Introduction to the Argentas Project

Argentas is a powerful second generation blockchain project bringing durable solutions to concrete real world problems

Argentas helps to create a new open global financial system. The execution of the project will enable migration economic activity from the old, incumbent structures into the new blockchain driven ecosystem, unlocking new growth and vast amounts of value-added.

While the first generation blockchain projects were individual cryptocurrencies, tokens and/or blockchains often without concrete value-adding use or utility, rather prototypes or proofs of concept than real tools, products or services, the second generation blockchains like ours will focus on actually migrating economic activity into the blockchain and generating entirely new kind of activity within a dedicated ecosystem, causing delivery of very concrete value-added to its users.

What are the problems we are solving?

Some of the key problems the Argentas Project will help to solve relate to (i) global payments, (ii) global banking services and (iii) access to financial services / financial inclusion and the potential to increase economic activity and wealth generation through solving these problems.

Global payments

A decade ago, we conceived an instant online payment product running within a closed ledger banking system that enabled free, real time and global payments to anyone on the basis of a name and an email address. If the recipient of the payment was not member of the system, an automatic invitation email was sent to the recipient to sign up, and after having signed up including verification of the recipient’s identity, the payment was credited to the recipient’s account within the system. However, if transfers to other banks were needed, traditional interbank payments, sometimes involving currency conversions, had to be effected. This consumed time — often several days — and money. It still does: It can be said exactly the same way as years ago that despite of technological advances, transferring money has remained expensive, slow and time consuming. Nothing has changed much.

When we had created a solution for a closed ledger banking system, and, later on, saw new developments in the cryptocurrency and blockchain sphere, aiming at tackling the same problem of global payments, we discovered that the same concept, idea and functionality can be better enabled by leveraging distributed ledger technologies, with the payments then not getting clogged like at the interbank end as it does concerning such interbank payments, when money had to be transferred between banks, countries, continents and currencies.

After having analyzed other blockchain projects, what had been created, we realized that even though there were many good attempts to solve the problem, there was no ‘perfect’ solution, but all of the projects within the area of global payments were flawed, and, surprisingly, some of them even deeply flawed despite of the markets’ very high appreciation of them, even if, at the same time, many of them had very smart ideas and intelligent solutions applied and working. However, there still are significant challenges ahead for any project to be able to launch and run a real global payment solution, with the speed (latency), volume and cost required at that scale. This means we could not adopt any of the existing blockchains as our platform (nor would we even want to), but we needed to create a new one that meets our required specifications, and not only for the core protocol and blockchain running on it, but for an entire ecosystem that enables vast additional efficiencies, synergies and cost savings, thus potentially enormous value-added for its users.

Crypto-friendly banks (network bridge entities)

At this point, we saw that the blockchain networks cannot yet operate in a ‘vacuum’ isolated from the real economy, as economic activity needs both to be created and migrated from old traditional economic structures into the crypto economy for significant enough volume. ‘Bridge’ entities bridging the gap and facilitating exchange with between crypto and traditional assets such as fiat money are needed. When value is transferred over the blockchain — and we realized that for the network to serve as a true global payment transfer system, it would basically need to enable the transfer of any item of value regardless of what it is — such value, when it represents a traditional financial asset held at a ‘bridge’ entity on its accounts, is then issued as network ‘credit’ (logical, when a blockchain could be simply seen as a distributed accounting ledger, as the DL term already tells us), then this ‘credit’ is held at such ‘bridge’ entities such as banks interfacing with the blockchain, where it can be then deposited or withdrawn, depending on the direction of the transaction in question.

Therefore, such bridge entities are important parts of the ecosystem around the blockchain network, bridging the ‘real’ economy with the crypto economy.

