The project lead of Skycoin, Synth, recently talked with Chris Coney of The Cryptoverse podcast. In 50 minutes of fascinating discussion, they went deep into the justification for Skycoin’s creation, the pedigree of the SKY developer team and the vision of the coin moving forward. Here are the critical points of this compelling interview:

The history of Skycoin

Synth became involved in Bitcoin at its truly embryonic stage of development. He worked alongside the core group of contributors G. Maxwell, Sipa, Luke Jr., who took stewardship of Bitcoin after the disappearance of Satoshi Nakamoto.

‘…when I started on Bitcoin it wasn’t even on Github… it was on a website called Sourceforge and it didn’t run on Linux. I was stuck there fixing bugs.’

Synth explains the nuances of the Skycoin ecosystem to Chris Coney of the Cryptoverse podcast.

Synth was tasked with auditing the Bitcoin code from a financial services perspective when the hedge fund he was working at took an interest in it. At the time, numerous technical issues and vulnerabilities were affecting critical components of the Bitcoin code. Like many early developers, Synth saw these flaws and identified the need to create a coin that was unconstrained by Bitcoin’s rigid design specifications. The project now known as Skycoin arose from the merging of three independent groups who started work shortly after Bitcoin was released. Synth illustrates the history and pedigree of the developers who have contributed to Skycoin,

‘The first developer on Ethereum was Chen, and he left Ethereum before the ICO to start working on the Skycoin consensus algorithm…There’s a huge history of different people coming into the project, the Lisk guy, the Ark guy, the Qtum guy…’

He also provides insight into the funding of the project, answering any doubt about Skycoin’s financial viability,

‘W e have a lot people that were in Bitcoin when it was pennies…we also did some ICOs when Bitcoin was at $100…we had a lot of donations too… we also have the Skyminer sales…we’re profitable just on the hardware sales and we’re doing six more hardware projects…’

By this early stage in the interview, Synth answers some of the key questions that give insight into the legitimacy of a project. He provides convincing evidence that Skycoin has both the breadth of developer talent and depth of developer experience to truly understand the obstacles to blockchain development and provide feasible solutions. As for project funding, not only do they have significant Bitcoin reserves from their early involvement in the space, the Skycoin project is currently profitable on the production of specialized hardware designed specifically for a Skycoin application (more on this later).

The flaws with Bitcoin

Synth describes Skycoin as fundamentally a reactionary project that has been designed and re-designed from its inception in response to the flaws and shortcomings of other crypto projects, chiefly Bitcoin.

‘…the reason Skycoin was created was because we saw the problems affecting Bitcoin today, 4–6 years ago…Skycoin was a reactionary coin because every single thing in Skycoin was in response to a problem Bitcoin was going to have 3–4 years later…’

Synth discusses two key flaws in Bitcoin that he believes necessitated the creation of a new coin that could fulfill the role of peer-to-peer digital cash as Satoshi conceived it.

I) The human aspects of Bitcoin

Synth claims that the core developers maintaining Bitcoin refer to the project as a ‘social experiment’ that was never intended to sustain dynamically into the future. Instead of a piece of immutable code that will exist unchanged for the next century, he implies paints a picture of a fragile and precariously positioned project under siege from a tidal wave of interests and influences all seeking to mould Bitcoin to suit their agenda. He believes that the reason Bitcoin survived up until now despite this constant pressure is the careful stewardship of G Maxwell, who has staunchly and intolerantly refused to add new features but will eventually succumb to these external pressures.

The human influences that Synth describes are inherent to all open source projects however; Skycoin’s approach is to remove as many potential opportunities for future coding disagreement as possible. At the source code level, the core Skycoin software was written with only 5000 lines of code compared to Bitcoins 100 000 lines. Most importantly, it was written and re-written to require no further additions to its core protocol.

‘One thing we wanted to with Skycoin is have 5000 lines of code…give no reason for anyone to have to change anything in the core. If you allow any room…it splits the community.’

This isn’t to say there won’t need to be changes to Skycoin moving forward. It means that the core foundational blockchain architecture and source code are as thoroughly considered as is possible given the current technical development of the blockchain ecosystem. Future changes to how Skycoin might operate are possible and likely — however, these won’t be implemented at the core level, instead of on the second and third layers. This brings us to the next, equally consequential roadblock that Synth believes will prevent Bitcoin from ever fulfilling Satoshi’s vision of a trustless, decentralized global currency.

