Gcoin white paper English
Table of Contents
Gcoin is the next generation of open-source digital currency. It is based on a mutually verifiable distributed ledger (the “blockchain”) that enables bottom-up participation in financial markets and remittance networks. Gcoin adopts permissioned blockchains and a multi-role structure and that allows it to closely model real-world systems. ‘G’ represents ‘Governance’ and ‘Global,’ with the former referring to permissioned blockchains. With permissioned blockchains, you can use smart contracts for customization and automation. Digital currency is therefore both flexible and convenient. The latter refers to permissionless blockchains, where transactions are open to the public and thus contribute to the trust-based aspect of digital currency. Through the implementation of the Gcoin system, traditional financial instruments can be integrated without introducing centralized intermediary risk, so the multi-role structure can meet a variety of business needs and be used for major national public projects. Powered by improved blockchain technology, the Gcoin system can better support high frequency trading and contract versatility. The Gcoin system is capable of supporting sophisticated financial market and e-commerce applications within a decentralized structure.
Until recently, financial transactions on the internet relied heavily on the existence of trusted third party verification (e.g. by banks and credit bureaus). In these trust-based models, validation and the provision of related transaction information are centralized, and both sides of the deal must place their trust in the third party.
In 2009, Bitcoin was developed as the first decentralized payment network and digital currency that did not rely on such a central authority. The Bitcoin network is based on a public ledger called the “blockchain,” which captures the transactions processed and enables users (the “Bitcoin miners”) to mutually verify the validity of each transaction using a decentralized consensus algorithm. The innovations that Bitcoin introduced have drawn significant attention from markets and governments. Several other implementations of the idea of decentralized value transfer systems using the blockchain have sprung up accordingly (the “altcoins”), although Bitcoin remains the largest in terms of total market value.
Bitcoin, being the first experiment that solved the the centralization issue, has to compromise in several areas. One of these major issues is the speed of transaction.
Scalability issues and regulatory concerns have been the most serious growing pain for blockchain applications in the financial market. Some financial service entities require permissioned ledgers for their business needs because of their contractually binding responsibilities and legal accountability for the transactions that are processed through their system. Further weaknesses of Bitcoin in the e-commerce industry are related to transaction frequency and currency volatility. Bitcoin’s trading frequency is currently bounded at 7 transactions per second. Bitcoin’s price has also fluctuated in the exchanges because of market speculation and regulatory concerns.
One of the major concerns with Bitcoin is its economic incentive to monopolize mining power. If a single entity contributed the majority of mining power, it would be able to manipulate the blockchain and rewrite the history (“51% attack”).
In contrast, the Gcoin system establishes the true usability of digital currency. By focusing on improving blockchain technologies, the Gcoin system has provided practical solutions that will allow it to scale up as needed and closely match real business needs in the financial markets and e-commerce industry.
Gcoin system utilizes the same blockchain technology underlying Bitcoin, but makes several important extensions.
similar transactions and block format
multi-tier permission system
alliance-based permission system
improved mining difficulty
Gcoin natively provides multcurrency capability. Gcoin allows issuers to issue multiple types of currencies. Bitcoin is a single currency system.
Gcoin's system is similar to a colored coin system. Multiple colors can coexist on the same network. Multiple type of tokens can coexist on the same network.
A colored coin may be used for many different purposes. Colored coin tokens may be used to represent financial instruments, physical assets, or digital assets.
financial instruments: shares, bonds, debt
physical assets: car, land, house
intangible assets: copyright, music
Each type of coin can only issued by the same issuer.
an issuer can require that only the approved address can transact the coin issued by the particular issuer. This is called member-only transaction
an issuer can make an address a member by sending colored coin to that address. This is called activation of a member. this feature is optional. An issuer can decide to disable this feature.
Gcoin has a similar transaction structure as bitcoin. However, two fields are added. One is the color field. The other one is the type field.
Different types of transactions include: normal, mint, vote, license
Gcoin's target block creation time is 15 seconds.
Bitcoin has a 10 minute average block creation time.
Many applications benefits from a sub-minute block creation time. For many applications, users are unwilling to wait for 10 minutes for confirmation. Waiting for 15 seconds for confirmation is a big improvement.
Gcoin's 15 second block creation time increase tps (transactions per second) substantially.
Currently, Bitcoin transaction volume is ~7tps.
Block is only created when there is a transaction. No block is created when there is no transaction. This helps reduce the blockchain size. This measure will substantially reduce the amount of data during the early days of a private ledger.
==Multi-tier multi-centered:== There is an alliance with one or multiple members on a Gcoin network. Alliance is responsible for mining and creating blocks. Alliance member has the power to license issuers. Issuers have the power to issue colored coins. Each alliance member can license one or more issuers. Users can use one or more currencies. The currencies are tradable on the platform.
