We started distributing CrowdstartCoins during the Gdansk IOTA hackathon in November this year. Each member of the three winning groups received their XSC, as CrowdstartCoins are abbreviated.
Since then we have been asked what the value of a CrowdstartCoin is. As of this writing, the value of 1 CrowdstartCoin is 0. XSC is listed on EtherDelta, a decentralized cryptoexchange, and it has been traded once – but that was a test trade in order to check whether everything is working fine.
348 Developers Rewarded With CrowdstartCoins
During the first weeks of distributing CrowdstartCoins, we have focused on rewarding developers who have added valuable code to the blockchain ecosystem. We have started to send XSC to IOTA and Ethereum developers. Other blockchain technologies will follow. As of this writing, 348 developers have received their CrowdstartCoins. Considering the very reason why we created Crowdstart Capital – namely to incentivize the future development of the blockchain ecosustem at-large, and to grow the number of developers committing code – 348 developers is quite a big number.
In the first phase, the distribution of CrowdstartCoins will be at the discretion of the Crowdstart team. In the second phase, we will set up a smart-contract-based system that will pay out CrowdstartCoins according to the accepted commits. We will programmatically monitor the git repos of major projects. In the third phase, members of the blockchain community will be able to suggest projects to be included in the incentive scheme, a model known as liquid feedback. Token-based ballots will be used to enable community voting and determine which blockchain projects should be included.
CrowdstartCoin might be worth $1-$10
Now you might ask, why do we put all this energy into CrowdstartCoins when they have 0 value? The answer is simple: We expect CrowdstartCoin’s value to rise as soon as a certain threshold of coin holders has been reached and somebody starts trading her CrowdstartCoins. We haven’t communicated our expectations regarding the value of CrowdstartCoins, yet. However, when deciding upon the number of distributed CrowdstartCoins relative to the code committed to the blockchain ecosystem, we expect a CrowdstartCoin rise in value to anywhere between $1-$10, probably within the next 12 months.
Not being in possession of the crystal ball, we could be dead wrong. Since there is no reliable method of forecasting the value of a new currency, and especially one that is not backed by any kind of asset, such as gold, the US-Dollar, etc., we base our assumption on the combined anticipated circulation supply and the expectations of blockchain developers regarding their fair remuneration when committing blockchain code.
The essence of CrowdstartCoin is to reward developers for their work. In the good tradition of Jean-Baptiste Say, we think developers will figure out the right price of a CrowdstartCoin themselves, trading the coins. Despite having some flaws, over the long run Say’s law is largely true.
We certainly don’t expect CrowdstartCoin to repeat Bitcoin’s history. But, 10,000 Bitcoins buying 2 pizzas in 2010 is a story too good not to recall!
We want blockchain technology to live up to its original concept: being and staying an open, free technology. We want to prevent blockchain technology from the fate of the internet, being corrupted by lobby groups who succeeded in persuading the U.S. government to abolish net neutrality in December 2017.
For millennia, sovereignty defined currency. Governments created curency and the currency allowed a government to execute its monopolistic control. Now, people create currency. And since currency creates sovereignty, the former equation has been inversed: economic freedom is no longer dependent on governments but can be exerted in a trans-national, self-determined way.
Blockchain developers of all sorts, be it Bitcoin maximalists, Ethereum proponents, IOTA tangle enthusiasts, Stellar developers or active supporters of currencies such as Monero, Dash, etc, – all of them will be awarded CrowdstartCoins for committing valuable code. Two weeks after having issued the first CrowdstartCoins to developers participating at the IOTA hackathon in Gdansk, CrowdstartCoins have been distibuted to over 125 developers, most of them working on IOTA and Ethereum.
CrowdstartCoin can become the currency of choice for all those who work on blockchain technology. When CrowdstartCoin is widely adopted in and used by the Blockchain community, its value supports the future development and the evolution of the Blockchain ecosystem at-large.
If you’re a developer who committed code to advance Blockchain technology at-large, you’ll be eligible to receive CrowdstartCoins. You can request CrowdstartCoins by filling out the Developer Incentive Program: Claim XSC Rewards form.
On December 6, 2017, game company and distributor Valve announced that its gaming platform Steam is no longer accepting Bitcoin as a payment method. The company explained that Bitcoin transaction fees have gone up to nearly $20 per transaction last week, “compared to roughly $0.20 when we initially enabled Bitcoin.”
At the same time, CryptoKitties burned up 15% of Ethereum’s gas, causing a mid-level congestion and increasing in-game fees.
Since we have been working on some ICO projects over the last months, focusing on cryptoeconomics and token design, we felt the need for a model that would allow a high-yield return for investors on the one hand, whilst guaranteeing the stability and a proper functioning of the specific application(s) at the same time.
Two Token Model TTM Thesis Decentralized networks need a token model that
guarantees a stable cryptoeconomic mechanism to exchange assets, services, time and money between peers, and, at the same time,
allows investors to reap large economic benefits, and, therefore
allows an overall story of combining a cooperative/post-capitalist model with a pure capitalist play by technically separating both aspects through the representation of two dedicated tokens.
A) Two-Token Model
The network features 2 different types of tokens:
a) a core token (CT) that is tradable at crypto-exchanges,
b) an application token (AT) (per application)
CT The only function of the CT is that of a currency. In all of the network’s potential applications, there is one overarching CT.
