For the past few years, technology giants and enterprises have taken on the biggest challenge in the financial industry — building an entirely new financial system that is powered by both artificial intelligence (A.I.) and blockchain technology.
The advantage blockchain technology brings to the industry is a decentralized mechanism which provides for a safe and encrypted means of transacting directly and instantaneously with parties, without the need for intermediaries.
Corporate enterprises like IBM, HP Enterprises, Walmart, and many others have already publicly announced their involvement and utilization with the technology as they begin to integrate it into their core business models.
Yet, why does the market already seem flooded with these platforms? The answer is that many of these aren’t ready for actual usage. There’s no question that our financial sector needs decentralization and scalability.
But, how do we convince these financial players and consumers that we are ready to place our trust in such platforms?
We are still learning about cybersecurity threats and hacking escalades that would make it seem that these platforms are not yet ready for mass adoption.
What’s Wrong With Our First-Gen Platforms?
We are still in the very early stages of blockchain technology, dubbed “first-generation.” The existing implementations of systems like the proof-of-work (PoW) and proof-of-stake (PoS) protocols, is excessive computational resources or mining required.
In a previous interview with Grit Daily, Sid and Alicia Belzberg, two entrepreneurs who invented and patented the Belzberg system — the first ever electronic ETF, discussed how their company, Infinigon Group, are injecting A.I. and blockchain technology into a “next-generation” blockchain platform, Ig17, which is designed to fill in the many gaps these “first-gen” platforms have left behind.
(1) The technology behind blockchain must truly be decentralized, robust, secure, fast, scalable, and egalitarian;
(2) Smart contracts are still subject to human error and thus vulnerable to attack; and
(3) Digital currencies, regardless of their purpose, must be backed by and pegged by real-world assets to sustain their value.
To fulfill those three concerns, the second-gen blockchain platforms must be decentralized, secure, and highly-scaled for use.
But why aren’t such basic qualities still missing from these platforms? Good question.
Most blockchain platforms, while advocating a decentralized system, are still developed towards centralization because of how PoW and PoS protocols work.
Additionally, mining and staking are only available to those who can afford massive computing resources on top of paying those high electric bills.
For these reasons, platforms continue to lack scalability, allowing for smart contracts to be deemed vulnerable and cryptocurrency exchanges to remain open to cybersecurity attacks.
Take the crypto exchange, Binance, for example. It just resumed its trading activity after falling victim to a massive data breach last week, where hackers made off with more than $40 million in bitcoin. Hackers stole API keys, two-factor codes, and other information which allowed them to transfer more than 7,000 bitcoins to their own wallets. Binance, unfortunately, covered the stolen bitcoins with its own funds.
In most instances, attackers are usually gaining control of a network’s computing power, providing them with the ability to “re-write” transaction history, which is the one thing the Blockchain prides itself on not allowing to happen.
The iG17 Blockchain
In our conversation with Alicia Belzberg, she told us about their company’s creation of the Ig17 Blockchain — a second generation platform that does what first-generation platforms should already be doing.
Grit Daily: How will this technology help change the stock markets?
Alicia Belzberg: Our iG17 Blockchain platform is based on a dual blockchain architecture and involves a chip-level, AI-based unassailable security in a Trusted Execution Environment on each node, thus making it impervious to rogue node administrators — it is tamper-proof.
Our Proof of Neutrality (PoN) protocol does not rely on the computational resources, as is the case with the PoW protocol, nor does the PoN rely on the assumption that the majority of the nodes are honest, as is the case with both, the PoW and PoS protocols.
For those familiar with blockchain platforms, the protocols, PoW (proof-of-work) and PoS (proof-of-stake) should ring a bell.
With iG17, all nodes are treated equally. Irrespective of computing power, popularity, or stake in the platform’s digital currency, all nodes have an equal opportunity to participate in validation revenue. What this means is that it prevents the formation of mining consortiums and centralization of currency ownership, while at the same time, reducing the risk of cybersecurity attacks such as 51% attacks.
Additionally, its unique block validation protocol, PoN, or proof-of-neutrality, allows for the platform to have an enormous speed advantage over other systems. According to the company’s whitepaper, the platform can process thousands of transactions per second without resorting to centralized proof-of-consensus or hybrid solutions.
With respect to smart contract technology, it’s important to understand that even if they are computer code, they are still subject to bugs, no matter how many precautions are taken. Why? Human error.
With this new blockchain platform, containing such problems are essential. If a problem is discovered within a smart contract, the only person or entity affected should be and will be the entity that owns the account, nobody else.
If a problem is discovered surrounding a particular type of contract, the program template can be stopped from being linked to other account holders until the problem is fixed. Essentially, freezing everyone else out to prevent potential harm.
To avoid future instances like what Binance recently suffered, establish long-term, sustainable value of digital currencies is a must.
The problem with almost all digital currencies is that the vast majority of them do not represent equity in any goods or services, nor are they backed by any reserve assets. Luckily, Binance was able to front their own costs to return what was taken to those affected.
A system like iG17 which only issues tokens that are backed by real-world assets is the differentiator. By working with credible enterprises, both large and small, who are able to back their STO tokens with redeemable products, resources or services, in order to tokenize their asserts in the form of an asset-backed digital token, separate.
This New Blockchain Platform Looks to Build Higher Scalability Than First-Gen Platforms was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.