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Following a number of prototypes and proof of concept builds, the Kinesis team determined that the most effective and fit-for-purpose selection for a blockchain network for the kinesis currency suite was to use the Stellar network forked to form a bespoke blockchain network. There was one defining objective that needed to be met with this choice, and this is the ability for Kinesis currencies to function as the high velocity, globally used currencies that form the basis for the Monetary System that Kinesis is pioneering. Stellar met these primary needs in a number of ways, both technical and algorithmic, but at the core of the decision lies 3 overarching reasons. 1. The speed of the Stellar network: The one obvious influence on this is of course hardware. The hardware upon which a network is hosted of course will have a bearing on the processing capabilities, but there is no accurate measure of this influence on network speeds prior to it being used in a network the scale proposed by Kinesis. The need for extreme flexibility here has been addressed by Kinesis through sophisticated designs in Cloud Technology. The other and more pertinent factor in network speed is, of course, its specific model of data propagation and cryptographic algorithm. In this regard, there have been a number of closely regulated tests performed on a number of blockchain networks. The outcomes of these give a good idea of the comparative average estimated speeds of the networks under load. The results of these tests place Stellar at the forefront of network speed, outstripping competitive networks not just marginally but by orders of magnitude. In an interview with the blockchain-focused podcast Epicenter, Stellar founder Jed McCaleb suggested ~4000 transactions per second was within the capabilities of the Stellar network. Following a number of experiments with stellar networks on various scaled hardware, the outcome of estimated speeds was between 3000 and 4000 transactions per second. At this stage, this remains an estimate but with higher speeds anticipated. Compare these numbers to those obtained through experiments of competitor networks: · Bitcoin’s 3.3 to 7 transactions per second, Bitcoin graphical statistics.· Ethereum’s average of 15 transactions per second, Ethereum Transaction Chart, Etherscan, 2018· VISA’s 1,736 average transactions per second at current volumes and 24,000 transactions per second actual capacity, VISA, Comparison to Visa, These figures will make it clear why Stellar was the top choice for the Kinesis blockchain technology and the ability for the fork of this network to cater to the high velocity of a fully fledged currency. 2. Stellar Consensus Model versus Mining Model: A key characteristic of the Kinesis and Stellar designs is that it does not implement the ‘mining’ model of blockchain like bitcoin and Ethereum do. The Stellar network utilises a purely Consensus model instead. The consensus model requires a specific number of nodes to reach consensus in order for a transaction to be persisted to the network, so transactions can only be propagated on the network if a number of nodes agree that they are authentic and comply with their calculations. This is quite different to the fact that extensive mining activities are required to propagate transactions in the Bitcoin or Ethereum models. This makes the propagation of new data to the network extremely costly to processing power and creates the possibility for run-away fees to do so. The Kinesis network also ensures that it is not possible for external parties to add false nodes to the network by ensuring that consensus is reached across trusted nodes only. Inauthentic nodes will simply be excluded from the process, ensuring that consensus can at all times be trusted. 3. Stellar Fee Accumulation Model: The Kinesis monetary system offers unique yield-bearing characteristics. To achieve this the transaction fees in the cryptocurrency need to be collected transparently and managed centrally in the network. In a mining model, the fees are allocated and earned by the miners who undertake the processing overhead of mining the data propagation, meaning that fees cannot be offered across a broader range of network participants.Additionally, the currency demand incentivises mining by the fact that the fees are directly allocated to miners only, resulting in fees varying unpredictably and escalating rapidly in this uncontrolled model. Where a mining model allocates transaction fees only to the miners, the stellar model utilised a consolidated fee accumulation approach across the entire network activity, and in this way, the fees can be accumulated for broad distribution to the participants of Kinesis. Additionally, the fees in Stellar and hence Kinesis are linked linearly to the actual transactions and calculated accordingly in a static manner, not artificially manipulated by mining. In this way the Stellar model allows Kinesis to prevents the run-away effect that mining has on fees by attaching fees to transaction activity itself, so those who transact with the kinesis