AT The AT is designed depending on the respective application’s requirements. It is the only token that allows the usage of the respective application. It is not listed at any exchange. Potential listings of ATs probably could not be prevented technically, but by regulation: The network defines the listing of AT’s as not allowed and will exclude applications that behave otherwise. Organizers of applications that already have a token will be offered to exchange their tokens for AT. Additionally, they can be awarded CT depending on their applications’ asset values.
B) Token Issuance Mechanism
Initially, there will be two events that happen at the same time:
SAFT of CT to (accredited) investors
One-time distribution of (free) AT to interested potential network application users (comparable to a basic income)
The Token Story
A (revenue-driven, high-yield) SAFT will finance the development of the network and serve as the initial AT supply of the network. Within the first applications running, AT holders can earn additional AT, and, directly derived from that, additional CT. The intensity of use and supply of AT represents the intrinsic value of a CT.
This model of a clear, technical separation into – and combination of – a speculative and an application part should serve the initially conflicting interests of both categories of the network‘s stakeholders: the potentially application-interested majority of AT holders and the potentially solely commercially driven and high-yield-driven investors who hold and trade the CT.
Every app token holder (ATH) will receive CT’s additionally to their AT’s, if the intensity of use of the application reaches a certain threshold. As long as the intensity of use is above this threshold, the ATH will receive additional CT’s, scaling with their intensity of use. When the intensity of use sinks below the threshold, there will be no CT’s awarded further on.
Definition of Intensity of Use IoU Criteria
As mentioned, ATH are being rewarded CT depending on their intensities of use of the application(s). There are several aspects of defining an “intensity of use (IoU)” in a good way. First, an ATH could use a specific application very frequently. This could add to her IoU. Then, the ATH could move huge assets within an application. Again, this could add to her IoU. Further on, an ATH could use an application in a way that leads to a higher IoU of another application. This would lead to trans-application elements of the IoU’s algorithm. Then, there are further aspects, s.a. hoarding/inflation, etc..
The definition of the IoU algorithm is one key aspect of this token model. On the one hand, it seemingly is the most complex problem to solve for the network. On the other hand it offers the opportunity to create one single algorithm that is completely variable in design and can be tweaked throughout the lifespan of the network without any need for changing the structure.
Due to the fact that the AT is not tradable, and the IoU algorithm prevents the ATH from hoarding and other unintended use, it can be regarded as stable.
The CT, in turn, is a tradable token that entails no other rights than being exchangeable with other currencies. The prize of the CT will be defined by market forces alone. This pure market-driven nature of the CT, combined with the value(s) of ATs, makes the network’s model highly attractive for application-focused users, as well as for investors.
We have intensely discussed the TTM within our network, and we have not found severe weaknesses that could prove to become showstoppers. However, we invite you to prove otherwise! Please provide us with your feedback on TTM – thank you!
From the early days of capitalism, when from 1633 the Hollandische Mercurius referred to capitalists as the owners of capital, on to David Ricardo who, in his Principles of Political Economy and Taxation is seen as the one who actually coined the term capitalism, until today: the structure and behavior of the enterprise as the main capitalist entity, hasn’t changed that much. With the advent of blockchain technology, the evolution of the enterprise could pick up pace, dramatically.
An enterprise can be defined as the largest participant of an economic system with an ideology based on – in most cases – private ownership of the means of production and their operation for profit. In the early days, the owners of an enterprise would manage its operations themselves. With the advent of the public corporation, ownership and management were separated from each other: in most cases, the owners did not participate in the management of the company but delegated this to employed executives. With this separation of ownership and management, and a trend towards larger entities with hundreds to thousands, to hundreds of thousands of employees, enterprises had to be structured in a way that would enable a proper management and controlling. In democratic countries, there are specific sets of regulations and laws that provide the framework for owners’ and managers’ scopes of action.
The Enterprise As An Institution
Throughout the history of capitalism, enterprises have been regarded as stand-alone, singular entities, existing because of the product and service portfolios they would offer to the market. Aspects of enterprises’ interdependencies and connections with their environments played a minor role: one of the better known examples of this is James Buchanan’s Public Choice theory that describes people’s decision-making process within the political realm. When, with the Industrial Revolution, people became aware of the significant external effects enterprises could have not only on the lives of their employees but on the environment, etc., something changed within the enterprises: owners and managers started wondering how they could address their enterprises overall impact on the outside world.
Another aspect that made managers think of the interdependency of their company with others, was marketing. Companies discovered that it wasn’t enough to produce high-quality products – they had to tell potential customers about it and even had to compete with other companies offering similar products.
The Enterprise As A Platform
Acknowledging external impacts of enterprises and the shift from supply-side to demand-side driven markets mark a clear behavioral change for enterprises: trade unions, environmental regulations, but also purely economic aspects, such as just-in-time production or supply chain optimization, all have led to a new kind of enterprise – evolving from institutional constructs into a platform, acting as hubs mainly responsible for organizing a network of partners making sure a final product will be presented to the customer.
The enterprise as a platform: these days, most companies would be happy being regarded as a platform. After all, that propels them into the top ranks of the innovative minority according to Accenture, Bain and other consultancies.
And yet, the platform enterprise isn’t state-of-the-art.
