockchain he intends to use, and then has the option to assign it an inherent value. Then he can proceed to seamlessly trade it for other assets on the IoC. When another person takes the trade, the coins are transferred to them on the other chain. Like Cosmos, this gets a bit complex if you are not a blockchain architect like the authors of the whitepaper.
The IoC blockchain itself is based on proof-of-allocation, and its biggest job is to maintain a running ledger/table of such allocations already made. Proof-of-allocation involves a type of escrow in the form of nodes which “have allocated a certain amount of assets or coins to be used for interblockchain transactions.”
These nodes work by processing the information of the trade and swapping private/public keys, thereby creating multi-signature transaction keys for the movement initiator to then use as access keys to the funds in question. The code for a hybrid asset already exists, and is available here.
Where The Rubber Meets The Road
So far, peer-to-peer trading already has a number of analog methods that aptly do the job outlined here, but they are not efficient, nor instant, and still rely on the third-party in the form of a third-party holding the escrow. Thus, there must be something gluing all this together. This is covered in the white paper as well, describing a meta server that can unite most or all cryptocurrencies at the highest possible level – and at this highest possible level, it becomes ever more feasible to integrate with the legacy financial system.
IoC also takes privacy concerns seriously, and intends to integrate various obfuscated communications networks such as Tor from the outset while also sending the data itself encrypted. Part of the reason for this move is that, while governments have been struggling to regulate the exchanges, they will be even more interested in regulating a technology that will eliminate the need for third-party exchanges/middlemen. By making it incredibly difficult (maybe impossible) to successfully identify the parties in a trade over IoC, IoC could take all of cryptocurrency to the next level by making it that much more invincible to government intervention.
As earlier mentioned, IoC has within nodes that allocate funds on the network. These nodes are incentivized by receiving a .1-.2% fee of the transfer – almost unnoticeable to the trader, especially by comparison to current methods, not to mention network fees that occur during traditional trading. Unlike Cosmos, allocators do not own a currency-agnostic token, but rather a hybrid token representing exactly the value they are capable of moving. A more specific value vehicle, rather than a general purpose one to feed the network.
Knowing all of this, it’s time for brass tacks. The crowdsale is for a multi-blockchain asset called the Hybrid. Hybrids are purchaseable in the following ways: Bitcoin, Ethereum, CounterParty, NXT Platform, New Economy Movement, Waves Platform, and Bitshares. The current cost is around $1.50 each. These assets can be traded like any others on those networks. Each network will be issued a million tokens, but 100,000 will be doled out over the first three years of the project to the investors. This is an incentive for them to propel the platform forward, so that their hybrids are worth more. They won’t be available except through the crowdsale, however, until launch.
The funds raised will go toward the development of the IoC. The team has an extremely clear roadmap:
That they are directly selling the tokens in order to fund exchange, and being upfront about that, rather than simply skimming them off the top while selling the rest as well, is also a much healthier sign than we see in some other crowdsale models.
With such a clear plan, experienced team, and the like, it’s impossible not to recommend IoC as a good play. Out of 10, with Apple in 2006 being 10, we can safely give IoC a 5.6 compared to Cosmos’ 4.8. It seems that due to the ongoing revenue of Metasync and NetAidKit, Joachim de Koning could keep the project in motion even if the crowdsale fell flat on its face.
The same warnings still apply regarding the budding market, however. It would be unwise, if you’re looking to move into blockchain 2.0 investments, to only put eggs into the basket of IoC. Rather, you should continue researching and smartly invest in several of the options that are coming to fruition. If you feel as strongly as this writer does after some research that this thing is going to take off, then perhaps make a bigger bet than others. We must keep in mind that with each new idea and new contender, previous ideas will be integrated and new ones developed, to the point of possibly creating a better mousetrap than even the Internet of Coins.
You have until June 21st to make a decision. If you decide to wait until then, you will pay up to $2 per hybrid. There’s not a lot of difference in trying to recover $1.50 and $2, so take your time in doing your own research before making a play here.