==Multicurrency:== Gcoin is a multicurrency system. Bitcoin is a single currency system. Multiple currency can coexist on Gcoin network. Minting cap for a single currency is 10 to the power of 10 (10^10). The issuer may optionally creates minting schedule for its currency.
==Smart Contract:== Gcoin provides smart contract capability that is optionally extensible for the customer need. Just like Bitcoin, a simple stack-based script is provided in Gcoin transactions. Unlike Bitcoin, customers have the possibility of accepting more flexible scripts. Bitcoin also provides scripting capability within its network. However, it is difficult to make any modifications to Bitcoin protocol. Most Bitcoin miners will accept only standard transactions. Gcoin allows more flexibility for its customers.
==Confirmation time:== Gcoin's confirmation target time is set to 15s. This will increase the transaction volume cap and decrease the latency of confirmation. Bitcoin's 10 minute confirmation target time has been a major source of user acceptance issues.
There are several special functionalities. These special functionalities are represented using special type of transactions. There is a field called “transaction type” in the transaction. ==vote to add new alliance member (aka: sendvotetoaddress):== at least half of the current alliance members have to agree to add a new member. An alliance member may starts a new round of voting. If at least half of the alliance members voted and agreed, the new member become an alliance member. ==create new issuer (aka: sendlicensetoaddress):== an alliance member may grant “issuer” permission to an address. Doing so is called sending issuer license to an address. ==mint (aka: mint):== an alliance member and an issuer may create new coin. Note that coin of color id 0 is reserved for protocol use. Coin of Color id 0 is used as a token for alliance member to do their voting or issue license. ==activate a member: Gcoin system has an optional== member-only-transaction requirement. An issuer can require that only members can be involved in the transaction. In those case, the issuer has to send a small amount of colored coin to that address to activate a member. Unlike the other special function, this function uses a normal transaction instead of a transaction of special type.
There are many distinct roles in the Gcoin network, i.e. alliances, issuers, full nodes, and Gcoin wallets. Each role has a set of different functionalities and permissions on the blockchain. A functionalities comparison is shown in Table 1.
Gcoin adopts a multi-alliance structure for verifying transactions in the network. Each alliance member may comprise a group of Gcoin users who compete with other alliance members for the right to validate the ledger and earn a transaction fee, based on computing power. Alliance members may coordinate with each other through a voting system to accept a new alliance member, or to ban a misbehaved alliance member. This co-existence of competition and cooperation between alliance members helps to secure the entire Gcoin network.
Vote (sendvotetoaddress): alliane member can add new alliance member by voting. More than half of the alliance member has to agree to accept a new alliance member. The new member will have all the same rights as any other alliance member.
Send license (sendlicensetoaddress): alliance member can issue license to an address. The owner of the address can issue mint new coins of a certain color.
Issuers can mint tokens of a certain color.
Hayek’s theory on the “denationalization of money” helps explain why digital currencies in the Gcoin network have value. The primary argument is that by allowing the private issuance of currencies, open market interactions will favor the most competitive currency. Accordingly, Gcoin supports transactions in multiple currencies, and each currency is minted by an issuer with the authorization of alliances.
In the Gcoin network, the issuance of currencies must fulfill one of two criteria: (1) the currency has a proven purchasing power in a pre-existing e-commerce marketplace provided by or directly related to the issuer or (2) the currency has a pre-specified mining schedule and distribution policy. In the former case, the issuance of currencies in the Gcoin network is merely a migration process from a central database into the blockchain by the issuer. The value of a currency is based on the credibility of its issuer and the alliances that approve it. Through authorization by these alliances, an issuer can provide multiple currencies. The issuer is responsible for the minting schedule and distribution policy.
Mint: This is the function that creates new coin
Activation of member: The issuers can optionally specify that only approved members can own the token it issued. In order to approve a member, The Issuers have to send 1 satoshi colored coin to an address to activate that address. The address is considered a member of this color from now on.
A full node is a participant in the Gcoin network that makes a full replicate of all the transactions and blocks. However, the nodes have no role in minting or mining. In other words, an issuer is a full node with a minting license and an alliance member is a full node with the right to validate transactions and blocks.
Table 1. Functionality comparison of different roles in the Gcoin network
In the long run, we believe that decentralized ledger technology will become the industry standard for a robust trading infrastructure. Cryptocurrencies like Bitcoin and other Altcoins are inspiring innovation, and current technology may well be displaced by more advanced technology, as happened when MySpace was overtaken by Facebook’s growing momentum. By integrating value-based currencies into the Gcoin network and improving the blockchain to better suit the real needs of business, we believe that Gcoin represents the next generation distributed smart property platform that will support a wide range of applications in financial markets and the e-commerce industry, whilst working within a decentralized structure.