Among the traditional banks, which in most cases have no ‘bridge’ functionality interfacing with a blockchain, regardless, there have recently been serious problems in how clients transacting in cryptocurrencies have been treated: they have had their debit and credit cards blocked, transfers blocked to or from crypto exchanges and similar entities, and other types of products and services blocked such as personal loans. This is not correct and it is not sustainable: the clients must have a liberty of choice and freedom to use their legitimate funds as they please. Anti-Money Laundering (AML) and Know-Your-Customer (KYC) rules do not by themselves cause any prohibition of such activity, so it is only an excuse to suffocate certain types of economic activity that some banks do not ‘like’. Since the banks do not normally accept cryptocurrencies, but the cryptocurrencies have been exchanged into fiat money, before they are transferred to traditional banks, what concerns traditional banks have only been the same old fund transfers, not any direct cryptocurrency activity, and the fund transfers original from other banks, where cryptocurrency exchanges etc. hold their accounts, so the money has anyway been treated in accordance with the regulatory rules before any transfer. So the argument to block retail users’ free choices, transfers and users of bank’s products and services is neither morally nor legally valid: the clients have only been badly mistreated, and deserve better.

Since banks, among other possible ‘bridge’ entities such as currency traders and money transfer firms, are a significant part of the ecosystem around the core blockchain, and thus needed, and there have been significant problems without merit faced by crypto enthusiasts and users when dealing with traditional banks, it is important that ‘crypto friendly’ banks are created as parts of such ecosystems, to facilitate the bridging between the real and crypto economies as well as boosting the overall economic activity, in particular the economic activity being directed into the crypto economy. There are very few such ones today. Such banks would also function as laboratories towards the eventual development, where banks and bank accounts as we know them today will morph into the blockchain network and be more or less just service interfaces of the native blockchain functions and the decentralized applications running on the blockchain. Today, however, the state of the evolution is not yet there, and more advances need to take place to get there. Today, the bridge entities are important: they must comply with applicable regulations, but at the same time they can be pragmatic, flexible and crypto friendly. We have experience from A to Z, how such entities are created, their operating platforms, and how they are run, which makes it smooth to integrate between distributed and closed-ledger systems as parts of the same ecosystem.

Financial inclusion increasing economic activity and wealth creation

Even in advanced economies like the United States, there is a surprisingly large number of under-banked people, around 27 million. The rates of under and non-banked people are obviously much higher in developing, emerging economies, and very significant part of the world’s population has either very limited or no access to banking or other financial services. This limits their ability to participate in an economic activity, generate income or create wealth, cutting the economic output, growth rates and wealth of many nations much smaller than what they could otherwise be. Blockchain technologies make the barriers to access financial services in the form of a new open global financial system lower than ever before. If one has access to a smartphone, which is increasingly a reality everywhere with the cheapest models costing a couple of dozen dollars or euros, one can also have access to a blockchain wallet interface, and thus ability to send, receive and hold money, transacting in business activity. This gives the basis for economic activity, growth and wealth creation, having an easier access to global financial services than ever before, and we recognize that such access has much lower barriers than the closed-ledger system we conceived a long time ago: it can be the solution to dramatically increase financial inclusion and access to global financial services, and good things will follow everywhere in improving the state of the world.

In what space do we operate? How is the value-added created?

The space the project operates in is vast, and the potential for new value creation is enormous. Many people wonder, how the value generated by blockchain and cryptocurrencies is measured, and how it can be best understood. As concerns cryptocurrencies like bitcoin that some see as a store of value, bitcoin is many times compared to gold, with the global value of gold stock of USD 7 trillion or so seen as potential value for bitcoin. For many payments oriented blockchain projects, a good measure is the value of transactions and economic activity within such blockchain.

In our case, we could look at a few reference examples from the real world:

Global payment card schemes

Global payment card scheme operators like Visa, MasterCard and American Express have a combined market capitalization of more than USD 500 billion. A significant portion and eventually all traffic from closed-end card networks may migrate into the blockchain. At the same time, the value of that economic activity, e.g. being that USD 500 billion and more between those three, will also migrate into the blockchain, and, in fact, the blockchain can produce even greater value-added through efficiencies enabled by the most modern technology. That is why the major card schemes hate and try to block cryptocurrencies, because cryptocurrencies can take over their business: neither plastic cards nor their virtual versions are any longer needed in between, when transactions between counterparties are directly conducted in cryptocurrencies or similar transfers of value.