Platforms may offer many positive aspects but they lack all advantages of a decentralized, trustless system, such as a blockchain protocol. Apple, Tencent, Siemens, or other giant platforms are centralistic structures that are successful as long as each platform partner plays along: as soon as one entity in the supply chain fails, the product can’t be delivered on time or with a certain quality. Costs of managing and controlling the platform processes itselves have become immense. In the event of an external irregularity, e.g. an activist group’s protest on the basis of an alleged misbehaviour, followed by a consumer boycott, could force even market leaders to halt the production process or even to discontinue a product line. Platforms are highly sensitive against irregularities because of their centralistic architecture.
The Enterprise As A Protocol
There is a cure for this sensitivity: if platform enterprises improve themselves further and evolve into protocols, they become resilient against internal as well as external attacks and they can regain what most of today’s companies have continuously lost in the past years: credibility and trust in the eyes of consumers. A protocol can be described as a defined set of rules and regulations that determine how data is transmitted in networks. A blockchain protocol is a decentralized database and ledger that allows all participants of the network to work with the identical, consistent data set at any time.
Convergence: Blockchain + Smart Technologies
A protocol enterprise uses blockchain technology to share the database and its additional, external intelligence, such as AI, autonomous machines, VR or AR, to collaboratively manage and control a supply chain process. The system is completely decentralized, featuring automated processes in line with a set of rules and regulations all participants have agreed on – the governance model. A liquid feedback mechanism ensures that all participants have the ability to participate in the network’s opinion making process. Depending on the intended level of openness, either selected third parties or the general public may also join the network. In the first case, a private, permissioned blockchain would allow a pre-defined group of participants to join the network. If everybody should be granted access to the network, a public blockchain would be used.
Cryptoeconomics & Token Design
Participants of blockchain networks need tokens to communicate or, more correctly, to transact on the blockchain. These tokens can take different shapes: they can represent a value store only, or they come with a set of instructions defining the so-called token design, or cryptoeconomics of the network. Cryptoeconomics describe the incentive mechanism that motivates participants to actively engage in the network.
In the same way, the token design is the regulatory framework for behaving within the network, it’s the (re-)presentation of each participant’s behaviour and value system. In other words: the token is the representation of the brand equity of the network’s or protocol’s participants. Customer perception will be created through the design and use of the blockchain network tokens. Since all transactions in a blockchain are immutable and, therefore, represent an accurate, consistent history, all actions of a protocol enterprise are open for scrutiny by third parties, s.a. auditors, or the general public, i.e. (potential) customers. CEOs of protocol enterprises won’t have to fear misleading accusations by activist groups. However, they have to be aware that omniscient auditors or customers form their opinions on the company on the basis of a complete behavioral history. Bad times for fraudsters!
A Tokenised Economy
It presumably will take years, if not decades, for existing enterprises to evolve in protocols. Also, many of today’s platforms will not join this evolution and will remain platforms or even morph back into institutions before the end of their business cycle. But for a new breed of contenders, blockchain technology provides the basis for a tokenised product offering already today. These vendors won’t necessarily regarded as enterprises in the first phase, but they might take over the role of today’s market leaders. The key aspect of a tokenised economy is the token representing the behaviour and values, or, the brand equity, of market participants.
Blockchain technology is still in its infancy: most systems are not enterprise-ready, yet. However, the decentralized and open nature of blockchains provide the basis for a market penetration in an insane mode . Bitcoin, the first blockchain protocol, has evolved into the world’s 6th largest currency by circulation according to the Bank for International Settlements. The figure is based on a value of bitcoin at $10,765 each, meaning that the total value of all bitcoins in circulation is $180 bln. Bitcoin evolved into this widely used currency within nine years of existence – being the very first of its kind, initialising the category of cryptocurrencies.
Solarcoin, another cryptocurrency and token, was launched in 2014. It’s a global rewards program for solar electricity generation: 1 Solarcoin represents 1 MWh (megawatt hour) of solar electricity generation. Verified solar electricity producers, may get Solarcoins for free when participating in the network. 99% of Solarcoins will be given to solar electricity producers of 97,500 TWh (terrawatt hour) over 40 years. The creators of the Solarcoin foundation expect a market price of $30 per MWh in unregulated and unsubsidised markets. As of today, a Solarcoin costs $0.50 – so, there us a long way to go to reach a $30 price tag. However, at $0.50, Solarcoin has the third largest market capitalisation of all cryptocurrencies, reaching over $45 bln. Since renewable energies, especially solar power, cover more and more of the world’s energy consumption, we could expect the Solarcoin network becoming the or one of the main vendors within this space. And, what else is Solarcoin than a reasonably tokenised product offering?
For us, blockchain technology is more than a database and a ledger: it’s the basis of a tokenised economy. Done right, blockchain protocols not only allow new vendors enter a crowded market, their decentralized and open characteristics provide the tools for decentralized and open business models, such as (a renaissance of) cooperatives, collectives, etc.. Blockchain technology provides the tools – creators and entrepreneurs may now use them and start morphing centralized, vulnerable platform enterprises into decentralized, resilient protocols.
CrowdstartCoin (Ticker: XSC) is a digital currency rewarding blockchain developers.
