Your Coin White Paper

Linear scale means continuous growth

Abstract

Your Coin is a blockchain based platform for processing digital transactions of fiat currency in an environmentally friendly manner. Each coin represents a single deposit of fiat currency and is tracked on three ledgers. The first ledger includes all the transaction data from the coin’s creation in the genesis block to the current owner’s proof of ownership. The second ledger is a running list of the proof of each individual transaction. The third ledger is the list of ownership.

Each coin has its own set of these three ledgers, which means that a single block in the chain is limited to a single transaction. The first ledger is held by the owner of the asset in a digital wallet that may be held on a physical device (such as a mobile phone) or in a cloud-based application. A reputable bank holds on to the proof ledger and the ownership ledger.

Each transaction is computed directly by the user receiving the coin, verified by the spender of the coin, and reported to the bank. There is no need to wait for a miner to solve the block for your transaction to occur, which means that a user may process many transactions on separate sets of chains all at the same time in order transfer ownership of the right amount of currency to the new owner.

Coins are minted by banks that are trusted partners in the ecosystem. The banks then provide users the proofs as needed in exchange for the interest the bank is able to earn from holding the user’s currency. Coins and their chains can be created and destroyed as needed, either when physical money is deposited and withdrawn, or when change is needed in splitting or combining coins to make assets of different denominations.

The continuous use of this currency allows the users to create proof of income and proof of spending for use in other third party applications such as credit monitoring and advertising marketplaces.

 

Introduction

Your Coin is our new blockchain and fiat-backed digital currency platform. Physical currency has been around for thousands of years and today fiat-based currencies are widely accepted and legally traded. Blockchain-based currency has been around for over 15 years, though is still not universally accepted. Digital transactions of fiat currency have been around since the early days of the internet, and today many people go through their day without ever touching physical money thanks to credit and debit cards, often using just a virtual card stored on a personal device such as a phone or a watch. This digital transformation of real money is happening all around us and there is no going back for many users.

While blockchain has promised digital security and anonymity, in many cases the rush to make it easy to use has led to users having their money stolen. There remains a gap between what is secure and what can be secure, between utilizing trustless infrastructure and being able to trust yourself to maintain your own security.

The novel type of blockchain, involving three ledgers per coin builds on the security of traditional blockchain applications. The hashing algorithms that have been developed and will continue to develop will be implemented as soon as they are validated by NIST or other governing bodies. It reduces the energy required to produce a transaction to a single hashing algorithm run once to generate and once to validate, with no wasted hashes. It allows users to create financial profiles which they can use to increase value to themselves across many digital industries.

 

Your Coin Platform

Your Coin is the platform that enables every user to share in the digital economy. It was designed to grow with the needs of the ecosystem, meaning that there is an increase in efficiency as the number of coins goes up. The platform hosts two different groups, the users and the banks. The banks are traditional banks that are held to a high standard based on banking regulations within their countries of operation. The users can be individuals or institutions, any party who will be involved in receiving or spending money.

 

Stable coins

After watching the value of blockchain-based currencies become volatile, many people came up with ideas for stable coins. They were in effect pegged to the value of fiat currency – meaning that a coin you buy for a dollar (or the currency of your choosing) would always be worth a dollar. To appease governments, they are generally required to maintain that dollar 1:1 in a monitored account. While brick and mortar banks have seen a significant increase in regulation following the housing bubble and recession of 2008, even they are not required to have 1:1 for their money.

Your Coin is a new type of blockchain that can be blended into a bank’s application on behalf of their customers. The aim is to create the most environmentally friendly currency since bartering and complete every transaction as quickly as possible without sacrificing security. Your Coin is based on the concept that the only people who care about a transaction are those that are involved, either now or in the future, and that sharing transaction information beyond those individuals is both wasteful and unnecessary. The security of a blockchain does not increase with the number of transactions per block, nor with the time it takes to solve a block, and any gas paid to a third party to mine (or even care about) a transaction is wasted.

 

Background

As with all blockchain based currencies the end goal is to create provable transactions between users in the digital domain. Most blockchains are based on having a single version of the truth which is shared between the peers in the network. Peers are typically defined based on the specific chain and how they are constructed, but the general game theory of the situation is that most of the peers are good and therefore if most agree on the current state of the chain, then what they agree upon is right.

The biggest issue with blockchains is that you need everyone to agree that a transaction has taken place. This means the entire network, or at least most of the peers agree, and have confirmed that the transaction was good. But this takes time, and in that time, life continues to happen. If you wait for ten minutes for your bitcoin transaction to clear at a convenience store, then it wasn’t convenient at all. If you had to pay the network more than you paid the merchant, then it isn’t sustainable.

The network of your chosen blockchain currency doesn’t care about you or your transaction. Unless you are a whale making a major purchase, then you don’t matter. The only parts of the network that truly cares about your transaction is the person who you are transacting with, and yourself.

