Cryptocurrency has come a long way since the successful launch and adoption of Bitcoin but many features and issues are still outstanding and the existing coins and technology are unable to function as a real currency for real-time trade or business. Essentially cryptocurrency today lacks most of the key features that would allow users and businesses to replace their current banking system today.
The most common cryptocurrencies have been deployed without realizing the challenges and use cases they are facing today. Many currencies didn't anticipate they would be competing in similar spaces with banks and credit processors like VISA and Mastercard. To this day there isn't any single currency which can compete or rival those systems for a variety of reasons. No single currency does enough things properly to be a replacement for the current debit/credit banking system. But collectively they all have features that make it possible and Sonajin will bring them together in its own hybrid decentralized cryptocurrency.
Today's coins are plagued with usability issues, security holes, community disputes resulting in hard forks, scams, fraud, slow transactions, high fees and true lack of easy integration. Those who aren't tech savvy, crypto-enthusiasts would be ill advised to actually obtain their own wallets and use their own currencies. Sonajin will make it easy for any individual or business to buy, store and trade with XSJ (Sonajin).
In fact today the majority of holders of cryptocurrency don't use their coins on a daily basis but hold them on exchanges. But as more users migrate to their own wallets and actually execute transactions for goods and services, they begin to notice the huge issues with today's wallets and coins. The next phase of cryptocurrency usage as a daily replacement for banking and payments cannot be achieved with the current state of cryptocurrency and threatens the very existence and established values of all decentralized currencies.
One of the stated goals of cryptocurrency is that it frees the user from banks and allows you to become your own bank. However, in effect and practice this has proven to be very risky and unreliable for many reasons. Traditional banking still largely beats cryptocurrency for daily usage and this has got to be resolved for cryptocurrency to advance and fufill this goal.
Sonajin recognizes both the challenges, successes, flaws and opportunities that the existing cryptocurrencies have created and aims to improve upon and solve all of the current outstanding issues.
Mining/PoW (Proof of Work) is unsustainable and doesn't work
Mining has proven to be popular by rewarding miners with currency for using their CPU, GPU or ASIC computing resources but has severe drawbacks. This is best illustrated by Bitcoin's insufficent 1MB block size and that fully mined blocks are not enough to satisfy the transactional demand based on block-time, size and difficulty which is only increasing.
Mining is also physically unsustainable. The majority of miners can't add more capacity except large players who threaten to centralize or take control of the major currencies with huge mining farms. On top of that we will reach a point where most governments may ban mining because of the strain on electrical resources. Imagine if someone can't power life saving equipment in a hospital because miners have used the majority of electricity? It's extremely inefficient, unnecessary and hard on the environment.
The public blockchain solution has created security and speed issues because in essence the current system relies on random strangers to be honest. The system understands not to trust a single announcement or confirmation from a single node because then anyone could trick another user into thinking money has been sent or received when it hasn't. So instead the network waits for multiple confirmations from other random and public nodes to be sure of the honesty. It is akin to verifying your cash payment with random people on the street to convince the person you gave cash to that it is not counterfeit.
This is a risky, inefficent and unsustainable way of using the blockchain to process transactions. The best solution is to make currency blockchains permissioned so that only trustworthy users/nodes can announce or confirm transactions. We don't need the whole world involved, just a trustworthy network and nodes within in.
We believe the best solution is PoS (Proof of Stake) which rewards currency holders with more currency based on their holdings, activity and usage of the currency. It is essentially the same result without the inefficient waste of energy and resources.
Bitcoin continues to suffer from congestion and limitations such as the 1MB block size making it a slow and unusable currency. Even newer coins such as Litecoin and Ethereum suffer from speed and transaction limitations. Litecoin currently announces transactions almost immediately but still takes several minutes to get the recommended 6 confirmations.
This is the nature of open blockchain technologies, they will never be fast enough because there isn't enough trust. Why should even one potentially untrustworthy node be able to broadcast transactions? Confirmations address this issue but at the cost of being so slow that you cannot make real time purchases like you can with debit or credit.