Launched in December 2017, CrowdstartCoin presents the additional advantage of being a tangible virtual currency: in fact, by coupling each line of code committed to projects within the blockchain ecosystem to the production of a CrowdstartCoin, the virtual world joins our physical world. Put another way, CrowdstartCoin works as Reward Miles: any blockchain developer receives CrowdstartCoins for code that she adds to tye development of the blockchain ecosystem – and it’s free!
CrowdstartCoin has a social utility for its community: by rewarding a blockchain developer, CrowdstartCoin acts as an incentive, stimulating the development of the blockchain ecosystem worldwide. CrowdstartCoin is already distributed within three European countries and is intended to be circulated worldwide: any blockchain developer may apply and claim his CrowdstartCoins for free. To do so, the developer simply fills out this form online with data proving that she has committed code to the blockchain ecosystem.
3-Phase Incentive Scheme
The grant mechanism for delivering CrowdstartCoins is based on 3 phases:
In the first phase, CrowdstartCoins will be directly distributed to the active developer community, approached through blockchain conferences, meetups, forums, etc. Developers committing code to key blockchain projects can opt-in to receive CrowdstartCoins for free for code that has been accepted.
In the second phase, the distribution of CrowdstartCoins will be semi-automated by using a smart-contract-based system to pay out tokens according to the accepted commits. Technologies to be supported by these incentives include the core protocols of leading blockchains, e.g. Ethereum, IOTA, Monero, etc..
In the third phase, members of the community will be able to suggest projects to be rewarded with CrowdstartCoins. A liquid feedback model will be used to enable community voting and determine which blockchain projects should be included.
CrowdstartCoin therefore acts as an incentive for the future development of blockchain technology. Since 1 December, 2017, CrowdstartCoin is officially listed at the cryptoexchange EtherDelta, with the ticker symbol XSC.
We are very happy that, ten days after having issued the first XSC to IOTA developers at IOTA hackathon, in Gdansk, the tokens have been officially listed on EtherDelta! From today, blockchain developers can grow the value of their own token that serves as a reward for contributing to the evolution of the blockchain ecosystem!
The final decision has been made: We will not ICO with Crowdstart Capital. After having worked on the preparation of a token sale based out of Germany several months we’ve reached the conclusion that such an ICO is not advisable at this time.
Two issues have been the decisive factors: First, an ICO based out of Germany would have to be done in the environment of a legal limbo. Other project teams may decide to take the risk of selling a virtual currency to professional and/or individual investors in Germany but we’ve decided that the regulatory uncertainty and risk is too high. With our parent company Datarella, we have built a solid brand reputation within the blockchain ecosystem and we are not willing to put this at risk.
Second, we think that we can better meet our goal of contributing to the blockchain community by giving our Crowdstart Coins away. Instead of selling tokens to investors and using this cash to provide blockchain-based startups with consulting, services and solutions, we will reward Crowdstart Coins (XSC) to developers who add valuable code to the blockchain ecosystem.
We gained this insight to change our model while working on the cryptoeconomics; i.e. the inventive mechanism within a specific community. Finally, we have come up with a 3-step-process of distributing Crowdstart Coins – “XSC” – to the blockchain community:
In the first phase, we will distribute tokens to developers at conferences, events and hackathons. This activity will occur primarily in Europe and the distribution will be at the discretion of CSC. The goal of this phase is to get tokens into the hand of active developers and blockchain early adopters/enthusiasts.
Developers committing code to key blockchain projects can opt-in to receive XSC tokens for every line of code that is accepted for their respective projects. CSC will set up a smart-contract-based system that will pay out tokens according to the accepted commits. CSC will programmatically monitor the git repos of major projects.
In the third phase, members of the community will be able to suggest projects to be included in the incentive scheme, a model known as liquid feedback. Token-based ballots will be used to enable community voting and determine which blockchain projects should be included.
In this phase, we’ll also be rewarding developers to contribute to our code base. Essentially, over the course of the three phases of the incentive program, it should morph from being a mostly manual process to a fully automated process.
If you’re a developer who committed code to advance Blockchain technology at-large, you’ll be eligible to receive XSC tokens. You can request XSC by filling out the form:
The IOTA Hackathon took place from Nov 17 to Nov 19 in Gdansk, Poland. Software developers from all over Europe came together to put to test the IOTA Platform with various use cases. The event was sponsored by IOTA, Baltic Data Science (blockchain and big data service), Datarella (blockchain and big data consultancy) and Bright Inventions (mobile app development). Four teams of developers and software experts formed around various use cases and competed for 4,200 IOTA in prize money.
The team was joined by Bogdan Vacusta, who brought a real-life challenge from the London Council to the IOTA Hackathon. London Councils issue „Freedom Passes“ to disabled residents which allow them to use public transport within the city free of charge. Prior to the issuance of a Freedom Pass, one must obtain a doctor’s certificate to prove disability.
Unfortunately, scammers have successfully been photoshopping doctor’s certificates for perfectly healthy London residents. No one knows for sure how many Freedom Passes have been issued under false pretenses but the number is likely in the thousands. London Councils have no procedure in place to verify if a certificate has been faked. A simple alert, when one doctor has issued an unusually high number of certificates would be a huge step in successfully detecting fraud. This step alone could save the public tens of millions of Pounds per year with the help of IOTA.
The team’s task was to build a Proof of Concept (PoC) to prevent fraud. So, how can IOTA be used for fraud detection?