II) Proof-of-Work

Synth believes PoW mining creates a fatal flaw in the game-theoretic design of Bitcoin by utilizing miners. He sees them as an unnecessary and undesirable human element whose interests will inevitably diverge from the interests of the rest of the community. When the miners can earn increasingly large amounts of money in transaction fees by auctioning off limited space in a Bitcoin block, they will act in their self-interest to maximize profit. He describes the reality that hashing power in Proof-of-Work mining inevitably accrues to a small number of actors. He explains the justification for the Skycoin design that removes miners entirely from the process,

‘Bitcoin tried to remove human element from currency, banks, the government and replace with mathematics but it only achieved that 50%. Now we have to go next 50% because the miners ended up being another human element that was basically subverting Bitcoin because it introduced problems of greed and miners were making this money so they might not want to accept changes that were necessary for the network to achieve mass adoption.’

In highlighting the problems that PoW poses, Synth enumerates an enormously important concept that few discuss or understand — that PoW governs three core functions of Bitcoin that should be completely separate. From this position, he describes the Skycoin approach,

‘In Skycoin we said the creation of new coins, the creation of new blocks and consensus over the set of blocks are three completely orthogonal, unrelated things that should not be lumped together.’

Separating these three essential functions allows Skycoin to eliminate the game-theoretical flaws that Proof-of-Work mining introduces into coin consensus and function. Skycoin’s solution involved the creation of all Skycoins in the genesis block (which are locked according to a prespecified distribution schedule) and the design of a new consensus algorithm called Obelisk, which is 51% attack resistant by the nature of its separation from block minting. Further technical details on the exact mechanism of Obelisk are yet to be released.

Skycoin blueprint for universal adoption

With the justification for the technical features of Bitcoin established, Synth proceeds explain the Skycoin blueprint for universal adoption — how Skycoin will go about achieving the original vision of Bitcoin. He uses a pyramid analogy to describe this concept:

Synth believes the key to global adoption of digital currencies are blockchain applications that serve essential real-world needs and create an economy around a token. Skycoin’s flagship application is monetizing bandwidth their new decentralized internet, called Skywire.

I) Fundamentals

The foundation of the pyramid consists of the 5000 lines of code that brings the technical philosophy of the coin into reality. These include the novel Obelisk consensus algorithm, best-in-class cryptography, and a highly scalable blockchain. Synth describes the Skycoin team spending ‘… 3–4 years just doing research on database consensus algorithms.’ This foundation provides the, ‘under the hood’ performance that supports the user-facing functionalities of the next level of the pyramid.

II) Usability

The second level aims to provide a frictionless user interface that removes as many barriers as possible to lay adoption of crypto and blockchain. Part of this approach is an easy to use web wallet, mobile wallet, and desktop wallet. A deceptively simple app for accessing the new encrypted Skywire internet. A suite of dedicated Skycoin blockchain hardware devices including cheap hardware wallets and easy-to-install MESH net antennae.

III) Applications

The capstone of the pyramid that will genuinely drive blockchain to mass adoption are applications that provide services which are indispensable in the real world. This creates a closed-loop economy within the Skycoin ecosystem and drives network effects and uptake of the coin. Skycoin has worked incredibly hard on this layer, focussing first on Skywire, the decentralized internet protocol which runs on its dedicated hardware device, the Skyminer.

’You need to create reasons for people to use blockchain…after the first and second layer of the pyramid are laid, the third layer is the applications. That’s the capstone. If you want a billion users you have to messaging, video downloading, a way of people to earn money and get coins…you need an economy, you need people spending the coins, there has to be services that you are forced to buy the coin to use…something that everyone on earth uses…’

Skywire — the new decentralized internet

Synth describes Skywire as one of their many ‘capstone apps’ that will create a demand for Skycoin and drive use of the SKY ecosystem. Skywire will create a market in high speed, encrypted internet bandwidth that is easily accessible by the average internet user and will be paid in Skycoin’s coin hours, the fuel for the SKY ecosystem.

‘…if you provide bandwidth to the network, you get paid coins. If you are consuming the bandwidth, you pay coins.’

Skywire is designed not only to be faster and cheaper than the current internet but also beyond the reach of censorship, throttling, and price-gouging of corporate internet service providers.

‘One of the big applications is VPN…we have a VPN application where you pay coins and can route your bandwidth through different countries; it’s like a decentralized VPN.’

This elegant design will efficiently operate like the Uber of bandwidth — when the numbers of users on the network is low, usage costs will be small, which incentivizes new uptake. When demand is high and the cost of use increases, more people are financially incentivized to buy and operate a Skyminer and add their bandwidth (think Uber surge pricing).

The outcome is a closed-loop bandwidth economy running on the native Skycoin token providing a service that everyone, not only crypto users, demands. Skycoin will be backed by bandwidth and will have utility value that renders it immune to market sentiment and the wild price fluctuations of coins sustained only by speculative value.