Bitcoin achieves a mere 3-4 transactions per second in practice although the theoretical limit is 7.
Ethereum is 20/s
Paypal is 193/s
Visa is 1667/s
As we can see some of the top currencies are extremely slow and are not anywhere close to matching traditional payment or banking systems. PoW/minable currencies will likely never be able to keep up even by increasing block-time it's simply an inefficient and slow way of processing transactions.
Sonajin will be able to match and exceed the speed of VISA with ease.
Bitcoin fees are so high and transaction times so slow that even Bitcoin conferences refuse to accept it as a payment method. Ethereum gas fees can be so high that sending $5 worth of tokens can cost over $100. There has to be dynamic or regular update of transaction fees to make sure it is relevant, practical and affordable. The moment a currency isn't used for a payment, goods or transaction is the moment the currency is on the path to devaluation.
The fees for most major currencies are constantly rising whether Bitcoin or Ethereum.
Cryptocurrencies are also often touted as banking the unbankable, however most currencies are too expensive and the fees are too high to serve that segment of the market. Even if fees were not an issue, cryptocurrency is not functional as a banking tool when transactions on average take minutes to settle even with some of the faster cryptocurrencies.
A huge issue with most currencies is that you could send an amount to an exchange, vault or even other wallet and it is becomes "stuck" because the transaction fee is higher than the stored value. This should never be the case, it should be simple to move your coins and they should never be stuck even if it's a tiny amount. Fees should be proportional to what you are sending and never be to the point where you have a few dollars of coins that are not worth sending or can't be sent due to high fees. You should be able to send it or spend it and this is how Sonajin will revolutionize the issue of fees.
Sonajin will ensure that fees are always realistic, affordable and adjusted for market conditions. In general fees should be expected to drop rather increase. Sonajin will also make it easy to send "your maximum amount" from your wallet without trial and error or mathematical calculations.
Centralization is fast becoming a reality
Although some of the top coins like Ethereum, Bitcoin and Litecoin are decentralized they are inevitably heading towards centralization and this cannot be stopped. In fact it is being hastened by the increasing use and adoptions of cryptocurrency by large and well funded players. Bitcoin relies or expects that a single player wouldn't have more than 10% network hash rate, but this is simply not the case, when large players in China far exceed this. This was never supposed to happen that large players could centralize, control, manipulate and/or fork established currencies.
The Ethereum white paper itself recognizes that the future of itself is probably headed to centralization, this is simply due to the memory, CPU and hard drive requirements that are placed on the runners of full nodes. Ethereum is not alone, any currency (the majority) using the public blockchain in such a way are headed towards centralization. As the blockchain of all currencies grows it becomes increasingly difficult for small players to secure and control cryptocurrency. Because of this the future of today's decentralized currencies is uncertain, it would be possible for large government, corporate/banking players to use their computing resources to hard fork the major currencies or make other harmful changes or negatively impact the block chain (such as sending bogus transactions).
The decentralized blockchains all rely on the premise that they've reduced incentive for players to use their computing resources to harm the blockchain. What none of them can protect against or account for are extremely large, powerful and wealthy entities that would have a vested interest in harming the blockchain. Throwing several million dollars or several hundred million dollars of computing resources to destroy or impede the major blockchains is a cheap price to pay for entities or individuals who see the current cryptocurrencies as a threat to established business in banking and finance.
Most of today's top currencies whether we are talking about Bitcoin, Ethereum, Litecoin etc.. have completely public ledgers where you can easily trace all transactions of a particular user including their total holdings and to who they sent and received coins from. The benefit is that this makes it easy to verify transactions but is completely unnecessary. Imagine if your bank worked this way and that everyone could see your bank account balances and full account history? It can even lead to security issues with attackers being able to search for wealthy holders of these currencies and target their IP address, hack them and steal their coins. This has happened to both individiduals and large exchanges.
There must be a balance of privacy, security and way to verify a transaction.
