Skycoin, doesn’t have a large market cap, doesn’t have crazy volume, and doesn’t have the biggest name….yet a community is growing and John McAfee got a “tattoo”...
We’re not totally sure, but let us explain Skycoin to you so you at least understand their basic intentions.
Let’s dig in…
Skycoin (ticker: SKY)
Low-Tier Shitcoin (will rise as market cap increases)
Wtf is this shit?
Alright guys, it’s been a while since we wrote a review/summary. We have received emails, Telegram messages, and DMs on Twitter asking when one is coming. We took a short break at the start of the new year, but we are back baby. We sense the markets rising and want you to keep learning shit!
We know you’re eager, so we’ll make this direct.
The Skycoin project has big ambitions - they introduced their own consensus algorithm Obelisk (not to be confused with Sia’s mining rigs…) and want to create a decentralized internet so we no longer need to rely on ISPs (internet service providers), amongst other shit. Oh, they also use CoinJoin for private, 'untraceable' transactions.
Let’s go over their main features (altho they have broad goals).
First, there is Skycoin. Skycoin is the cryptocurrency that comes along with the network, they are DISTRIBUTED...this means they are not rewarded to miners, which they feel adds network security (we will explain later). Most of the coin supply (75%) is locked up until the first 25 million are distributed….then at this point, only 5% of the remaining coins will become available each year, until the 100 million total cap is hit. We admittedly find this weird and enjoy block-rewards, but there is (some) merit to their argument.
Let’s next acknowledge Obelisk, their consensus algorithm, created by their team and accompanied by nearly 60 pages of theoretical and practical research. They have team members from Ethereum and Bitcoin and have been working on Skycoin since 2013, so this isn’t some quickly thought of algo or minor tweak to PoW.
The logic behind the Obelisk algorithm is that all of the nodes in the network agree based on a Web-of-Trust consensus. Nodes are ranked based on trustworthiness and each node is ultimately ranked by the number of other nodes it is connected with. Nodes will only want to connect with other trustworthy nodes - so there is a distribution of influence across the network and it is basically a social proof of trustworthiness. The blockchain of each node is public - compared to Bitcoin where it is public once a proposal to the next block is broadcasted - this allows nodes to see in ‘real-time’ whether a node is acting in favor of the network, and if a node is identified as being malicious, then it can disconnect from that node, and basically, the network can dynamically adjust power so trustworthy nodes continue to grow and stay in the game.
The issue here is that there are no rewards, as we said, but there is a logic to their madness.
The logic here is that getting rid of the block rewards gets rid of the incentive to act maliciously, avoids 51% attacks, and still incentivizes nodes to exist due to the dApps and solutions the network will provide such as 3,000 TPS and high scalability. Yes, no block rewards! We question this...decentralized networks have been around for years...since the 80s, but they did not grow in popularity due to the lack of financial incentive...in our opinion.
Their flagship product is Skywire...basically a mesh network of nodes. They use logic from CJDNS and claim that their speed of connectivity will be faster than any VPN or connection offered today. This is their big-swinging-dick and most of the talk about Skycoin.
Next, there are Coin Hours. Coin Hours is the currency used within the Skycoin ecosystem to use their services. HODL Skycoin in your wallet and get Coin Hours. Each hour you will get 1 Coin Hour for 1 Skycoin held. We wish they just used Skycoin...what’s the point of Skycoin then?
Let’s keep moving.
There is also Fiber. Basically the name for their blockchain architecture...it’s like a child or side-chain and main-chain relationship. Each dApp on the network will have its own private, permissionable, or public blockchain for optimal scalability. Not everything needs to be on a main-chain is their belief. We agree with this too.
Then they have Skyminer, their custom-build mining rig built for letting users act as the backbone of the network.
Who tf is behind this shit?
Synth and Houwu Chen are the founders. Synth is one of the earlier Bitcoin contributors and has been working on Skycoin for 8 years. Houwu is one of the Ethereum creators, the author of the Obelisk whitepaper, and was formerly a PhD at Tsinghua University. They are well connected and on their shit, so we wish them luck.
All in all, low-tier shitcoin mostly due to market cap, we think they may be a decent bet (relative to most other projects), but we shall see!
Hope you learned some shit and be sure to follow us on Twitter.
- Mike and Aaron