We need a stable crypto to make this technology usable for everyone. Once we have that, there’ll be room for thousands of other specialized crypto-tokens, each with specific niches, markets, and so on – says Eiland Glover, co-founder and CEO at Kowala, in Bithub.pl’s #SundayInterview.
The speed and efficiency of the blockchain seems to be a growing issue, especially with regard to Bitcoin. Could you outline what the problem is about?
Eiland Glover: The root of the problem with Bitcoin is that the maximum number of transactions per block is 2,020, and, since only one block is produced every ten minutes, on average fewer than four transactions are created per second. This is ridiculously slow for a payment system — Visa can can handle thousands of credit card transactions per second. Even worse, during periods of high demand, many transaction senders offer extra-high transaction fees to get their transactions included in the next block. At such times, all other transaction senders are, in turn, forced to increase their fees in order to get their transactions processed. It’s not uncommon for a single transaction to be hit with the equivalent of a 10 USD fee. This obviously won’t appeal to someone who wants to complete a small transaction.
You claim to have created the fastest and most efficient blockchain ever. How have you accomplished that?
EG: Instead of competitive mining based on solving cryptographic problems, we use a much more efficient consensus protocol that is very close to Tendermint’s implementation of Practical Byzantine Fault Tolerance (PBFT). PBFT was first published in 1999 and is a well-understood and highly efficient protocol for having a group of independent people come to agreement on a set of facts, even in the face of malicious agents. The core of the efficiency is that the hard work of proposing a block is done by one randomly selected “proposer.” The other nodes of the network vote on this proposed block. The PBFT algorithm makes cheating in the voting or in the selection of a proposer too expensive to be worth the trouble.
Our first blockchain kUSD is now in testnet, and we are seeing block times of under one second. We’re aiming at being able to process thousands of transactions per second.
Your kUSD is pegged to the value of US dollar so it’s kind of dependent on fiat money. How is it autonomous then?
EG: The mechanism to keep the value of kUSD stable relative to USD is autonomous, meaning it does not rely on a centralized party. Beyond kUSD, the Kowala Protocol allows any unit (EUR, GBP, JPY, etc.) to play the role of underlying asset. Each such asset can give rise to its own cryptocurrency token, which maintains a stable value relative to that asset.
Mining in your ecosystem works differently than, say, with Bitcoin network. How is it different?
EG: In our system, the more mining tokens you install into a mining client, the more work you can do, and the more work you do, the more block rewards you will earn. A mining client can run on a regular laptop or even a cloud-based computer, and uses very little electricity.
With so many cryptocurrencies on the market how do you plan to succeed? The competition is tough.
EG: The lack of trusted, stable cryptocurrency is keeping the market small. We need a stable crypto to make this technology usable for everyone. Once we have that, there’ll be room for thousands of other specialized crypto-tokens, each with specific niches, markets, and so on.
Interview by Przemyslaw Cwik