2. The Solution
The team decided to create a transaction from the doctor to the applicant, thus certifying the disability of the applicant on the IOTA Tangle. If an anomaly in the number of issued certificates of a doctor occurs, the system alerts the London Councils.
In an ideal scenario, the doctor would issue this digital certification from an app (mobile or web based), signing the transaction with her private key (this measure would actually help prevent fraud). Given the short timeframe at the IOTA Hackathon (less than 24h), the team chose to create sample data and to carry out the transaction on the doctor’s behalf for the PoC. A local database would be fed the details of the doctor and the applicant, as to identify them. So, the system for the PoC was to include the following components:
An input form for doctor and applicant data
An interface to the IOTA Tangle
A database with doctor and applicant data
A backend which analyses the data
A frontend for the London Councils with a list of alerts
3. The Process
Here’s is how it works:
1. Entering the data
The data is written to the local database. Simultaneously a transaction – symbolizing the disability certificate – from the doctor to the applicant is immutably written to the IOTA Tangle. The transaction ID is, in turn, written to the local database adding the ability to prove that the certification has taken place.
3. Analysis & Reporting
The backend analyses the data and alerts the officials in case of any anomalies. ie. (If one doctor has issued unusally many certificates within a certain time frame.)
What we learned
We completed our goal within the timeframe despite running into issues due to working with an immature system along the way. In the end, we managed to create a Proof of Concept perfectly suitable for the setting of the IOTA Hackathon.
We did run into a few issues along the way which must be addressed by the IOTA team in order to improve the system and make it fit for future use cases:
Speed of transactions: On the IOTA testnet we experienced long wait times when confirming transactions. Submitted transactions confirmed in ~1 minute, reading transactions took circa ~3-5 minutes or more depending on the amount of data. This may be a testnet issue independent of the mainnet.
The Documentation was not up to date, there was missing information and what documentation existed was somtimes misleading (i.e. Properties marked as optional are actually required, not obvious that a replayTransaction function creates a completely new transaction, sending message instead of transaction the sender is not documented on the tangle …)
Releases are not scheduled in advance, if an update is run during development, developers must adapt quickly to accommodate changes. A roadmap by IOTA for releases would be very helpful.
Node.js SDK is based on „callbacks“ (an old technology standard), not on „promises“ (current technology standard).
The API can easily be misused. Values and properties that shouldn’t be passed can go through without any error message. The API is missing descriptive error messages, leaving developers in the dark when it comes to hunting down bugs.
So, why IOTA?
Frist off, one might argue that this task could have been done with a regular database entirely. While this is true, a database is a lot easier to attack by hackers than a blockchain or tangle. Also, this kind of system could have been set up on a blockchain system s.a. Ethereum, why use IOTA? Well, the challenges blockchain systems are struggling to overcome are performance and scalability. Due to block sizes, transaction times constantly increase – thus making the systems less usable for scenarios in which transactions must happen near instantly.
IOTA helps to solve the problems of performance and speed of transactions. The team is in agreement that the IOTA Tangle and similar „non-block“ chain approaches are likely to be most feasible to enable scalability in future. Also, an application using IOTA can quite easily be transferred to related use cases.
Would the team recommend using IOTA for fraud prevention?
The answer is Yes, if the long term goal is to further develop IOTA in general. The answer is No, if the system should be used in a productive environment at this point, since it is still immature. Alternative systems which currently are more mature and could be used for the task include Hyperledger Fabric, Sovrin and Ethereum. These blockchain systems pose scalability issues in the future, whereas development here is also ongoing.
The IOTA application „Freedom Pass“ is very well scalable and transferable to related use cases. However, IOTA must undertake massive improvements regarding performance s.a. speed and documentation as well as for the API and SDK/node.js. If the above issues are continuously improved, the team recommends IOTA for further developing this kind of system for the public. IOTA promises future potential for the public for reconciliation of data, reduction of duplication, auditability, authentication.
This is the second installment in the posts about the experiences that Team Freedom made during the IOTA Hackathon. In the first post, Kira set the stage and explained the current issues of the London Freedom Pass. In this post, we’ll get a bit more detailed with regards to how we built the project.
DISCLAIMER: Even though the project is called „Fraud Detection“ the technological focus is very much on IOTA and not at all on machine learning-methodologies or data science, as one would commonly associate with fraud detection and prevention.
After we’d narrowed the scope down sufficiently to what we thought would be achievable during a hackathon, we started getting familiar with the IOTA tangle. We followed this tutorial for making a simple transaction, written only a few weeks earlier but already with some modifications required. After having gotten ourselves familiar with the general concepts of the Tangle (much accelerated by a presentation and Q&A by ChrisDukakis of IOTA) we connected to a testnet node and started issuing transactions.
Before we get into the details of the project, I’ll make a short comment about the decision whether to run a full node, the IOTA Reference Implementation (IRI) or to connect to pre-existing nodes. In short, to run the IRI, one needs a complete Java Runtime Environment, which is one of the reasons why IOTA can’t be run on an IoT device at this point. Each node connected to the tangle exposes an HTTP API through which transactions can be issued. To set up an instance of the IRI, one has to acquire the addresses of the already connected nodes in the tangle. The recommended way to do this is by asking people in the slack-channel #nodesharing. Because of the above restrictions and our requirements in time, we didn’t think it would be necessary to run our own node.
