Terence Zimwara
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Multi-asset blockchain enables exchange of
crypto assets across separate blockchains without intermediaries
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User satisfaction determining balance of rewards
between service providers and computing power providers.
Kuva, a crypto start up inspired by monetary history in
Africa recently released a technical whitepaper for its blockchain kNET. The
whitepaper release marks the beginning of an economic and monetary operating
system, driven by users’ satisfaction. It is also the culmination of a two year
effort by the Kuva team to create a scalable crypto-currency for Africa and
indeed the world.
Functionally, Kuva’s native blockchain, kNET allows
crypto-currency users to switch between different currencies, both digital and
fiat without intermediaries as well as enabling users to pay for various
services.
At a protocol level, the kNET Blockchain attempts to
incorporate end user satisfaction into its governance protocols. In a
statement, Kuva outlined what it terms a third generation Blockchain
technology, with world first utility, scalability and user governance.
Kuva Director of Strategy, Andreiko Kerdemelidis said:
“The Kuva team has worked hard to address challenges seen in
the first generation Blockchain, the Bitcoin Blockchain. Bitcoin has shown its
resilience and utility as a store value over the past 10 years but its noble
consensus protocol has made it difficult to implement enhancements that can
help drive user adoption. Bitcoin consensus protocol has in effect become its
Achilles heel.”
According to the Kuva whitepaper, statically decentralized,
consensus-driven, trustless networks like that of Bitcoin, are a Gordian knot;
the same security that enforces their protocol and keeps users safe is also
their weakness. These protocols can only change with the majority agreement of
those who provide the resources to sustain the network, with the unintended
effect that these protocols rapidly harden and become unchangeable to the
detriment of end users.
For instance, it has not been possible to get miners’
consensus on controversial issues like increasing the block size. Increasing
the block size (a part of the protocol where transactions are processed and
stored) enhances the scalability of Bitcoin.
However, for miners, a smaller block size means limited space or a
scarce resource which can be exploited to extract a premium on the fees paid by
those who want quick confirmation of their transactions.
The result is that Bitcoin which was launched with a vision
as a universal “peer-to-peer electronic cash system”, has now settled
permanently to be a form of ‘digital gold’ rather than ‘digital cash.’ Bitcoin
is effectively unusable for making day-to-day small-value purchases due to the cost
of transacting which grows every time the cryptos’ value increases.
Some Bitcoin supporters believe addressing this scaling
challenge will be vital in facilitating the next wave of its adoption. As it stands now, Bitcoin remains stuck at a
block size of just 1MB, smaller than a typical photograph taken on a modern
smartphone and this happens despite Bitcoin’s specialised computing power which
exceeds capability of every single supercomputer on Earth put together!
User ratings in
governance
Bitcoin proponents and opponents alike do acknowledge the
effect of this challenge (block size) in slowing the biggest cryptocurrency
from achieving its goal of creating a true alternative to fiat money as well as
advancing the financial inclusion cause.
So in order to avoid falling into the same trap, Kuva has
conceived that by involving end users—the true economic majority—in the
governance process, the chances of a Blockchain’s ability to scale and get
adoption are greatly enhanced.
Kuva believes it will achieve this by incorporating
governance protocols that are intended to progress the network toward a
‘dynamically decentralized’ system with a representative strategic governance
that balances the incentives for service providers and infrastructure
providers, based on the satisfaction of end users. This point is appreciated
when one observes the progression (or lack thereof) as well as the trends
observed in pioneering Blockchains. A pertinent example is crypto mining.
A few years ago, some
mining pools in Bitcoin gained over 40% of the hashing power in the network, a
phenomenon that raised concerns with stakeholders. These major pool oligarchies
are reported to have backed off from the 50% mark ‘voluntarily’ in order to
preserve confidence in the system.
To pre-empt something similar to this from happening, the
kNET whitepaper is proposing what it terms a strategy and governance for the
network to be shared between collateralized Licensed Service Providers (LSP)
and network infrastructure operators; the Masternodes and Masterminers.
Importantly, this complex protocol allows the public or a
third-party organization to submit ‘Strategic Governance Proposals’ for voting.
Collateralized stakeholders will post a vote on a submitted proposal. In other
words, Kuva users will be able to influence changes or the direction of further
development of the network and protocol.
Solving the exchange
dilemma
Meanwhile, the whitepaper touches on what it terms Chainbond
Protected Swaps (CPS) or simply put, a two party exchange between
crypto-currency assets across separate crypto networks. This allows the
seamless exchange between crypto-currencies like Bitcoin and Ethereum without
the involvement of an exchange as is currently the convention.
This is a potential game changer as users will not have to
briefly relinquish control of their private keys each time they want to swap
assets. Even better, they will not have to store funds with exchanges which
historically, have been vulnerable to hacking.
Sometimes a person in African who wants to buy digital currency
often has to spend time looking for a seller because there are no formal and
locally domiciled exchanges operating.
This is ironic, as the strongest use cases for alternatives to
government issued money are in developing countries. Chainbond Protected Swaps
address an area that is presently hindering many potential users from adopting
crypto-currencies.
James Saruchera, Chief Executive of Kuva said, “CPS will
enable direct, trustless exchange between ordinary people where crypto is
needed the most.”
kNet’s ability to allow trustless exchange across
blockchains and user centricity, are attributes that may position it as the
final missing piece in the crypto puzzle.
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