Skycoin Industry Analysis
Token/s Symbol: SKY
Industry: Internet Service Provision
Market Cap: $159,993,747 USD
Coin Supply: 25,000,000 SKY
Skycoin Introduction and Project Description
Skycoin is one of the oldest and most ambitious altcoin projects in the cryptosphere having been initiated in 2012 with the first Github commit in 2013. The core developers were original Bitcoin and Ethereum contributors and analysts with enough depth of vision back in 2012 to identify the issues which plague Bitcoin today. They set out to create Skycoin as a solution to those issues.
The principal problem they foresaw and corrected was centralization tendencies in Bitcoin's network which they correctly identified as being driven by mining and transaction fees. Skycoin's revolutionary Obelisk consensus algorithm solves this problem as it requires no POW or POS, relying instead on a mathematical construct of opinion dynamics to create a 51% attack proof "Web Of Trust" based network.
A significant consequence of this is that Skycoin consensus requires a minuscule fraction of the electricity required by POW consensus algorithms which renders it an Eco-friendly blockchain.
Having successfully constructed a truly decentralized blockchain, the Skycoin team continued pushing the crypto envelope by creating a stack of development tools for their blockchain. CX is a turing complete, post-smart contract programming language and CXO is distributed object storage for use on the skycoin blockchain, formally known as Skyledger.
Arguably though, what displays the most profound insight into the industry on the part of the Skycoin team is Skywire. Whereas most cryptocurrencies derive their value purely from speculation, Skycoin is a commodity backed coin. Skywire can be defined as a community owned and operated, anonymous, incentivized meshnet. In essence, it is the new internet for which Skycoin has created an entire technology stack and is the commodity from which Skycoin ultimately derives value.
Current state of the Internet & Internet service provision
The current Internet is essentially centralized and controlled. Web pages are dependent on the hierarchical Domain Name System to be accessible to browsers while being found is dependent on conforming to the specifications of search engines. Large social media platforms’ algorithms allows not only directed advertising based on tracking the users’ on line behavior but also censors and shapes the information which reaches the user.
The TCP/IP carrier protocol which the current Internet uses, is unencrypted by default and requires additional security wrappers such as SSL to secure data which would other wise be transmitted in plain text across the wire. Even if the data itself is secured, the user’s online behavior can still be tracked by monitoring which web sites are visited and with what frequency. ISP’s, who have a monopoly on the provision of bandwidth and in many parts of the world do so at an extortionate cost, are legally allowed to gather and sell this data and are actively doing so.
Skycoin enters the market at a time when net neutrality is a hot topic hotly contested with corporates lobbying governments to pass legislation in favor of more restrictions and less privacy while a rapidly growing privacy aware user base is increasingly resisting such legislation and searching for alternatives.
Skycoin provides a viable solution to the net neutrality issue by providing a full technology stack with which a truly distributed, anonymous and neutral internet can be constructed as well as a strategy to catalyze the formation of this network based on incetivizing users to provide bandwidth for Skywire by being rewarded with Skycoin to do so.
Bandwidth provisioning on Skywire is facilitated by hardware units known as Skyminers which can either be purchased directly from the company or built as a DIY (Do It Yourself) unit by the user as the design is open source and components are freely available on the open market.
The Skyminer hardware has gone into production and at the time of writing, the first batch of miners has been shipped
The Skycoin blockchain, Skyledger, is production ready and other projects are starting to adopt and use the Sky software technology. Among these are Suncoin from Solar Bankers who provide a distributed electricity grid, MDL which provides a trusted talent sourcing service on the blockchain, Metalicoin which provides blockchain based metals trading and Spaco who works on future Internet protocols.
Competition to Skycoin
While there are other projects in existence which provide elements or components which can compete with parallel components of Skycoin and Skywire, no single project provides the entire spectrum of technology which Skycoin does.
For example, IPFS provides distributed object storage which could compete with CXO while numerous meshnet initiatives could be perceived to compete with Skywire. However, both IPFS and other meshnet initiatives rely on the existing Internet’s hardware, protocols and software to function while Skycoin provides it all in-house.
Skycoin will initially leverage the existing Internet to establish it’s networks but it was designed to compete with, and ultimately replace the existing Internet.
In terms of anonymity, the TOR network provides pseudo-anonymous Internet operating over the existing Internet's infrastructure. Tor is slow and several exit nodes are known to have been compromised.
Strengths and weaknesses
Skycoin’s primary strength lies in their profound insight into, and thorough understanding of, both the Crypto and Internet landscapes, the problems faced there and the solutions required coupled with a remarkable drive to deliver these solutions in their totality.
The above could inversely viewed as being a weakness as the project is hugely ambitious and requires a tremendous amount of diverse inputs to deliver on what they set out to do. However, the project has been producing code for more than 5 years and have their products in varying states of readiness at the time of writing which reveals the dedication and tenacity of the team.
The strong technical focus of the team led to a deficit in public relations and marketing though which explains the project’s relatively low exposure to the public at large to date. This has been redressed with the recent appointment of a COO, marketing director, events director and community director.
The project delivers two tokens.
Skycoin is the primary currency of the project. It can be used for regular transacting via the desktop or mobile wallet application and will be used for rewarding participants in Skywire.
Coinhours are earned by keeping Skycoin in the user’s wallet. One Coinhour is generated for every hour that a coin is kept in the wallet. Coinhours are used to pay transaction fees on the Sky network and can be thought of to be similar to Ethereum gas. The primary objective of coinhours is to prevent spamming of the network.
The core Skycoin development team have a highly technical background. Synth, the lead developer was an early Bitcoin developer and Howu Chen was a former Ethereum lead developer. The team’s technical skills is rounded out with a skilled and experienced PR and marketing team centered around COO, Bradford Stephens who holds a degree in computer science and political science, specializing in distributed systems.
The Skycoin developer community is large and active with more than 60 developers from across the globe contributing code to their 30 active Github repos.
Despite it’s hugely ambitious nature, the Skycoin project has stood the test of time and is a mature project with a set of products which uniquely positions it at the leading edge of the Internet service provision market at a time when the need for their offering is about to grow exponentially.
Skycoin stands out in the cryptosphere as being one of only a few projects which have progressed past the whitepaper and fundraising stage to deliver tangible products and is now poised on the brink of take off.