We conceived a simple chain which accounts for the entire history of a specific coin. That coin has a serial number. It has a past – it was created by a bank in exchange for a specific amount of fiat currency. It was used to buy things. It changed hands. But what it represents never changed, it is that piece of fiat currency that the first user entrusted to the bank. What it means to you is that this is money, and it is your money, and that you are free to spend it how you wish. It also means that whoever you are giving the money to needs to be able to prove that it was your money, you were free to spend it, and that it has become their money.  They are then just as free to prove it is now theirs and that they can freely spend it when that time comes.

Users

Within our ecosystem there are three entities: a person looking to spend a coin they have, a person looking to receive a coin, and a bank holding the fiat. Each needs to know they can trust the others, and none of them explicitly do.

The person looking to spend the coin is doing so to buy something so we will refer to them as the spender. The person earning the coin is the receiver, and for clarity we describe them as selling something. The goal of a transaction is that the spender transfers ownership of the coin to the receiver. The bank is the bank.

The bank is required to do one thing to make this platform successful. They need to provide proof that the spender isn’t lying to the receiver.

The spender needs to prove that their money is their own and give the receiver a path to becoming the next spender. They need to show the receiver that all the coin’s transactions have led to this moment, to this spender holding this coin, and the information they have matches the proof the bank has which will unlock the value of this coin.

The receiver doesn’t believe anything that the spender is sharing at face value. They will validate that every portion of the information adds up, and that this spender has a coin from a trustworthy bank. The receiver will only believe a coin is valid when they have personally calculated the values of the blocks that led up to this point, and that they match exactly with the record provided by the trustworthy bank.

Ledgers

For every coin there is a set of three ledgers: Transaction Ledger, Proofs Ledger, and Ownership Ledger. These ledgers are unique to the specific coin they represent and are easily identified by the serial number for the coin.

The Transaction Ledger has a complete list of every completed transaction to date. It begins with the bank creating the coin, and noting the specifics, such as the bank’s information including the URL of the Proofs Ledger and the Ownership Ledger, the value of the coin, and the maturation period (based on the interest rate and value of the deposit and the cost per transaction). The next block is the bank giving the coin to the first user, with their information. Subsequent blocks are the transactions between users that have followed.

The Proofs Ledger is a publicly queryable list that is maintained by the issuing bank. Each entry in the list is the accepted hash value of a transaction that was added to the Transaction Ledger. Generally, any user may query the Proofs Ledger at any time, though in some cases access may be limited by the user to decrease the maturation period.

The Ownership Ledger is a list of the public key of every owner who has owned the coin. It is not available for queries, but rather may be called by an API in the format “is Public Key XYZ the current owner” which will return a binary true/false response.

 

Transactions

A transaction is completed by adding a new block to the chain for a specific coin. While the full transaction may require multiple coins, they are all processed individually. While that seems excessive, think about buying a watch for $500. The store would check that each of the $100 dollar bills is real, and this is no different.

The first step in the transaction is presenting the coin(s) to be verified. There are many ways to share the information between devices such as QR codes, NFC, text message, or IP, but the important thing is that the recipient of the coins has the full chain for every coin they are going to verify.

The recipient then calculates the hash value for every block within the chain. Hashing algorithms are easy to verify the outcomes of, so this step takes minimal effort by the recipient’s device. Once they have verified that all the hashes they calculated match the hashes provided in the footer of each block, they can request the Proofs Ledger in its entirety as well as the most recent record from the ownership chain.

The bank may decide to share that information with the recipient or may ask the spender to verify that the transaction is underway. Once the bank decides to provide the information to the recipient, the recipient verifies that every hash they calculated matches the Proofs Ledger and that the ownership record matches the identity of the spender.

Next, if everything matched, the recipient calculates the next block of the chain. Then, following the formatting of the application, they write the next block assigning ownership to themselves and calculate the next hash. They then return that information to the spender.

The spender shares the hash and the information identifying the new owner with the bank, giving approval to update the Proofs Ledger and the Ownership Ledger. Once completed, the transaction is official.

The recipient will again request the Proofs Ledger and the most recent ownership record from the bank, and when they find their hash and identification, they know the transaction is complete. The transaction itself will happen in a fraction of a second, and proof of the transaction will be available in about a second. The recipient can almost instantly prove that the coin is theirs and as soon as the bank has recovered the cost of the transaction through the accrual of interest, they may spend the coin however they choose. The expectation is that the maturation period will range from less than a second for large value coins, to a few minutes for smaller value coins.

 

Security

A blockchain application is only secure if every attacker has a 0 probability of influencing any chain. As with all software-based systems, perfect security is not achievable. Therefore, we are forced to make things as difficult as possible and rely on time to take care of the rest.

In order for a thief to steal money in the Your Coin system, they would need to create a block that shares a hash with an existing current block, and it would have to follow the formatting requirements, and list them as the owner.

To spend the coin, they would be able to convince a third party that their version of the block is correct (this is assumed as a given since it is the only version the third party has access to). The third party would request the hash value of the chain from the bank. If this value matches what the spender provided (known as a collision) then the third party would agree to earn the coin. The problem goes from difficult to near impossible because the thief/spender would have to convince the bank that they are the account holder who owns the coin, meaning they need to have the private key of the actual owner. As with any other system, if a thief has the keys and the means to convince a multinational bank that they are a specific account holder and can find a collision before the actual account holder spends the coin, then no platform in the world will prevent the theft of that coin. Here however, the theft is limited only to the coins for which they can find collisions before the coins are spent.