Global payment messaging systems

The old-school closed-loop SWIFT network helps to convey payment messages worth trillions of dollars every day across borders and around the globe. Blockchain can do the same, in particular the more advanced second generation blockchains, and replace SWIFT and similar payment messaging systems that form the core infrastructure of the previous global payments infrastructure, which is a myriad of often very old systems that actually do not even communicate with each other but need many kinds of filters in between. Blockchain and its latest innovations represents an opportunity to disrupt SWIFT and take over its business the same way as that of the global card payment schemes that are based on old generation technology.

Global banks

Already 70 biggest banks in the world have a combined market capitalization of USD 6–7 trillion, and the whole global banking sector much more. When more and more people realize that the blockchain is actually better than the bank and the bank account and migrate into cryptocurrencies, banks and bank accounts as we know them will gradually disappear and morph into the blockchain. This will cause massive transfers of transactions, other banking products and services, and the underlying economic activity into the blockchain, which will reflect in the intrinsic value of the blockchain.

Massive value migration potential

When we look at the spaces touched by this project (which will be eventually more than those of global payments and transaction banking, as briefly explained under the ecosystem part), it is very easy to see that the full potential is a value migration of trillions of dollars from old to new — like the value of the global gold stock in the bitcoin example. Even if this project caused only a fraction of that value to migrate and created in the new blockchain setting, it would still be enormous. What will further add value and the self-reinforcing synergies is the thinking in terms of a complete ecosystem to be built, not only the blockchain component and its underlying protocol. This thinking underpins the second generation blockchain project like ours: there indeed are vast blue oceans ahead.

The 3 key dimensions of the Argentas Ecosystem

How do we do it? To make this all happen? Through a careful analysis of the existing projects and the technologies and their performances in terms of what is currently possible, we have developed a plan and specifications that meet our objectives. The execution of the plan will take place partially in parallel between certain of the key components, and some will follow later on in the next phase.

As explained above, we do not see the project as a new, unique blockchain in a ‘vacuum’ only, but as a complete ecosystem to be formed around the core protocol and the blockchain running on the protocol. In our project, there are three key dimensions to this ecosystem that will create automatic internal synergies, reinforcing it and increasing its value-added through every additional piece of economic activity or transaction. These dimensions are:

HydraNet — the core protocol and blockchain component,

2. Network interfaces (e.g. wallets) and bridge entities (e.g. banks, exchanges) — enabling network access, use and bridging between real and crypto economies, and

3. Dapps — decentralized applications running on the HydraNet.

The core protocol and the blockchain network (HydraNet)

For the core part of the project in terms of the protocol governing the blockchain and the blockchain itself, “HydraNet” as named after the ancient monster that had new heads growing to replace any head cut off, just like a blockchain is resilient in not being dependent on any single network node but they can take over from each other, we have both analyzed the existing key protocols and blockchains in terms of their strengths and weaknesses and their suitability for a purpose similar to ours, and amended our specification whenever we have found better ways to achieve a desired functionality. Some of the key features of the HydraNet are the following (which are likely to evolve in this fast-evolving world of blockchain and cryptocurrencies as the implementation progresses, whenever new solutions and better innovations are discovered, to better achieve a desired outcome):

Like bitcoin, HydraNet will be a decentralized and distributed ledger (DL)

(DL) Bitcoin is the native currency of the bitcoin network, and HydraNet will equally have its comparable native digital asset enabling network transactions

enabling network transactions To make HydraNet better facilitate large scale, low latency (i.e. fast) and low cost transactions , there will be no “mining” or equivalent in the HydraNet — one will be able to run a HydraNet Core node validating transactions, but since there will be no mining, transaction validation will not reward node operators with any newly “minted” HydraNet digital assets (while there will be minimal transaction fee covering for the processing cost of the nodes)

