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With the recent surge in Bitcoin’s price, the public is getting more and more divided as to its future. Is it a bubble that’s going to pop at some point or is it going to get widely adopted? Will it leave millions of people with broken dreams and terrible financial losses or is it going to replace traditional currencies?
Even the most renowned and experienced players in the financial markets are getting confused and changing their opinion on this issue. While this debate is getting the most attention in the crypto-world, there are more things happening that aren’t getting as much spotlight. For example, more than 1000 teams are now working on their own blockchain-based cryptocurrencies. They are all aimed at revolutionizing how we do financial transactions, data storage, healthcare, computations, communication, and much more. Today we are going to take a closer look at two of them to see how they can improve our lives.
One of the main drawbacks of Bitcoin is its lack of anonymity. If you have a computer that’s powerful enough, you can trace back every transaction ever recorded, and e.g. calculate how much money every wallet holds. NAV Coin is a cryptocurrency which prevents that by enabling private money transfers. It also aims at becoming a default method of transferring money with fast transaction times and low fees. A single operation takes 30 seconds and costs 0.01% NAV or 5 minutes for 0.5% NAV if you opt for a private transfer.
How NAV Coin works
At its foundation, NAV Coin makes use of the 2048-bit version of the RSA algorithm capable of scaling up to 4096-bit with ease. It has been widely studied, tested, used, and not broken since its inception in 1977. This is the main factor that differentiates this currency from its main competitors like Monero and ZCash who opted for creating their own solutions (CryptoNote and zk-Snark respectively) which are fairly new and not tested nearly as much.
To make transactions truly anonymous, NAV Coin became the first cryptocurrency to operate on a dual blockchain — the additional one breaks the connection between a sender and a receiver as stated in their white paper:
The main technique that we have employed is to use a second blockchain we call the Subchain.
Instead of sending NAV directly to the receiver, the wallet encrypts the receiver’s address and sends the transaction to one of the addresses provided by the randomly selected processing server. When this server receives this transaction, it creates a transaction of arbitrary size on the Subchain which it sends it a randomly selected outgoing server.
This Subchain transaction has the receiver’s address and the amount of NAV to send encrypted and attached to it. When the outgoing server receives the Subchain transaction, it decrypts the data, randomizes the transaction amounts and sends the NAV to their intended recipient from a preloaded pool of NAV that is waiting on the outgoing server.
After the outgoing server has sent out the randomized NAV to the intended recipient, the incoming server will join together any NAV which has been processed and on the next transaction cycle send it to the outgoing server to replenish the preloaded pool of NAV for future transactions.
The consequence of this is that we have broken the transactional link between sender and receiver on the Nav Coin blockchain by routing the transaction information through the Subchain. The NAV sent to the recipient are not in any way connected to the NAV that are received.
Moreover, the NAV Coin team wrote a detailed article about how anonymous transactions work under the hood.
NAV Coin's roadmap
The NAV Coin team is currently working on a number of improvements to their cryptocurrency, e.g. further simplifying and securing the wallet and the transactions, cold staking, or enabling people to build Anonymous Decentralized Apps on top of the existing dual blockchain system. However, the most game-changing feature might be the NavTech Polymorph. It’s a partnership with Changelly exchange that will allow people to use NAV Coin’s dual blockchain system to perform anonymous transfers using any cryptocurrency supported by the Changelly platform (at the moment there are over 80 of them). Users will be able to make private and anonymous transactions also using currencies that do not support privacy by themselves. Moreover, coins can be exchanged on the fly which means that you can anonymously send someone e.g. Bitcoins on their Litecoin wallet.
Most of the world’s wealth is stored electronically — financial records, real-estate records, medical records, etc. However, they are being kept in centralized databases so we have to trust somebody to store them, and also they can be hacked (and they have been multiple times this year alone). Factom is a collaborative platform to preserve, ensure, and validate digital assets that aim at resolving these problems. It places data in its own structures, which are shared and secured over a distributed hash table (much like torrent files).