If you take the entire world’s computing power, and consolidate it to work on finding a collision for a single block, how long would it take to find the collision? This is not a rhetorical question but rather a method for setting limits for our platform. We can calculate the amount of energy it takes the bank to process a transaction and from that find the amount of time that a given coin will require to accrue enough interest to cover the costs of the processing. Once we know that time, we can say that if all the world’s computers worked together to find a collision it will likely take a much longer time.

We need to look at the computing costs of various hashing algorithms to find the one that matches our time scales. We can then use the assumption that we need to re-mine blocks much, much faster than the world could find collisions, whatever that may be. That can be in the form of a person paying themselves with their own coin (just creating a new block), or by combining or splitting coins to create brand new ones.

As computers get faster, we may need to update hashing algorithms, in which case each chain can be updated as needed over time as opposed to a single all at once function happening across the network. This can be thought of as a withdrawal paired with a new deposit. The new coin could utilize any new hashing algorithm which meets the standards set to protect the asset. While these new hashing algorithms may require more computing power, it is likely that mobile phones will also increase in computing power.

Two values need to be calculated based on architecture and the speed of worldwide computing power. The first is the cost per transaction for the bank. This includes the cost of sharing the Proofs Ledger and the current owner with any interested parties (there may be multiple requests per transaction) as well as the cost to verify identities and update the key file. These costs must be borne by the coin maturing (interest earned). This means that larger coins, or coins backed by higher yielding assets may mature more quickly than smaller coins with lower yields.

The cost of a transaction and the interest yield determine the time to mature (the bank recoups all costs on every transaction). After the coin has matured, it is available to be re-spent. Even after a coin has matured the bank continues to earn interest, which is where the profit margin for the bank is gained.

The time to find a collision is a calculation based on the current computing power of the world and the hashing algorithm. Some algorithms are faster than others (time to calculate a single hash value), and some have more possible outcomes (a hash with an output of 2 base 10 digits will be 10 times more likely to have a collision on the first try than a hash function with 3 base 10 digits (1:100 vs 1:1000).

A coin will be forced to generate a block with the same user for the spender and the receiver such that the maximum age of a current block for a coin is much, much less than the length of time to find a collision. Once a coin reaches the maximum age, it must be spent, though the coin can be spent by automatically paying it to the current owner. As this has a lower cost (the bank can automate the process and there are no external calls) the time to mature can be much less.

 

Oversight

The ownership chain records the owner’s PKIs, account number, or other identifiable name, and affords banks the opportunity to know their customers in a manner that traditional blockchains can’t offer, especially when paired with the bank’s application running on users’ mobile devices. This allows banks to track who owns what at a level they can choose, in keeping with the local laws and regulations.

When an authority comes into the bank with proper legal recourse they can freeze the assets of specific users, as with traditional bank accounts. However, there is also the possibility to freeze only the specific coins which are in question (specifically noted in a warrant). In this manner a user may retain the right to utilize coins that were unrelated to suspected illegal activities.

 

Eco Friendliness

This process uses very little energy compared to traditional blockchain ecosystems, as there is far less wasted computing or share cycles. We are working to validate the decrease in energy usage compared to cryptocurrencies and paper and coin currencies as well. By removing the need to grow cotton for bills and mine metals for coins, we decrease our overall carbon footprint. By being able to carry our money in digital format we cut down on the overall weight of moving money from one place to another.

As an example, think about a plane full of people flying from New York to Los Angeles. If 200 passengers each have 8 ounces of cash (bills and coins) in their pockets, then the airplane needs fuel to carry an extra 100 pounds of weight between the two cities. Multiply that across every flight, every car trip, and the vehicles that deliver cash and coins to your local bank and you quickly see the waste generated by moving money around.

Our goal is that Your Coin creates the greenest currency solution in the world.

Financial profiles

While users utilize the platform, they can create a profile of their earning and spending habits which they can utilize in other digital domains. This feature would be a function of the application storing proofs of various transactions and affording the user a profile showing where their money comes from and where it goes.

Addressable advertising continues to be an area where first party data is desperately needed and often reluctantly shared as the user has limited benefit. The ability to share your financial profile and be rewarded for it would lead to many instances where the users may be paid outright for viewing an advertisement, or where the user’s coins could be instantly matured, replacing the need for the bank to earn interest to cover the next transaction.

Furthermore, the banks, if given permission, could create abstracted user profiles based on shared trends between users. They would not know the full contents of a transaction, but the value and the transitions between owners would produce large amounts of highly valued data. When paired with the individual data the insights could be highly valuable.

Conclusions

Your Coin is a platform which is intended to be integrated into the existing applications of world leading banks. It has the goal of creating a simple peer-to-peer electronic payment system that uses less resources than any other form of payment. The users should be able to transfer money as easily as cash, in a secure application.