(i.e. fast) and , there will be or equivalent in the HydraNet — one will be able to run a HydraNet Core node validating transactions, but since there will be no mining, transaction validation will not reward node operators with any newly “minted” HydraNet digital assets (while there will be minimal transaction fee covering for the processing cost of the nodes) This removal of the mining component that is required for the “proof-of-work” (PoW) or “proof-of-stake” (PoS) approach in confirming transactions will require much less computing power and thus make the HydraNet blockchain much more energy-efficient and environmentally friendly than any mining-intensive cryptocurrency such as bitcoin and ethereum

and thus make the HydraNet blockchain much more and than any mining-intensive cryptocurrency such as bitcoin and ethereum Thus, instead of the PoW approach of bitcoin, HydraNet will use a consensus model called Hydra Protocol (HP) for transaction confirmations; HP will leverage a variation of an approach commonly known as the Byzantine Generals’ Agreement , with the objective of minimising and optimising the percentage of network nodes out of the total required for transaction confirmation, for which research is underway but requires further work — there have been attempts in certain projects to find solutions called ‘quorum slices’ or similar in order to lower the relative number of nodes required for transaction validation, and while there are functional solutions to improve this in ways that it cannot cause network blockages in the event of lack of quorum or in cases of disagreements and risks of malignant forks, and while secure solutions have been created, no ‘perfect’ solution has yet been conceived by any party, which means that significant challenge and opportunity remains to improve on any other attempt to solve this

called for transaction confirmations; HP will leverage a variation of an approach commonly known as the , with the objective of minimising and optimising the percentage of network nodes out of the total required for transaction confirmation, for which research is underway but requires further work — there have been attempts in certain projects to find solutions called ‘quorum slices’ or similar in order to lower the relative number of nodes required for transaction validation, and while there are functional solutions to improve this in ways that it cannot cause network blockages in the event of lack of quorum or in cases of disagreements and risks of malignant forks, and while secure solutions have been created, no ‘perfect’ solution has yet been conceived by any party, which means that significant challenge and opportunity remains to improve on any other attempt to solve this While the network transactions will remain anonymous, with only the transaction hash and the public account key visible on the network i.e. are the same way pseudonymous as those of bitcoin , we will have to further study for measures augmenting user privacy while developing tools to minimize any network use for illicit use that may damage network reputation, if not prevented or contained — it is always a balancing act, and especially in today’s world given the recent global scandals of abusing private user data (not related to any blockchain but social media), network user privacy is paramount — however, there has to be a balance between the two — a complete privacy and anonymity of projects like Monero, and at the other end unencrypted traditional bank transfers of the centralized closed-loop system, because, in particular, concerning transactions that relate to e.g. fiat money and interface with regulated institutions, transactions will not be completed, if there are no sufficient means to identify such network users that interact in assets requiring interfacing and asset conversions

, we will have to further study for while developing tools to minimize any network use for illicit use that may damage network reputation, if not prevented or contained — it is always a balancing act, and especially in today’s world given the recent global scandals of abusing private user data (not related to any blockchain but social media), — however, there has to be a balance between the two — a complete privacy and anonymity of projects like Monero, and at the other end unencrypted traditional bank transfers of the centralized closed-loop system, because, in particular, concerning transactions that relate to e.g. fiat money and interface with regulated institutions, transactions will not be completed, if there are no sufficient means to identify such network users that interact in assets requiring interfacing and asset conversions Further study will be required, whether it will be possible to achieve intrinsically so low network latency that eventually millions of transactions will be processed per second, or a variation of “ lighting network ” as a secondary layer (as it may currently seem to be the case) will be implemented to provide the core network with additional payment channels further speeding up global transaction processing

