Piotr Piasecki || Development || Ethereum || Factom
Piotr Piasecki is a master of science and a double bachelor in the field of computer science and informatics. He is currently an Advisor for the Crypto Currency Certification Consortium, Chief Scientist at Provable Inc, and Core Developer at Factom.
Working at Factom I came across an idea that seems seldom explored in the cryptocurrency space - a transactional currency called entry credits. They operate alongside the main currency of the network, factoids, but while factoids are a fully functional cryptocurrency that can freely circulate in the network, entry credits have a number of restrictions on them:
- Entry credits are created out of factoids (by burning them) at an exchange rate dictated by the system, but they can't be turned back into factoids.
- Entry credits can be created ahead of time to lock in their factoid-entry credit exchange rate, and used later down the line.
- The exchange rate is tweaked by the system to stabilise the price of entry credits, while still allowing factoids to be a free-floating currency.
- Entry credits can only be spent (burned) to store entries into Factom - they can't be spent elsewhere.
- Entry credits are not transferable - they can only be spent by the account that received them during the factoid->entry credit conversion.
These restrictions create a few interesting features for the system that I don't see explored much in other cryptocurrencies:
- It is possible to put a large amount of entry credit tokens on a hot wallet without worrying much about theft - any would-be hacker wouldn't be able to cash out the stored value, only spend it. This makes production servers much less of a target for attacks.
- Being able to lock in the price of the tokens ahead of time means companies can budget ahead of time and don't have to worry about token volatility.
- Having the exact amount of tokens in an account, one always knows how many transactions they can perform in the system before running out.
Other tokens
While I haven't heard of another currency having the same features, there are some that function similarly. Most cryptocurrencies adjust their transaction fees on a regular basis to keep up with the price of their coins.
This can function as a way to keep the transaction cost stable without trying to control the price of a currency.
Ethereum uses a more formal approach to this with their gas currency. It is separate from their ethers, but you can't purchase gas ahead of time. The gas is used to pay for transactions and operations in smart contracts, but the final cost calculations are more complicated - one can get gas rebates for freeing up memory as far as I heard.
Conclusions
The Factom project might be one of the first projects to implement a fully transactional currency - entry credits.
While being a confusing feature for some, it is an interesting approach of stabilising the transaction cost of production blockchain application, as well as limiting the attractiveness of an attack on the production servers.
According to the BNC indices, at the time of writing:
Steem was trading at $1.5657
bitcoin was trading at $596.97
This article can be found on our website on the following link:
http://bravenewcoin.com/news/transactional-currencies-entry-credits-and-gas/