These days, most people are familiar with the act of accepting a friend request on a social network. We rarely pause to consider that the integrity of our experience in the system depends on this simple function. When we accept a friend request, we are verifying that this digital identity represents the real individual it claims to be, and as such we accept that all information we choose to exchange with this digital identity is authorized. Aeternity believes that a similar process is required to simplify identity management for the digital exchange of value. If you have ever attempted to introduce a non-techie to cryptocurrencies, you will understand why. The hexadecimal addresses we commonly use as unique identifiers are not user-friendly. They are functional, but unfamiliar and daunting for many people. Aeternity is building a scalable, Erlang-based blockchain, which will be deployed with a ‘mobile-first’ strategy. It’s essential that all users can transact with ease and confidence, so they have developed an identity management ‘aepp’ that serves a similar function to the friend request in social networks. It enables users to establish a list of verified contacts, which they can then exchange value with, as effortlessly as exchanging information via text message. This is a prime example of the interface innovations that have been lacking in the cryptosphere. Aeternity is determined to solve ease-of-use problems and realize the global, mainstream potential of cryptocurrency.
Global scalability has been the Achilles heel of blockchain technology for several years, but solutions have arrived. These solutions include sharding, side chains, state-channels, second-layer networks of payment nodes, and several variations and combinations of these concepts. Aeternity’s blockchain will support state-channels, which solves the scalability problem by incentivizing the settlement of transactions off-chain. This is a beautiful solution because it offers many benefits to end-users, with a comparatively simple and reliable implementation. Users can setup a state-channel and sign a smart contract that will determine the rules for execution of transactions in that state-channel. If both parties execute in line with the terms of the smart contract and neither party disputes the outcome, then the the only transactions that would ever be verified on the blockchain are the initial input and final output transactions to setup and close down the state channel. Bear in mind that state channels can remain active between friends, partners or businesses for years at a time. If one party in the state-channel disputes a transaction, then the smart contract is settled by the blockchain. This is comparatively expensive, so both parties are incentivized to settle off-chain in the state channel. It’s common to hear proponents of various new blockchains comparing theoretical or tested transactions per second throughput these days. The throughput of transactions inside a state-channel is theoretically unlimited. The speed is only bound by the bandwidth between the parties participating in the state-channel. The Aeternity network will involve transaction fees, but fees for transactions in state channels will be dramatically lower than for blockchain verified transactions.
So how might you use state-channels in your everyday life? As an individual, you may setup payment channels initially with friends and family; for instant, low cost payments from the convenience of your smart phone. As a business, you may set up multiple payment channels with business partners that are automatically settled once a month on the blockchain. The Aeternity blockchain will also include integrated support for oracles, to enable automated settlement of smart contracts using real world data. Business could automate transactions based on the weather, the price of commodities, financial derivatives, or sports results. For example, if you are a fantasy football fan, you may find yourself playing a fantasy football mobile aepp on the Aeternity platform in the near future. All players must sign the smart contract in the state-channel in order to participate, and they must pay an entry fee from which the prizes will be aggregated. Transactions within the state-channel will be determined by real-world match results and player stats, provided by a set of trusted oracles. Transactions will be instantaneous and low cost, and any disputes can be settled by the blockchain. The Aeternity testnet is live now and the mainnet is on schedule to launch in Q2 2018. A vibrant community of developers and enthusiasts is building a suite of next generation aepps that will power the crypto-economy of the future. An aeternity of possibilities is just around the corner.
Disclosure: I have been a active support and investor in Aeternity since the ICO.
Competition Article written by murt9000