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Project Spotlight: Scalability, volatility and Radix

Project Spotlight: Scalability, volatility and Radix

There has been much discussion of Bitcoin becoming the  currency of the future, replacing fiat currencies such as USD, GBP or EUR. This will not happen for two simple reasons.

  1. It is far from being able to handle the number of transactions needed, and there is no proof it could ever scale to the level it would need to
  2. It is too volatile and too narrowly distributed

This problem is not solely confined to Bitcoin – there is no cryptocurrency on the market that can ever function as a replacement for traditional fiat currencies (and I would argue that the term ‘cryptocurrency’ is a misnomer that is not beneficial to the crypto/blockchain community more generally).

There are two important evolutions in blockchain that we will see come about in the coming years that could potentially alter that:

  • Scalability: The ability to handle thousands of transactions per second (VISA handles c. 2,000 tps – Bitcoin is more in the order of 7 tps and Ethereum c. 15-20 tps)
  • Stablecoins: The concept of a ‘stablecoin’ (i.e. a coin that has a stable value that is not prone to the volatility of the crypto market)

One such project that aims to tackle these issues is Radix. Formed out of a previous project (eMunie) led by Dan Hughes, Radix claims to be “the first, truly scalable, Distributed Ledger protocol for trustless systems”. It does not, unlike most projects covered on FlatOutCrypto, have a blockchain. Rather it is a purely transactional database which is an entirely new distributed ledger technology that is designed to meet the requirements of the mass market and Internet of Things. It aims to scale in a manner beyond any existing blockchain technology (it claims to be able to process 100,000+ Transactions Per Second, with confirmation in 0.2 seconds), an assertion which has led to a notable public spat on Twitter with the IOTA team. It would also enable low powered devices to support the network. The team has recently released a technical whitepaper dealing with the issue of scalability.

One other major differentiator is its aim to remove volatility through controlling the supply. This essentially works by allowing an actor who wishes to buy Radix to purchase off an integrated decentralised exchange. This generates a new supply of coins for the user which is then matched in the generation of a new supply of coins for the overall market. This latter generation is distributed between all other Radix balance holders, meaning that every time the market cap of the project doubles, a user’s initial holding will increase by 50% e.g. 100 Radix are purchased initially, the market cap doubles after X months, the interest is paid to the user, the user’s holding is now 150.

Through this system the value of the token remains constant, but the supply – and therefore the user’s holding – increases proportionally. It aims to make supply the variable, not the price. The team claims to have modelled years of Bitcoin transactions and come out with a variance of c. 3% from the initial Bitcoin value – obviously in stark contrast to the actual performance of BTC. The team is releasing an Economics whitepaper shortly which will hopefully address this system in more detail.

The project’s second feature, scalability, also means that it could potentially be used as a payment method. Rather than using Visa or Mastercard services (such as Monaco, TenX or other services in the space), Radix claim to be able to run native direct debit cards (created by the user themselves if desired) that can be used with any existing point of sale terminal. If so (and with this number of claims it is always healthy to reserve caution), then the project comes could realise a dream of proponents behind cryptocurrencies initially - a means of spending cryptocurrency that would be essentially untraceable.

The team is currently running a Radix test that aims to enact all of the Bitcoin transactions ever done in under just 7 days, with their explorer viewable here.

There is no details of any proposed ICO, with Dan posting numerous times he is against the idea of a large offering, but any future developments will be posted here given the potential of the project if it can fulfil the many promises laid out.

What happens when projects fail?

What happens when projects fail?

Introduction to cryptocurrencies (Part 4/4)

Introduction to cryptocurrencies (Part 4/4)