In addition to Skywire, the SKY has numerous other apps that will further create an economy of utility around Skycoin including blockchain games, messaging, video downloading and file storage.

The Fiber platform leverages Skycoin technology to provide enterprises with control over their private blockchains tailored to their specific use case. Massive scaling is achieved by laying down new blockchains horizontally and running them on dedicated Skyminer computing boards.

Fiber — massively scalable blockchain enterprise solution

Another critical app and usability innovation that Skycoin offers is a platform to transition corporations and businesses onto the blockchain. With the insight afforded him by his financial background, Synth and the Skycoin project have designed an ERC20-like blockchain enterprise solution that provides companies with the flexibility and customizability that corporate policy and legal regulation require. Fiber is both a Skycoin application and a usability innovation that solves these issues. Fiber creates an unlimited number of blockchains that are horizontally scalable,

‘We have an infinite number of parallel blockchains…infinite scalability without the sidechains…’

In this way, congestion on one chain does not effect on the usability of any of the other chains running on Skywire. This is in contrast to the Ethereum who demonstrated the scaling issues that arise by running all dApps simultaneously on one global chain. By exploiting the modular design of Skycoin that separates coin creation, block minting and block consensus, different chains can be customized to have different key features, depending on their application and use case.

‘…You can have one algorithm for block creation, one for coin creation and one for consensus. You can have different coins with different modules for each…a corporation might have a public consensus network, but only these three banks can create new blocks for KYC…there are different rules for different use cases.’

Unlike other projects, this customizability doesn’t come at the cost of security or support, as all the Fiber blockchains will leverage the power and code of the core Skycoin software.

Skyminer — hardware for the new internet

The blockchain hardware provided by the Skyminer makes this possible because each computing board in a Skyminer can act as an individual, independent consensus node. Horizontal scalability thus permits any of these enterprise blockchains to achieve the full number of transactions per second as the Skycoin main chain provided they are running on sufficient numbers of Skyminer computing boards.

‘Every single blockchain if needs dedicated hardware if you want 300 transactions per second…if you are running 60 blockchains, you need 60 nodes…if you are a company and you need 300 TPS, you need dedicated capacity in terms of CPU and memory.’

The Skyminer device uses numerous computing boards to host dedicated blockchain nodes on the enterprise platform Fiber and rent out bandwidth on the encrypted internet protocol Skywire. The first generation of Skyminers have been released and contain 8 computing boards, in the future 256 board Skyminers will be available for companies to plug-and-play.

Companies will, therefore, maintain the number Skyminer devices that run their private blockchain applications in-house, providing them the control necessary to be legally compliant. Synth lays out his vision for how blockchain will shape the new financial system,

‘Delaware is allowing companies to put their stock on blockchain from day 1…if we have 1 million companies in Delaware on blockchain, you’re not going to shove all these blockchains on one chain…you are going to need 200 copies of the node running each company’s blockchain…’

The Skyminer can be used both to provide bandwidth on the Skywire app and host enterprise blockchains on the Fiber platform. On their own, the Fiber platform and its hardware backbone are groundbreaking blockchain innovations that can truly bring practical value and real-world efficiency to companies. The fact that these are only two aspects of the broadly encompassing Skycoin project is astounding.

Final thoughts

Synth delivers both a devastatingly delivered dissection of Bitcoin and a visionary glimpse into the potential for Skycoin in the coming blockchain future. The crux of Synth’s message throughout the interview is clear — Skycoin has an unwavering focus to build a blockchain that can truly facilitate global mass adoption.

He demonstrates an unparalleled understanding of the fundamentals of blockchain technology, which can only be gained from a decade spent thinking about network design, cryptography, game theory, economics and how they can be reified in software code.

When one considers the knowledge required to contributing to a blockchain project, let alone create one, Synth appears to be in crypto royalty. This upper echelon of developers with the knowledge and skill to develop blockchains is a tiny community of multidisciplinary autodidacts and includes names like Nick Szabo (Bitcoin and concept of smart contracts), Charlie Lee (Litecoin), Vitalik Buterin (Ethereum), Dan Larimer (EOS). The value of such a developer to the future success of a crypto project cannot be overstated.

Synth sees Skycoin as a successor to Bitcoin in every sense of the word. In this discussion he explains how Skycoin will achieve what Bitcoin was initially intended to achieve. He makes a powerful case for Skycoin to be the catalyst for the blockchain revolution that will transform societies on a fundamental level.

The final exchange of the interview perfectly distils the essence of Skycoin as Synth is asked how he defines success for the project. He looks intently forward,