Register Doctor as a seed on the tangle
Register Applicant as a seed on the tangle
Perform a transaction for each certificate between the issuing Doctor to the Applicant.
Verify that a certificate was registered on the tangle given a Doctor and an Applicant
Read information off of the tangle about outgoing transactions from all Doctors
Given the above functionality, how could we leverage the existing IOTA library in the best way possible? Well, since smart contracts or most types of advanced transactions aren’t really possible on IOTA (yet), we will need some off-tangle processing, storage, and UI.
For this, we implemented a backend and some wrapping to process the information from the applications. The server-side was written using Node.JS and the express-framework. To model the logic and structure of the database, we used MongoDB and mongoose. The MongoDB contained a simple key-value store, saving relevant applicant information. One could imagine that is could be upgraded to a graph-model to better mirror the tangle structure and to be able to more efficiently analyze connections between Doctors and Applicants, however, that was out-of-scope during the ~30h of coding we had.
In order for the user to interact with the tangle in an easy way, we built a small web-frontend. It allows the user to enter information about an application such as the national insurance number of an Applicant, postal code of the Doctor and Applicant, phone numbers, etc. At this stage, four things need to happen: 1. The information is saved in the MongoDB-collection, 2. Seeds for the Applicant and Doctor are created based on an aggregate of identifying information, 3. New test tokens are generated and sent to the Doctor’s account and 4. An IOTA transaction is issued from the Doctor to the Applicant.
To save the information into a MongoDB-collection a controller instantiates and returns a new model containing the just entered data. It passes it on to the server.jswho handles the HTTP-requests from the client.
There is no dedicated IOTA API-call for generating seeds, but they do supply a command line command for generating a random seed. We made our seeds relatable to the private information by concatenating the private key with the national insurance number for the Applicants and the Doctor’s ID for the Doctors. After the seed was generated, a fresh address is created for each new transaction.
To make the functions from the iota.lib.js a bit more usable, we wrapped the existing callbacks-based structure in Promises. This allowed our code to become a bit more asynchronous than it is ‚out-of-the-box‘.
Here is an overview of the architecture:
Once the data and the transactions are issued, the next step is to provide a way of viewing the existing applications and certificates. So we created a second page of the UI for listing all applications with relevant information read from the MongoDB-collection. This doesn’t, however, provide such a great way of finding the main type of fraud that we were considering, namely Applicants reusing information about Doctors. This makes it look like a single Doctor issued an unreasonable amount of certificates. A pretty easy case to catch, one would think, but considering it is a completely analog process done by on paper in different boroughs by different administrators, it sums up to quite a large amount of faked applications. This is the type of fraud we focussed on in our processing.
So how can we in a user-friendly way flag cases that should be investigated? We chose the simplest option and created a second view of the UI where each Doctor in the system is listed along with the number of certificates they’ve, supposedly, issued. The list is sorted by the number of certificates issued. Here one could imagine making it a bit smarter by including the date the certificate was issued and creating a more differentiated metric of certificates per time unit, but it wasn’t in scope this time around. If a Doctor issued more than 10 certificates, they were highlighted in red. A very simple but potentially efficient way of communicating to the user that something needs to be investigated. Of course, the number 10 was completely arbitrary and could have been chosen differently. In fact, to decide that number, one would have to, first of all, analyze historical data.
To sum up, Team Freedom had a lot of fun and learned tons about IOTA, ideation, cooperation, and creation in a short time-frame. We managed to build a functioning Proof of Concept for how IOTA can be used for the secure issuing of medical certificates in order to prevent and detect fraud. The application to the Freedom Pass was done so that it would be easier to understand what was being done and why. But that does in no way mean that the base structure cannot be used for other purposes, in fact, it was written specifically to be general enough that it is also interesting in other areas.
Is this the only way that the problem could have been solved? No. Was it the easiest way of solving it? Absolutely not. However, we believe that only by experimenting and utilizing one of the few scalable and future-resistant distributed ledger solutions can we achieve applicability. There is, generally speaking, almost no distributed ledger application that could not have been done without the use of a distributed ledger, but it would have incurred great financial, organizational or trust costs. IOTA is a very cost-effective and scalable solution, but with the caveat that it is still in its infancy.
Here is an overview of all reports on the IOTA Hackathon’s projects:
This post by Joerg Blumtritt describes how blockchain technology supports decision making and voting mechanisms in processes called Liquid Democracy. These processes are the basis for Phase 3 of the CSC Blockchain Evolution Incentive Scheme.
Distributed consensus, realising consistency without central control, is one main achievement of the blockchain. From the beginning of the Internet revolution, there has been the discussion, whether our new forms of media and communication would lead to another revolution as well: a political one.
New forms of political participation are discussed, like Proxy-Voting or Liquid Democracy, which had been hardly conceivable without the infrastructure of the Web. However, all the digital forms of presenting, debating, and voting for policies all suffered from a serious flaw: Either there would be no secrecy of the vote, or the legitimacy of the ballot would not be accountable, due to the lack of provable uniqueness of transactions. The curse seemed to be either to vote in the open or make it impossible to decide if a person was indeed not voting multiple times.
Blockchain is built to heal this very problem, guaranteeing uniqueness of transactions even for totally anonymous participants. And Liquid Democracy, as I will discuss here, promises to deliver a versatile, efficient, and grassroots liberal form of decision making that complements the blockchain idea of consensus.