” as a secondary layer (as it may currently seem to be the case) will be implemented to provide the core network with further speeding up global transaction processing It is estimated that given the planned structure of the protocol and some existing non-PoW/PoS blockchain projects (with no mining), the intrinsic transaction confirmation speed will be at least 2–5 seconds with an intrinsic transaction processing output of at least in tens of thousands of transactions per second, but it will require further research and tests to be able to conclude, whether quasi-instant native confirmation speeds can be reached, or whether, as suggested above, application of a specific variation of the further “lightning” layer with additional payment channels will be required to achieve that objective — it will be achievable either or anyway, but it cannot be concluded as of yet, and since there is no live “commercial” application of lightning anywhere to date, no parallel information in another previously created project can be used to quasi-validate the assumptions or not, but further proprietary study will be required

The “base case” of the network is that all nodes will replicate the “transaction database” of the network with the full account ledger containing the network transactions i.e. the distributed / decentralized ledger mentioned above, but further research will be required to determine, whether a variation of “ smart sharding ” will be required to be implemented for further speed and efficiency, meaning a the ledger / database portioning so that not all transactions are held by all network nodes but the load is spread around the network, as otherwise each node would, especially with a global transaction volume, become massive in size, making the load on individual servers very heavy and possibly clogging the network performance

” will be required to be implemented for further speed and efficiency, meaning a the ledger / database portioning so that not all transactions are held by all network nodes but the load is spread around the network, as otherwise each node would, especially with a global transaction volume, become massive in size, making the load on individual servers very heavy and possibly clogging the network performance The native digital asset of HydraNet will be designed such that it can both facilitate intra-asset transactions in the native asset on the HydraNet and transactions including transfer of value of any other asset (cryptocurrency, fiat currency, physical asset or other types of digital assets — anything of value) — only the ability to effect transactions of any asset, of any value, will enable a true global payment / value transfer network that is our objective

of HydraNet will be designed such that it can both facilitate intra-asset transactions in the native asset on the HydraNet and transactions (cryptocurrency, fiat currency, physical asset or other types of digital assets — anything of value) — that is our objective To facilitate transfers of any item of value, any user will be able to “issue” any asset on the network ; here, the HydraNet interfaces / bridges will play a key role, as any non-native network assets are held at specific bridge entities such as banks and currency traders operating in certain fiat currencies or e.g. holding gold reserves that can be digitally issued on the HydraNet, and such assets can then digitally be transferred from any sender holding them to any recipient — thus the network interfaces / bridges will support / back various types of non-native assets

; here, the HydraNet interfaces / bridges will play a key role, as any such as banks and currency traders operating in certain fiat currencies or e.g. holding gold reserves that can be digitally issued on the HydraNet, and such assets can then digitally be transferred from any sender holding them to any recipient — thus the network interfaces / bridges will support / back various types of non-native assets Given that the native network account structure will facilitate an issuance of any asset on the network to be able to meet its requirements as a global value transfer platform, at the same time, it will intrinsically facilitate the function of a “ decentralized exchange ”, where transactions between any asset of value can automatically take place, matching the best bid and offer available. The network transactions include such exchange transactions as the structure is the same, leveraging the HydraNet network account structure enabling issuance of any asset, and transactions between them

”, where transactions between any asset of value can automatically take place, matching the best bid and offer available. The network transactions include such exchange transactions as the structure is the same, leveraging the HydraNet network account structure enabling issuance of any asset, and transactions between them It is easy to understand, how HydraNet integrates with the “real economy”, when one imagines the network interfaces / gateways such as wallets, exchanges (in addition to the native decentralized exchange, from which the order book can also be fed through the network interfaces to any other exchange, complementing its other order book in other digital and/or traditional (non-crypto) assets) and banks, to which any network user can deposit non-native assets, which can then be issued digitally on the network, transacted, and any recipient of a transfer can then “redeem” or “cash” a fiat money or any other “physical” asset received at a bridge entity