currency will have predictable, transparent, and exceedingly affordable fees attached to their activities. The accumulation of fees in the Kinesis fork of Stellar is held securely in an off-chain account so that they remain secure until such time as they are distributed to the accounts of revenue earners. The fees accumulated, being part of the transparent blockchain processes, are visible ensuring that there is no way for them to be manipulated giving the network participants additional confidence in their revenue share. Why Fork the network: The final point to discuss is why the choice was made to create a bespoke blockchain network rather than use Stellar as it is. In the Kinesis currency designs, Kinesis itself is to form the underlying base currency in the blockchain system. To achieve this Kinesis blockchain needed to cater to a unique set of cryptocurrency characteristics. Regarding the base currency, on the Stellar blockchain one transacts using Lumins as the base currency and fees would be accumulated in Lumins. In the Kinesis blockchain, one transacts using Kinesis itself as the base currency. Fees are accumulated in Kinesis, for distribution as Kinesis coins, into revenue earners’ Kinesis blockchain accounts. The second important reason was to allow for the customisation of the fee mechanism to provide for a fee as a percentage of the transaction value. This is a custom feature of Kinesis and is one of the first blockchain networks to present this form of transaction fee calculation in the core network code. Again it supports the concepts inherent to the Kinesis system where velocity increases yield in the Kinesis currencies. While there are a number of other factors that were assessed through a variety of proof of concept experiments that lead to the choice in Stellar and the decision to fork the network to form a bespoke Kinesis Blockchain, these above hold the highest importance in achieving the true currency characteristics of a globally inclusive, transparent, reliable and high-velocity Monetary System on offer by Kinesis.
It is often asked of us at Kinesis how our blockchain network, forked from Stellar, differs from the Bitcoin and Ethereum networks and what it means that these networks are built with different blockchain models. Kinesis Blockchain Network (KBN) is a fork of the Stellar network which utilises a consensus model to persist its transactions, known as its ledger. In KBN, 5 Trusted nodes are needed to reach consensus to have a new transaction persisted to the network. This means that 5 separate nodes, trusted by the network, need to agree that the new transaction has been arrived at by following the network’s cryptographic algorithm and has not been artificially created. Every node in the network is aware of which other nodes are Trusted nodes. Since the KBN is a public network it does mean that nodes can be added to the network by external parties. These nodes can legitimately hold the network’s transactions and historical data, but none of the existing Trusted nodes will recognise this new node as Trusted and hence it will never participate in consensus and hence it will be unable to contribute new changes to the network. This is the consensus model of the KBN, and Stellar, blockchain networks.In this model, the fees are placed on individual transactions and are accumulated by the network, rather than with individuals. This is different to the mining network models of Bitcoin and Ethereum, where any number of transactions (blocks of transactions) can be added to the network through ‘mining’ activities, ie through running the cryptographic algorithm using vast amounts of processing power to arrive at the new chain data. Fees are earned by those performing this processing. It is in this way that the demand for transaction propagation can increase fees to extraordinary levels in order to earn more for mining activities. This is the primary difference between these blockchain models. In consensus models trusted nodes in KBN can reach consensus about the propagation of change to the network transactions. Transactions are not added through the mining of new blocks of transactions that are added to the network. Mining also has no concept in the KBN consensus model, meaning that there is no risk of run-away fee escalation, and additionally the fees in the KBN, as per Stellar, are accumulated in a fee accumulation calculation that can then be distributed to participants. In the mining model, this would not be possible because fees are paid directly to the miner who works to add the transactions. In the context of an actual currency that anticipates large usage and high velocity of usage, the mining model would be prohibitive. The fee structure would not support a linear fee accumulation based on this velocity and would lead to processing challenges which in turn would slow the network down. The Stellar consensus model was selected to Kinesis because it allows the linear and central accumulation of fees per velocity and use of the actual currency and not per cryptographic process, it also allows for significantly higher speeds in-network propagation.