Politics today is often set equivalent to negotiating opinions in the parliaments, committees, or council. Representatives are given the mandate from the voters to represent their interests. Not everyone can be an expert in every field. To foster adequate decision making, lobbyism has become an integral part of the parliamentary system. First, this is industry associations and interest groups (the JICs, ethnic organisations, religious and cultural associations etc.) relaying their clients’ interests to the representatives by providing arguments. Furthermore there are those groups of experts that gather around certain topics, rather loosely connected compared with the industry associations. Those think-tanks are often initiated by politicians and are much less transparent regarding statutes or goals compared to the associations.
Liquid democracy> is a conceptual alternative to pork barrel politics and lobbyism. It is designed as a method for direct democracy, where voters not only ballot at the decisions but negotiate one with each other every step of forming a political opinion and building the “volonté générale”.
Liquid democracy is a form of proxy-voting. Participants have suffrage and are at the same time eligible, can thus better be called ‘actors’ than ‘voters’. Actors can issue initiatives for projects like laws, changes in laws, budget decisions, etc.
To start the process of decision making, actors formulate their proposal as a so called initiative. The initiative is uploaded to the decision making platform it to be reviewed and discussed. This step can be preceded by informal discussion going on before the actual upload. During this discussion-phase, the initiative’s author can still change the initiative and react to criticism and suggestions. After a fixed time span (the same for all initiatives on one topic), the initiative’s text is frozen and can no longer be changed. In this ‘frozen’-phase, the initiative has to gather support from other actors who openly and actively register as voters for this initiative. Also, alternatives to the initiative can be added to be decided at the same ballot. For each topic, there a quorum of minimum support can be set, and only initiatives which get above this threshold make it to the ballots.
All actors can delegate their vote to some other actor, who then may delegate her vote together with all votes delegated to her further on, thus forming chains of delegations. Delegation can be withdrawn and changed anytime until the deadline for the decision has passed.
Secrecy of the vote
Of course, if delegation is possible to anybody, it requires accountability who gets delegated how many votes. As soon as somebody passes on my delegation, I want to be sure about the possible consequences to have the possibility to decide to withdraw and re-delegate or vote to myself. Before the blockchain, it was at least debatable if computer-based voting systems in general should require full identification of the voters to the public to prevent fraud. With liquid democracy, however, it would become mandatory to disclose the identity of most voters. With the blockchain, it is finally possible to heal this. Delegations can be provably legitimate and transparent without requiring to vote fully in the open.
Presentation instead of representation
In more then 2000 years, from the beginning of the Greek democracy and the Roman republic, the representative system prevailed, in which people delegate their interests to someone to represent them. It is not necessarily the case that representative systems are also democratic but in our contemporary understanding, all democracies are representative, that is, the decision making is done indirectly and not directly. There are obviously hardly any examples of grassroots democracy that could be called a success, apart from a few counties in Switzerland. Is the ideology of representative democracy thus without alternative? Representation, the parliament, has a long list of advantages – from “not everybody can be expert for everything” to “not everybody can join every conversation” – a discussion of which would lead to far here, as would a criticism of representative democracy as such. Here we want to focus on liquid democracy as an alternative hypothesis to representation.
Communities exist by their members’ taking tasks, fulfil duties within the community, and participate in the successes that are communally achieved. In a society, citizens delegate parts of their tasks and duties to the state’s administration. Over the course of the last two hundred years, the citizens of the so called western world have handed over more and more of their very own responsibilities to the state – caring for the sick and elderly, birth and death, provisions for retirement, education and many more.
How these delegated tasks have to be carried out is fixed by the process of representative decision making that characterizes parliamentary democracy.
Elected representatives are assigned to taking care about this for a time of multiple years. That all these jobs can be done, experts have to be paid for and equipped with the necessary means of work. To control the adequate application of these means, finally an administration is needed to oversee it. It is not clear, how the carefully balanced system of checks and controls between administration and parliament would be affected by such a radical change in delegation that liquid democracy would propose. The promise, however is to take back responsibility into the hands of the people.
Direct democracy is usually just seen as plebiscite, that is to “give the decision to the polls”. Basically, the political work in this case is still done by the elected representatives. Proxy vote or the imperative mandate goes considerably farther by tying the votes to a definitive decision behavior of the parliamentarian representing their voters. Imperative mandates are usually bound to decisions of conventions of voters. A party conventions or a citizen councils decides by majority, and the delegatee has to represent this decision in parliament. Proxy voting however allows for every single person to delegate their vote to those who would represent their opinion in the session. All three forms, plebiscite, imperative mandate or proxy voting – as in the same way then the classic “conscience-bound mandate” of the most democratic election laws – assume that there is a group of people, homogeneous enough to be abstracted into one set and then represented by their member of parliament.
In liquid democracy there is no separation of suffrage and eligibility, because everyone can contribute and vote. Everybody presents themselves – and even if they would have delegated their vote to someone else, there is no abstraction of people to groups that are represented. Liquid democracy is a system of direct, non-representative democracy.
A complete presentation of everybody for themselves show of course the marks of Max Stirner’s anarchistic egoism. And communities that are organized in such a non-representative way, like e.g. Wikipedia, in fact well appear like you would imagine Stirner’s anarchy.