We consider it very important to develop the interfaces and bridges in parallel with the network itself, even create “model” bridge entities and run them in a non-preferential manner, as the network cannot operate in a “vacuum” as explained above but needs to be bridged with the traditional economy, as only functioning network bridge entities (gateways) will bring in more assets and transaction volume into the network, and, gradually, more and more economic activity will migrate into the network, making it more and more self-contained with an increasing dapp ecosystem

As explained above, the Argentas Project differs from any other blockchain project also in the sense that we recognise not only the importance of the network itself but the bridge entities and the development thereof, because our objective is a transformational global payments and value transfer system, and we do not consider it realistic to grow and develop it detached from the rest of the world, but the quality and number of interfaces and bridge entities must be maximised, to maximise the migration of transactional business into the network — it could be characterized that the Argentas Project is in certain ways a “hybrid” project, when the bridge entities are considered, and there are “crypto idealists” that may claim that the involvement of bridge entities is not “pureplay crypto”, but we believe that the “pureplay crypto” of the project i.e. HydraNet with its native digital asset will be eventually much more powerful and widespread, when we at the same time support the development of the network interfaces, bridge entities (both in terms of greenfield projects and recruiting existing ones to join the network) as well as the wider HydraNet dApp ecosystem development.

Network interfaces and bridge entities

Native network interfaces such as the model wallet will offer direct connection to the network, and will feature not only the native digital asset of the network but also numerous digital and traditional assets that are issued on the network, and can be transacted through the network’s native decentralized exchange function. Bridge entities are third party non-native entities that form a ‘bridge’ between the traditional economy and the crypto economy running on the network. Bridge entities can be e.g. banks, money transmitters, currency traders and so on. The project intends to create certain model entities in the most streamlined manner as sample entities to show, how the native network features can be smoothly integrated to a non-native entity and make it function as an extension of the network, interfacing with it, and at the same time being connected to the traditional economy through its ‘centralized ledger’ closed loop setup. Bridge entities are important parts of the wider ecosystem in feeding economic activity into the blockchain network.

Dapps — decentralized applications

The second phase of the project, after the core network and its interfaces and model bridge entities, will be to expand the functionalities into further dapps. The nature of the network will be particularly suitable to financial services dapps such as lending dapps, when the native network features such as issuance of credit can be efficiently leveraged in issuing credit to the client users of such a dapp. There are numerous possibilities to develop dapps leveraging the network’s native capabilities such as merchant processing online and at points of sale leveraging the transaction processing capacity of the network, investing products through any financial instrument issued on the network, venture capital financing, identity and reputation management utilizing the immutability of blockchain records and so on. With the core network, interfaces and bridge entities, the dapps will form a complete crypto ecosystem that has vast potential for both internal synergies and growth of economic activity.

A complete, coherent and consistent ecosystem model

The three key dimensions of the ecosystem form a complete, coherent and consistent setup, where each component is well-aligned to serve towards the common objectives and concrete results. The ecosystem oriented thinking underpins successful second generation blockchain projects, where plans are more concrete and more realistic to achieve the desired outcomes and perform well. Since we know thoroughly the industry substance being disrupted and transformed through the project and the ways to develop the required technology, we are in a strong position to make this all happen, and happen in the way that will help to create vast value-added to the users of the network and, further to the network-driven ecosystem as well.

Private token pre-distribution event for community

The project offers an early opportunity to its early fans, believers and supporters to participate the story in a prioritized private pre-distribution event of the AXU (Argentas Exchange Unit) Tokens on its website. Normally, a public token distribution period would take place in the 3rd quarter of the year for wider audiences beyond the closer community. In line with its pioneering spirit, the project chose to utilize the Stellar platform with its lumens (XLM) rather than the most commonly used Ethereum platform for its private token pre-distribution and the later public token distribution event, also because the approach of the Stellar platform is several respects closer to its own than that of Ethereum which has faced serious bugs, security risks, network congestion and very expensive transaction prices (gas), and enabling the project to experience it at work as well, in contrast with our own specification and objectives. The AXU Tokens have also been verified and listed on the Stellar Port decentralized exchange.