As the Kinesis team has designed and built out their Kinesis Cryptocurrency, the true objective and vision has remained front of mind; that this is to be a globally accessible, usable and reliable digital currency forming the basis of a new Monetary System. As a result, a number of core characteristics were a top priority, with one of the highest focusing on security and reliability. This involved careful design and configuration around the way the Kinesis systems would be hosted and supported. The KBN is hosted in the cloud, on Amazon Web Services, in doing so makes full use of all security factors and hardware redundancy that the cloud solution affords. Hardware failure and redundancy is handled seamlessly in AWS as part of their IaaS (infrastructure as a Service) offerings, as is the quality of the hardware used. Cloud hosting provides access to advanced infrastructure strategies that would otherwise not be rapidly possible or cost-effective to achieve independently. For the KBN, the AWS platform has been architected specifically to ensure robust network stability and uptime assurances. To ensure this, not only is the Kinesis ecosystem hosted in the cloud on redundant high-quality hardware but additionally, the network is is designed to be distributed over 3 global regions of the AWS global network. This provides triple redundancy in the network for fail-safe operations. With the KBN being a fork of the Stellar network, the consensus model forms the mechanism through which the network is propagated. In the KBN design, 5 nodes are required to reach consensus to propagate any change to the network. Additionally, the network is configured such that only 3 trusted nodes exist in each region which means that at least 2 regions need to contribute trusted nodes for consensus to occur. This not only provides triple redundancy using 3 regions to protect against any failure or breach but also means that in order for the control to be lost of the entire KBN, an external entity would need to coordinate an attack on 2 regions simultaneously to incur any disruption to performance. Additionally, the loss of one entire region will have no effect on the network operation, with a rapid restore being automatically initiated in the failed region. In the highly unlikely event that 2 regions of AWS fail or are unable to contribute nodes to the consensus process, the transactions will be safely queued for consensus until two regions and 5 nodes are again available to participate, thus preventing data corruption. This combination of configuration and IT strategy ensures Kinesis the ability to commit to its high standards of system up-time and reliability, along with presenting a network infrastructure with an exceptionally low chance of compromise.
In the same way, our sun unconditionally delivers an indiscriminate share of energy to planet Earth that stimulates life, we present a comparative energy system to stimulate the movement of money, assets and hence overall commerce and economic activity in a fair, honest and rewarding process. It is an entirely new monetary system, which is based on movement, kinetics and velocity. We name the system Kinesis. The Kinesis system is an evolutionary step beyond any monetary system available in the world today. It enhances money as both a store of value and a medium of exchange and has been developed for the benefit of all. Core to the mechanics of the system is the perpetual incentive and thus stimulus for money velocity. Outside capital is attracted into Kinesis via a highly attractive risk/return ratio and then put into highly stimulated movement, promoting commerce and economic activity. This is achieved through structuring money to represent 100% allocated title of an asset and then attaching a unique multifaceted yield system that fairly shares the wealth generated by the system according to participation and money velocity. Aside from offering the greatest store of value and striving to provide the most efficient medium of exchange, Kinesis is a monetary system focused on: minimising risk; maximising return; stimulating velocity and maximising the rate of adoption. Kinesis defeats Gresham’s Law of Money that asserts “bad money drives out good”, by highly incentivising “good money” to circulate and be utilised as an effective medium of exchange. Someone who values money over other money is inclined to hoard it and not use it as a payment currency, but rather use the less valued currency for payments. This model has been broken in the Kinesis system as the reward for using the valued currency is so tremendously strong. The primary currency chosen for the Kinesis monetary system is a kinetically charged physical gold-based currency. Gold being the greatest store of value, indestructible in every sense, physically rare in quantity and has been appreciated by human civilisation as money for longer than anything else. It is the money created by our universe and not by people. It is created by a rare cosmic event of two neutron stars colliding, so rare that the first time this event was witnessed by humankind was 17 August 2017. Hold gold in your hands and you can feel its energy. It is the colour of stars, it is the money of the universe. Gold is the undisputed champion of fair, honest and sustainable money. Put allocated gold on a kinetically charged decentralised rail system and you have a very special monetary system. We believe this is what we have achieved, and a lot more. The Kinesis system can be overlaid on top of anything that can be standardised, traded and stored as value. Accordingly, we are developing a kinetically charged digital currency suite with allocated title of bullion, fiat bank notes, cryptocurrencies and other assets that are physically and digitally securely stored in our allocated Kinesis banking and asset management system. By attaching a yield to digital currencies, risk/return ratios can be forecasted