It enables people and businesses to use a mathematically provable “notarization” service. It also has built-in layers of redundant security that other blockchains do not offer. The Factom Blockchain anchors itself into the Bitcoin blockchain (and others) to take advantage of the security of Bitcoin’s hash rate. The layering effect of security ensures the immutability of its blocks.
Factom is most easily understood as a protocol that provides unlimited books of blank paper. Users of the protocol can take a book, label it with the title of their choice, open the book, and write on a page. When that page is submitted to Factom it cannot be altered or deleted. Nobody can back-date a page. All the data written into the book is preserved in the order it was presented to the Factom protocol.
Factom guarantees security of the records by three different methods:
- Proof of publication — the existence of each entry in the chain can be proven
- Proof of process — all of the entries are grouped in a chain which enables their enumeration, examining the order and validity
- Proof of audit — the chain is immutable, so it can be presented and examined at any time and documents behind it can be independently validated against the chain
Factom use cases
During an interview Factom’s CEO Paul Snow described three major use cases that are already being implemented thanks to partnerships with the Department of Homeland Security and the Gates Foundation:
1. We are working with the DHS [Department of Homeland Security] to provide audit trails for data collection on U.S. borders. Certainly, our technology will ensure sensors are secure against those that would tamper with them. Our technology will also provide audit trails that ensure other parties that the data collected is properly disclosed when required, the integrity has been maintained, and that data held back as irrelevant is provably irrelevant (not collected within some timeframe, or at some location).
2. We are working with the Gates Foundation to ensure medical records are maintained, and available to parties providing care in developing countries to individuals that may have been treated by many different organisations in the past. This application has to be available when needed, transportable to remote locations without Internet access, secure, private, and require little in hardware and human resources.
3. We are working on data management applications to ensure that mortgages can be processed faster, cheaper, and within the current regulatory framework. This involves auditing and tracking data collection from many different parties over time about information covering every aspect of a mortgage. Income verification, property history and maintenance, taxes paid/owed, payment histories, property surveys, zoning, etc., all produce many documents that must be reviewed in the course of issuing and maintaining a mortgage.
The third use case would have been particularly useful during the 2008 housing crisis when banks were buying each other and had to merge huge amounts of data which resulted in thousands of documents being lost. That alone cost banks billions but can be easily prevented in the future thanks to Factom. At the time of writing this article, there are over 140 mln records, 11 mln entries, and 110,000 anchors on the Bitcoin’s blockchain which shows that it’s already being used heavily.
How Factom works
Factom created two types of cryptocurrency. The first one, Entry Credits, is used to pay for the data stored on the blockchain (1kb = 1EC) and can be exchanged only for the second one — Factoids, as it is not publicly traded on any exchange. The Factoid, on the other hand, is more traditional (if you can say it about any cryptocurrency) — coins are being used to secure and maintain the blockchain. The exchange rate between the two coins varies to maintain the price of 1 EC at $0.0001.
The process of adding data to the system consists of 10 minute-long blocks. At the beginning of each minute, every server takes responsibility for a subsection of the existing chains. When a user submits their entry to the system, one of the servers adds it at the end of the appropriate chain (to speed up the process of searching for the requested entry, they are grouped in chains so that when you’re looking for a particular one, you have to only search through the entries that relate to the requested one in some way).
After that, all of the servers validate the new state and add the new entry to their copies of chains. At the end of the minute, all servers confirm that they hold the same data and reveal a deterministic secret number (Reverse Hash which is a successive pre-image of a long hash chain). The collection of Reverse Hashes are then combined to create a seed to reassign responsibility for chains among the servers for the next minute.
This process is then repeated 10 times. After the 10th minute ends, the system randomly selects the server that is going to write the anchor into the Bitcoin blockchain by performing a transaction that stores all the needed hashes.
As we can see from the two examples provided above, blockchain and cryptocurrency can resolve many real-world problems. These are only a few of the most interesting projects involving blockchain. It’s still a very fresh and quickly evolving technology, so it’s very likely that in the future we’re going to see many innovative applications that no one even thought of yet.
Continue reading about altcoins in the second part of this article