I will briefly discuss a highly debated and controversial topic — taxes.

A government’s ability to tax and service debt is the fuel that drives it. With crypto-currencies coming it is important to consider what effects this will have on something that was just years ago as certain as death itself. Full time salaries are already being paid in crypto, along with the ability to anonymize these assets, disclosure will soon be at the complete discretion of the individual. This will without doubt increase difficulty to both track incomes and collect taxes, leaving governments small and large facing difficult situations in both funding operations and collecting revenue.

What will be the effect?

Politicians have already begun discussions about criminalizing those who ‘hide’ cryptocurrencies, this will certainly evolve into broader criminalization of all holders at some point and time. Imagine what the discussion would be like when the very salaries that pay them are in jeopardy, I can guarantee you it would not be a discussion but a swift implementation of law to retain some semblance of control they once had. What does this mean for us? For most of us we have never had to worry about criminalization regarding personal IP’s, web traffic, or general behaviour with our online crypto-profiles…This activity however may be used as evidence for conviction and proof of guilt under possible prosecution in a not so distant future. “Hot” actions (I.e any activity online related to crypto currency) will be classified as a criminal offense entering this next era and it will be of high value for users to remain ‘cold’ ( interacting with the online ecosystem as little as possible), ensuring all privacy and security is maintained. Our new feature — TPoS — was engineered with this in mind and will provide several unique benefits that will ensure safety, privacy and security of our users not found anywhere else. I have reviewed in previous articles the main benefit to ‘Cold Storage Stake’ with TPoS and in this article I will cover how it is possible to ‘Cold Storage Exchange’ as well. A cold storage exchange is made possible by our commission payouts, allowing an owner of a TPoS address to instruct the protocol how to split rewards and also where to send them.

TPoS commission

On the surface the commission is simple, a merchant provides a service and charges a commission for said services, in our case however this entire negotiation is handled directly on our blockchain. The protocol itself is “smart” and knows how to split these newly minted TPoS coins. All done without any human involvement through a series of cryptographic signed messages broadcasted when the contract is first created. We engineered this feature to avoid predicting market rate or demand, but allow the two parties to settle between themselves a split from 0–100%. This will also allow alternative forms of services to arise — such as willingly giving the merchant 100% rewards in exchange for certain goods.

An Example…

Say a merchant wants to gain a competitive edge and offer added services on top of his regular staking — he could instruct the owner to input 100% commission at the time of his TPoS creation, then agree to send the reward in a currency of the owner’s choice…to an address of their choice. The owner could not only be staking his assets while offline but also be exchanging securely and safely, without lifting a finger. The exchanged rewards could hypothetically be translated to any form: a BTC address, ETC, or even fiat (directly into a bank account) and could be used as a means of “cashing in” to an owner’s local currency. Once these services are established it will drive large amounts of traffic and attention to our currency as we will be the first and only one with this unique functionality. Couple this with increasing regulations and the effect will be even more dramatic.

Seller Ratings

Since the staking rewards would be in control of the merchant, this example of a hidden exchange would have to maintain a small degree of trust. We believe this will be easily mitigated through giving the merchant a ‘rating’ based on quality of service. Any dishonesty or under performance would cost the merchant more in the long run than he would gain, similar to the effect of a standard seller rating we are all familiar with before making an online purchase. This model works because the merchant will never have the ability to make off with a significant amount of funds, worst scenario is he steals a few small rewards but completely ruins his reputation in doing so, and If the owner is not comfortable with the service he can simply cancel the TPoS and redeem his funds at his discretion.

Atomic Swaps

Atomic Swapping might be the closest thing to magic we have experienced thus far. It allows any user on one blockchain to ‘swap’ his asset with a peer he has never met on a completely different chain — 100% trustless, instant, and with little to no fee involved. It is also the closest solution in protecting privacy while acquiring and trading assets. There is a catch however as Atomic Swaps still require assets to be “hot” and by nature all information associated with these transactions are required public in order for it to work properly. This is a step in the right direction as a peer to peer system is much more secure than a centralized point of exchange, but still not a perfect system. It is not difficult to spot identities in a P2P market, and with that being considered we figure a user may not want to spend or transact any more than absolutely necessary on these platforms. As XSN will have a compatible off chain network of our own, our features can be utilized to provide extra value to this network. This is where our chain comes into play — by instantly ‘Atomic Swapping’ into a XSN TPoS address, your newly swapped funds will automatically be safe offline and gain interest, without the need to perform extra steps in sending, receiving, or activation of any kind. Rewards gained from these addresses can also be exchanged into a different currency of your choice, if you use a privacy currency (such as monero) for example you will have in one step maintained a level of privacy that up to this point has required multiple steps, through multiple parties to accomplish.

Final Word

As you can see from the examples above, XSN will be well suited to hold its own against a dystopian big brother scenario. As its specific features allow you to “skip” steps you would otherwise have to take the time and resources to execute, leaving yourself at greater risk of exposure from whoever might be prying. Lessening this exposure, and providing cold solutions is something we see very important starting on a protocol level, but of course continuing through application and wallet development as well.

If you’re interested in seeing our new features in action join our testnet on discord! https://discord.gg/27VccCp