A logical outcome of such a non-representative system is also, to no longer distribute governmental transfer payments, subsidies or appropriations top-down, but allow every person the same access. It is thus only consequent that Piratenpartei takes the basic income guarantee as a programmatic goal.
Liquid democracy is often compared with Wikipedia – everybody can participate, all discussions are open. And by means of delegation, if someone would not see themselves as competent for the decision or be busy during the election process, the may trust their political decision to their delegate. This process of Wikipedia-decision making faces some sound criticism: people who cannot articulate themselves very well or who would have to fear that they become “talked into something” or shouted down in the discussion, will not even begin to take part. Everyone who became victim to one of Wikipedia’s deletion-discussions knows how this feels. But still, Wikipedia stands without doubt for one of the very big successes in collective collaboration in the Net. It may appear unbelievable, what was achieved by thousands of people together, without any monetary incentive – and continuously, Wikipedia is brought further, gets enhanced, and this despite the communication culture there is after all gruff, to say it moderately. Wikipedia’s culture nevertheless is not a good example for inclusion; the horrible gender-bias alone is telling.
A concept to soften this spiral of silence is to give the actors the option to perform under a self given name and identity. Since the blockchain can guarantee that every physical person would get only one vote, this ‘autonymity’, the freedom of flexible choice of name, has the advantage, that it is possible to articulate a particular opinion without sticking this permanently to the own personality. However the disadvantages of acting under pseudonym in a system like liquid democracy stand, as discussed above.
Another criticism aims at political reliability. Continuity and predictability are obviously a necessary part of representative systems. The members of parliament represent their mandators only indirectly. For showing to their voters, that their intended politics would be dutifully represented, they have to stay constant and reliable in a few striking aspects, while their motives for most of their decisions would remain undisclosed to their voters. Whip and fidelity to the coalition are the well known consequences – not really in the very sense of our constitution that would see the the decision behavior only bound to the conscience. Since there is hardly any empirical data on Liquid Democracy, it is for now totally unclear, how stable and continuous the policies would be that the liquid decision making process would support.
Consensus instead of compromise
Liquid democracy means everyone is able to contribute, and consensus is to be build above the suggestions. Consensus does not mean majority. A majority overrules those who do not share the opinion – after the ballot, the set of voters will be regarded as homogeneous regarding the decision in question. For the daily party business this means: once a party committee has made its decision, all members have to stand behind this (at least this is expected from the party members).
In a non-representative, direct democracy, having unity behind the majority is not the point, since every opinion remains valid and cannot be overruled. Thus it is especially important to concentrate on finding consensus on the crucial topics. Consensus means to really stand behind the decision and not just be outvoted. So we could call consensus in politics as “agreement on the truth” in opposition to “deciding on opinions”.
The struggle for truth leads, as mentioned above, immediately to a rather gruff tone in the debates. Those inferior with arguments frequently take their last stand: the “Shitstorm”, usually a ranting against decisions or actions without arguments – completely convinced to be right and full of anger, not getting right. Other then the compromise which is closed between the two sides engaged – often formalized as in a coalition agreement – consensus is not fixed and not binding. Like in Wikipedia where existing texts are always open to edition, and where the authors continuously have to defend their words if they would like these to remain, the consensus in liquid democracy can always be left, and an initiative for change be placed. Frequently, so called trolls appear in the course of decision making in liquid democracy – people insisting on certain topics in a very destructive way. As inconvenient such arguing with trolls is, it still leads often to overcome differences and find a broadly based consensus. The continuous attack on established consensus stabilizes.
Liquid democracy is, when thought to its end, a radical breach with the foundations of democracy that we know and take for granted. Fully evolved, liquid democracy turns the whole process of delegation to parliaments, experts and administration around. The global crisis of the established economical and political order makes it worthwhile to think about opening a new chapter of enlightenment and really consequently accept humans as autonomous beings, that may better care for themselves as benevolent representatives ever could by governing them.
People are regarded as elements of different sets which are represented by typical specimens, the representatives.
One speaks for the others
The representative is the only one who can be noticed of a set from the outside.
Works well if people are homogenous regarding their needs and preferences
No two people are the same (As we clearly see now through web analytics, targeting, social media, etc.)
Speak with us, don’t speak for us.”Let’s listen to every voice without ironing out the differences.
Presentation instead of representation
Participants or votershare suffrage and are at the same time eligible, can thus better be called ‘actors’ than ‘voters’. Actors can issue initiatives for projects like laws, changes in laws, budget decisions, etc.
First step is formulating the initiative as a proposal and upload it to be reviewed and discussed. This step can be preceded by informal discussion going on before the actual upload. During this discussion-phase, the initiative’s author can still change the initiative and react to criticism and suggestions. After a fixed time span (the same for all initiatives on one topic), the initiative’s text is frozen and can no longer be changed. In this ‘frozen’-phase, the initiative has to gather support from other actors who openly and actively register as voters for this initiative. Also, alternatives to the initiative can be added to be decided at the same ballot. For each topic, there a quorum of minimum support can be set, and only initiatives which get above this threshold make it to the ballots.
All actors can delegate their vote to some other actor, who then may delegate her vote together with all votes delegated to her further on, thus forming chains of delegations. Delegation can be withdrawn and changed anytime until the deadline for the decision has passed.