Credits – High Throughput Blockchain Platform or Fiction?

January 2018
By Sam
Posted: Updated:
0 Comments

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CREDITS is a unique open blockchain platform with autonomous smart contracts, new technical capabilities which increase transaction volumes, reduce response time and have low transaction costs.  This B2B platform has an internal cryptocurrency, CREDITS.  The platform allows for the creation of services on their unique blockchain protocol using self-executing smart contracts and a public data registry.  All services on the platform are payable other than data viewing of the transactional ledger.

When fully operational, the platform will be able to execute more than 1,000,000 transactions per second and will have an execution speed of 0.01 seconds.  It will make high volume applications and transactions possible in a way that no other currently available blockchain network can match.

CREDITS’ platform will achieve these new features through a new algorithm for finding consensus, a new registry scheme for the operation, processing and saving of transactions, based on the model of federative node voting.  The platform will also offer a new, extended API that utilises a Turing system capable of creating services using cycles, schedules and unique functions.  Uniquely, the platform will be able to function completely autonomously and without the need for external systems’ participation.

The Opportunity

Currently, all blockchain protocols face obstacles in meeting the technological demands of platform users across many industries:

  • Bandwidth – Network capability to process a large number of transactions and current transactional size limits imposed by block size limitations.
  • Latency – Actual response/execution time compared to the expected response/execution time. Currently, in the Bitcoin and Ethereum networks, the average transaction time is more than 10 minutes. In comparison, transactions for credit card/debit payment networks take only seconds.
  • Transaction Speed Costs – A parameter for all operations but especially for two types which are high-volume and transactional:
    • Micropayments for small transactions – for example, buying coffee, shopping, microloans, Point of Sale (PoS), E-commerce etc.
    • Internet of Things (IoT) operations, for networking different objects or collecting data from these ‘things’.
  • The Amount of Data in the Network – The Ethereum network size is increasing by tens of gigabytes each week. As the networks increases in data size, the execution of transactions becomes less efficient.

CREDITS technological platform will address these problems based on new principles of transaction processing, finding consensus and data saving. CREDITS goal is to address the huge market for using blockchain and autonomous smart contracts in the financial services industry and beyond.

The Solution

CREDITS’ blockchain protocol was developed through a deep analysis of user needs and the transactional nature of financial services.  This unique and balanced system will achieve high-speed operation processing speed while maintaining the blockchain system principles and the strictest security requirements.

CREDITS’ technology has the following unique features:

  • Registry Structure/No Mining: An array of data and transactions stored in the registry have a sequence number and hash at the current processing node. All verified transactions are loaded to the main node and a list of candidates, from which the register is formed, is compiled. Transactions are transferred centrally for processing to the main node, where they are processed and written to the registry, thereby reducing transaction processing time. The node owner receives 50% of commissions.
  • New Consensus Principle (Target Time Interval of 0.01 to 0.5 seconds) – The one who calculates the function faster, who has a higher performance server and better network quality, wins in a competition for the right to be the main network node. This is calculated based on the load and the number of nodes in the network, the more nodes, the higher the speed and the shorter the time to achieve consensus. The winning user gets 50% commission in CREDITS tokens upon transaction completion.
  • Homomorphic Encryption – Allows for working with encrypted queries at all steps of the iteration step (rank) and reduces the processing time of transactions by not having to decrypt the data package completely. At the same time, privacy remains protected. Hacking and change take significantly more time than voting for transactions and their further placement in the registry.
  • Archiving via Compression – Compressing information up to 90% reduces the time to load data and saves server space used for storage in network nodes. The use of the modified “deflate” compression archiving algorithm is a way of making it more complex to get a clean registry to introduce changes.
  • Asynchronous Work of Consensus is parallel processing and building a whitelist of transactions. After the new processing node appears (i.e. is registered on the network), all newly loaded transactions are selected from it, a list of candidates is compiled, and the whitelist is initiated. A signal is also sent to the network for the remaining nodes at the start of a new round of consensus. Transaction speed increases as each of the nodes are primed to achieve consensus faster through activating the next node in the sequence.
  • Federative Node Decision-Making: The federative decision-making principle for added transactions verifies the validity of transactions and minimising the likelihood of illegitimate transactions. Each node can be either a main or a trusted node, not more than once in a mathematically reasonable time interval, depending on the network complexity, which eliminates the possibility of transaction processing centralisation. The capability to constantly increase the number of nodes minimises risk of the centralisation of the ownership of processing facilities and increases network bandwidth.

Other than ledger/data reading, platform use is paid for with CREDITS cryptocurrency. Users will pay a certain price in the internal currency (CREDITS) to create/execute a smart contract, save the information in the blockchain and/or perform an operation on the CREDITS platform.  CREDITS cryptocurrency will also be listed on exchanges as a store of value and a standalone currency unit outside the platform.  Their Beta release is due in March 2018.

Opinion

If CREDITS beta platform delivers on its promises of transactions size, speed per second execution and manage to keep transaction costs low, while still maintaining the value of its cryptocurrency, then it will be the holy grail of blockchain protocols.

However, these are all hugely ambitious targets, and without an actual Beta or Alpha platform running the protocol it is hard to verify their ambitious targets or the technical claims they have made around transaction speed.  I am not a technical architecture expert, nor do I claim to be.  But the value proposition in large volume, scalability and fast transactions on blockchain especially when it comes to settlement, clearing and payment transactions within financial services middle and back office is very clear.

CREDITS briefly touches on KYC and data identity on their platform; I would like to understand how this sensitive information will be stored and accessed through their platform as well as their security plans for the CREDITS Wallet.  Security of wallets and tokens has been at the forefront of news in recent weeks with high profile security breaches within exchanges and wallets.

Would CREDITS platform services include the creation of a token protocol, similar to ERC-20 on the Ethereum Network, whereby other projects or developers could build their tokens on CREDITS blockchain protocol? In my opinion, this is a straightforward way to acquire users and add nodes to the network, as well as to reduce user acquisition costs in the longer term by increasing the adoption of the network through organic growth.  They do not address the issue of how they will acquire clients or deal with the inevitable increase in transaction pricing if their cryptocurrency is successful and increases in value.

CREDITS has a large token supply in total; circa 1 trillion CREDITS will be created. If these CREDITS are not issued during the private or public sale, they will be burnt.  This would result in a higher transactional costs for the platform even before it launches, theoretically.  The lack of token economics within the white paper and presentations is also of concern.

I think there is a huge conflict of interest between a utility token and a stand-alone cryptocurrency in general and CREDITS is no exception.  The goal for a crypto-currency is to increase in value, act as a medium of exchange and maintain liquidity to process transactions as a means of payment.   As a utility token, CREDITS acts as the ‘gas’ for the platform, funding transactions and services provided.  The goal for a utility token is to maintain and increase its value predictively over time, through a slow annual burn rate, while maintaining low transactional pricing within the platform to increase use.  As the price of Ether continues to rise, you can see the platform economics around this network unravelling as transactions become more and more expensive and Ether liquidity is reduced, through this imbalance between supply and demand.  The economic models behind each use case are vastly different and in many ways contradict each other.

I think CREDITS proof of concept shows real potential and originality; the real questions is whether or not as an investor you believe they can translate the idea into reality and deliver given the complexity of the project.

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