and virtually all currency and investment asset markets can be targeted and infiltrated. As such, over time we plan for more currencies and assets to be added, ultimately infiltrating more markets spread across the world. Kinesis will attract capital from: Cryptocurrency markets - Currently little to no yield The gold and silver markets — Currently little to no yield Fiat currency markets — Low to negative yield via debt-based interest rates Investment asset markets — Comparatively low yields for the market and property investments Ultimately, if someone can get the same asset at the same price, but with significantly lower risk and higher return, it makes little sense for them to not choose the asset with the better risk/return ratio, particularly when significant returns are on offer. As the Kinesis monetary system is one that allocates title directly to the ultimate beneficial owner, where banks conversely hold legal title of their customer deposits and put those deposits at risk, the Kinesis system is in fact much less risky and with much greater return than legacy alternatives. With global low to negative interest rates, bail-in provisions, depositors’ insurance being removed, and with banks holding legal title to their customer deposits, it makes no logical investment sense to choose risk and nil-to-negative return over the alternative Kinesis system with negligible risk and high return. In comparison to legacy fiat money and fractional banking systems, Kinesis seems too good to be true, but it isn’t. Once clearly understood, Kinesis will lead a highly disruptive paradigm shift in money. Kinesis has taken the very best properties of both old-world money and new-world innovation and combined them together to power banking and commerce in a new fair, inclusive and incentivised way. The result is something extraordinarily powerful that will change the way we all view money forever. The primary elements of Kinesis are: Gold & Silver — The primary currencies offering allocated 1:1 title to physical gold & silver — the greatest stable and definable stores of value for use in commercial and private transactions and investment. Yield — A perpetually recurring yield generated from economic activity, not from debt based interest like fiat currency — providing definable value via Net Present Value (NPV) calculations for use in commercial, institutional and retail investment. Cryptocurrency technology — Can only be enhanced. Blockchain peer-to-peer decentralised distributed ledger technology — Blockchain may become obsolete, but distributed ledger technology can only be enhanced. Kinesis can never be destroyed as these elements will never go away, never be valueless and can only be enhanced. Nothing can take away intrinsic asset value and the value of future cash flows, and technology will only ever be enhanced. Gold and silver have survived the greatest test of all, time, and so too will Kinesis. Other cryptocurrencies with value determined by the anonymous decentralised blockchain payment capabilities and their controlled supply scarcity are all at risk of losing value as their initial founding value proposition is diluted by others coming into the market with enhanced solutions. This is evidenced by Bitcoins’ dominance continuing to fall and has been witnessed in many other industries and markets throughout history as competitors rise. A major contributing factor to the volatility in cryptocurrencies is that they are impossible to value. By intrinsically backing a currency, hence back-stopping the value and defining the risk, and then placing a yield on it, hence defining the return and providing superior value, then a currency which is safe, stable and rewarding is created with a highly attractive investment risk/return ratio attached. This form of currency has necessary real-world application in both commerce and private transactions, along with attracting capital from institutional and retail investors and savers. This is not just a currency, this is a new parallel monetary system to sit alongside but integrated into the legacy problematic centrally controlled fiat and fractional monetary and banking systems. Kinesis is the undeniable superior alternative. This model is highly revolutionary alone, however, to take it the next step further, already in place is a highly disruptive retail and institutional commercialisation strategy with unique distribution and committed adoption from day one of launch. Pre-existing investment commitments are in place for the Kinesis currency suite which will surpass the largest ICO to date by a significant multitude. Kinesis is being developed and being brought to launch by a consortium of industry leading organisations in the precious metal trading, mining, refining, exchange, technology, blockchain, mobile banking, vaulting, postal system and marketing spheres. From launch the system will have extensive institutional and retail distribution, integration, liquidity and adoption. Our liquidity, which will be provided by professional bullion market participants and others, will enable billions of dollars of value to efficiently enter and exit the market. Direct and indirect integrations will provide for immediate adoption into hundreds of millions of users. With the evolution of blockchain, cryptocurrencies and mobile devices, the people of the world have been presented with a profound opportunity. It’s an opportunity to apply empowering creativity to money and be part of a person-centric revolution. We have now been enabled to adopt and support a system that individually and collectively benefits us all based upon nothing more than participation. This system combines new world decentralised technology with the oldest, fairest and most sustainable form of money, to empower and serve the interests of us all equally and capitalistically. Welcome to Kinesis, the equally all empowering monetary system of the future.