Blocknet project purpose and description
What is Blocknet?
Blocknet also referred to as BLOCK, is a decentralized and peer2peer platform-as-a-service protocol designed to help nodes in different blockchains connect to each other. The cross-chain communication opens the door to multi-chain architecture that will help to take the cryptocurrency industry to the next level. Call it decentralization of decentralized networks.
Blocknet was founded by Arlyn Culwick and Dan Metcalf in 2014 through forking of PIVX. However, it was not until September 2017 that the development team launched the service nodes. Having worked in the Bitcoin and other blockchain networks as developers, the founders believed that the blockchain niche was likely to hit the rocks for poor interoperability. The fast-growing numbers of cryptocurrencies that operate as completely separate ecosystems have confirmed the Blocknet founders’ worries.
Since its launch, the price of Blocknelt tokens (BLOCK) has been moderate. Between launch in 2014 and March 2017, the price of BLOCK remained well below $0.06. Then, it rose sharply by more than 111,500% on 6th January 2018 to hit the highest point in its history, $56.22. The market capitalization also rose sharply to hit a high of $278.8 million during the same period. But these gains were short-lived. Between January and April 2018, the price sank to $13 and then fell further to $5.5 between June and August 2018.
What is the problem that Blocknet Solves?
Blocknet was introduced to address one core problem in the blockchain sector; poor interoperability. David Schwartz, the Chief Technology Officer at Ripple, explained that the biggest obstacle to blockchain growth is lack of interoperability.
Starting from 2009 when Satoshi Nakamoto released the first decentralized network, the society has been very fast in adopting blockchain based solutions. More stores are now accepting cryptocurrencies while businesses are considering new tokens as a crucial model of raising transaction fees. But everything appears to be suddenly slowing down.
In the year 2017 and early 2018, most cryptocurrencies experienced a surge to levels that could only be previously dreamt of. From BLOCK to Bitcoin, the growth in market capitalization and price was huge. Deeper into 2018, the thrill is ebbed out and investors started counting losses. Everything, from price to market capitalization, started slowing down.
Today, a person with Bitcoins but wants to send funds to another at Ripple will be required to be a member of both networks. This is very inconveniencing. To transfer value from one platform to another, the main route is using the exchanges. These are centralized and profit based platforms that work like the forex markets. The lengthy process forced by poor interoperability of cryptocurrency networks results in the following serious problems;
- High transaction costs.
- Transactions require a lot of time to complete.
- High risk of getting attacked at the centralized exchanges.
The impact of these problems is slow but a sure loss of interest from the community. A new generation of blockchain networks is required to foster cross-chain operations. This is why Blocknet was created. It targets to make the blockchain network interoperable, modular, and mobile.
How does Blocknet Solve the problem?
The core goal of Blocknet is becoming the internet of blockchains by enhancing communication between one network and another. This interoperability is achieved through the following components and key features.
The key interoperability components
- The XBridge: This is a blockchain router that acts as the main premise of the Blocknet system. XBridge allows the nodes in one blockchain to connect to others in a different platform. It facilitates the implementation of cross-chain atomic swaps and execution of smart contracts.
- The coin exchange protocol: To implement cross-chain swaps using XBridge, Blocknet uses coin exchange protocol. The protocol helps to make transactions faster by allowing the nodes in different blockchains to operate on a peer2peer basis. There is no need for third-party intermediaries.
- The inter-chain data transport: This is the last component that used by Blocknet to foster interoperability. This data transport protocol helps to power smart contract execution and features many sharing capabilities for different chains.
The decentralized exchanges
To change your funds from one token to another, the main method used is the exchanges. This requires opening a trading account, verifying it, and picking a trading pair with the targeted coin. It can be very complicated depending on the selected exchange. However, a decentralized exchange provides nodes with a direct way of sending tokens right from the user’s wallet.
Blocknet released the beta version of its decentralized exchange on March 2018. The exchange allows users to operate without involving the centralized exchanges. The Blocknet DEX has a number of benefits.
- Unlike the centralized exchanges that provide a limited number of trading pairs, decentralized exchanges allow users to pair BLOCK with any supported token. This guarantees users of a limitless number of trading pairs.
- Unlike the centralized exchanges, Blocknet’s decentralized exchange does not need the use of know your customer (KYC) strategies. This is crucial in enhancing the anonymity of users in a blockchain.
- Users have absolute control over their funds on the Blocknet network. Because you are not required to send the native tokens to a centralized account, everything runs from the wallet. Here, you also need to take every precaution to avoid sending the tokens to the wrong addresses.
The inter-chain blockchain services on the Blocknet system allows users to create decentralized applications (DApps) that make it possible to combine multiple features from various projects or just one of them. Users can also include service monetization functionalities that allow nodes on Blocknet network to charge those from other networks.
Blocknet’s decentralized exchange is not a monopoly in the blockchain niche. Many centralized exchanges are in the process of converting or opening branches to operate as completely decentralized exchanges. Good examples of other decentralized exchanges include EtherDelta, ForkDelta, Komodo BarterDEX, and BitShares.
The Blocknet’s token
The Blocknet token (BLOCK) is an important component of the network governance system. The platform uses proof of stake (PoS) consensus algorithm to help with decision making. The governance model relies on three types of nodes:
- Service nodes: These nodes are used to help gather and distribute the trading fees. For a user to run a service node, he/she is required to hold at least 5,000 BLOCKs and ensure that their node computers are on and running most of the times.
The Blocknet development team requires service nodes to further run full node wallets of the coins they want to support. This design helps to ensure that the trading fee received is optimized. About 18% of the trading annual returns from block rewards are distributed to the service nodes.
- Staking nodes: These nodes are very helpful in confirming the Blocknet’s transactions. To operate as a staking node, you are required to hold any amount of BLOCK and keep the Blocknet’s wallet open. The staking tokens receive between 9% and 14% annual returns from block rewards. If you target using Blocknet’s decentralized exchange, the network requires you to run a trading account and synching the wallets of the targeted tokens.
What makes Blocknet better than it’s competitors?
The design of Blocknet platform was informed by the need to change the blockchain niche. While its growth will no doubt help to grow the entire industry, the following core benefits make it stand out from the peers.
- Users serving as nodes in the Blocknet system can easily send value across different networks. The Blocknet XBridge allows them to reach other networks and send funds with ease on a peer2peer basis. In other blockchains such as Bitcoin Cash, users have to join several networks to send value and use exchanges to convert their tokens to different exchanges.
- Because Blocknet does not use centralized and profit-seeking exchanges, sending funds both in the network and across different blockchains is very cheap. Users only need to pay a small transaction fee to motivate the miners who confirm transactions on the network.
- Though the price of BLOCK has not moved at the pace like that of other top networks such as Bitcoin and Bitcoin Cash, it is still impressive. Between 2014 and August 2018, the value growth stood well over the 10,000% mark.
- The blockchain network has been in the market for more than 4 years. This is a clear demonstration that the platform is very stable compared to the newer networks. New cryptocurrencies are feared by the community because they can turn into a dump and sell models.
- The value of Blocknet is likely to grow exponentially when all the features are fully implemented. Because other platforms will be relying on Blocknet network for various services, its value is likely to grow exponentially as demand shifts upwards from the growing community.
- The development team at Blocknet is highly committed to advancing the network. While some development teams copy and replicate features of other networks, Blocknet’s development team is involved in progressive research to pioneer new features that are helping to define the blockchain network.
How can Blocknet be categorized?
Blocknet is the next generation internet of the blockchains. The design and commitment of its development team have demonstrated there is a ray of hope for the blockchain networks. Many cryptocurrencies are either targeting to work with Blocknet or crafting a similar model to remain relevant and indeed profitable.
What’s Blocknet’s vision on Security?
The main Blocknet’s mission on security is to guarantee users of optimal security of their tokens and personal information when sending tokens across the networks. When Blocknet was created in 2014, hackings, especially on the exchanges, had become a serious threat to the blockchain system. From Mt. Gox to Bitfloor, no centralized exchange was considered safe. To guarantee users of optimal security when operating on the network, here are the methods Blocknet utilizes.
- The project relies on proof of stake (PoS) for mining and governance. This helps to distribute the tokens evenly to avoid the danger of 51% and DDOS attacks.
- The Blocknet’s development team is always working on updates to close gaps and keep the network more secure.
- The Blocknet decentralized exchange helps to eliminate the centralized exchanges that have become the center of interest for attackers.
Examples of Blocknet’s use cases / applications.
The architecture of Blocknet that targets facilitating cross-chain operations make it have more use cases compared to the standard blockchains. Here are some of them.
- Use BLOCK to pay taxes in your country or state. If your country or state allows residents to pay taxes in cryptocurrencies, BLOCK is a great option to clear the dues. Some countries that allow residents to pay taxes with cryptocurrencies include Singapore and the State of Arizona.
- Trade BLOCK in the markets. BLOCK, like other cryptocurrencies, can be traded in the exchanges. You can do this in the decentralized exchanges of the common markets. In the conventional cryptocurrency markets, you will be required to sign up for an account and pair BLOCK with a preferred coin such as Bitcoin or Ethereum.
- Pay transaction value on the Blocknet network. When sending value on the Blocknet network or running other types of transactions, a small fee is charged. This fee is used to motivate the nodes that help to verify the details of the transactions and adding new blocks in the public ledger.
- Use Blocknet network to send value to nodes in other blockchain networks. If you target to send value to other networks without joining then, Blocknet is a great option. The XBridge protocol makes it possible for nodes to communicate and send value directly without relying on centralized and high-risk parties such as exchanges.
- Use Blocknet network as an investment and saving platform. Many people coming to cryptocurrencies want to have some assurance that their personal information and transaction details will not be accessible to third parties. But even the centralized exchanges still make it easy for your details to be accessed by third parties. However, Blocknet’s decentralized exchange ensures that trading happens right from your wallet where you have absolute control. Therefore, there is no one who can pull out your details.
- Blocknet tokens can be used to pay for goods and services in online stores. Like other cryptocurrencies, you can use BLOCKs to pay for products in stores that accept them. Note that with the direct communication and decentralized exchange system, even the stores that only accept other tokens will be only a click away.