Syncing the Entire Blockchain
Today's blockchains are continually growing in size and a single currency such as Bitcoin is nearly 200GB. The developers of such currencies correctly state that to have the benefit of safety with cryptocurrency that you need to sync the blockchain yourself. This is another issue that makes it nearly impossible for most users to run their own wallets. Light wallets do exist but the problem is that they usually come from third parties that rely on trusting a central node they've established which breaks the chain of trust by relying on usually a single source.
Syncing most major currencies takes hours, days or even weeks especially in the case of Ethereum numerous complaints and errors with syncing can be found. What if you are restoring your wallet on a new device causing the user to be unable to use their currency for days while the blockchain syncs? It is clear that syncing the entire blockchain is not a practical or realistic option and must be eliminated to move cryptocurrency forward. What if someone was up to date, gets on a plane or goes somewhere with no internet and needs to spend currency quickly or just wants a quick snack and their blockchain is out of date? It could even be that someone could be in a region where the internet is so slow that syncing will take an extremely long time.
Of all the major currencies there have been huge heists of Bitcoin, Ethereum, NEM and other coins. Part of this is due to lax security on the coin holders and exchanges but also due to lack of fundamental security built into the wallets and protocols.
This is further complicated in terms of privacy, security and usability when the blockchains are public and permissionless. You are essentially having random strangers vouch for the validity and integrity of transactions on the network. This is both risky, inefficent and unnecessary. It also breaks normal IT security norms. Any network especially for financial transactions should be secured and only trustworthy actors should be allowed to participate in the verification and broadcast of transactions. The current system does work albeit in a broken, inefficient and risky way by having unverified members of the public process blocks and public full nodes that confer amongst each other.
Ethereum is an unreliable solution for cryptocurrency, while unsuccessfully trying to do too many things at once. It fails as a currency because of security issues such as the Parity crisis, high transactions fees, confusing to use (hard to know how much GAS you need), slow sending, and wallets that by the Ethereum teams own admission come with huge security risks. Ethereum may be good for developers and ICOs to sell tokens but it's not a sustainable currency or ecosystem.
Ethereum's founder even warns 90% of tokens will fail.
Some currency developers have released new currency or done hard forks of coins like Bitcoin without even releasing their own wallets. This has arguably lead to the famous BTG (Bitcoin Gold Scam) where the BTG website and social accounts distributed third party wallets that stole the users other cryptocurrency. It also introduces new security issues stemming from both phishing and confusion resulting from "which is the real currency and real wallet for Bitcoin, Bitcoin Cash, Bitcoin Gold"? On top of that there exists the real possibility of replay attacks in scenarios of forking which could be used to fool users into believing they've received funds that they haven't or are non-existent. This should never be allowed to happen as it is a real security hole and also leaves room for confusion and mistakes that hackers and phishers have taken advantage of.
Ripple is another example of security issues because they don't have any first party wallets and users have to reluctantly rely on third party wallets.
Sonajin will focus on the need to function as an efficient, secure and properly functioning currency that all other currencies have not been able to solve or address.
Hardforks Are Like Counterfeits
In our view hardforks are essentially allowing counterfeiting to go on and should not be possible. However, with almost every currency available today, this is possible and has been happening. We do agree that changes to many currencies are necessary but this needs to be done by creating a brand new currency with completely new features instead of a simple gimmick or reason to fork.
We believe hardforks and centralization of the current currencies are a huge security and investment risk. No one should be able to literally copy and ripoff a major currency worth millions or billions. But this has happened time and time again while adding no value to the users and devaluing the original currency, while creating confusion, frustration and division among the original currency.
Bitcoin updates such as various Segwit have been fraught with risk and warning of potential loss of currency. No cryptocurrency should be in flux during such an update as our view is that it should not be optional (IE no one should be able to split the network) and it should be transparent. Such updates are also simply bandaid solutions and don't address the inflexibility and issues caused by hardforks and similar updates such as Segwit. Each time there also exists the possibility a new group will essentially counterfeit the original coin and make their own, leading to more fraud, confusion and devaluation of the original.
Evidence that the majority of teams doing hardforks is obvious, they usually do not make any wallets available. In fact as many experts point out, you're expected to give your valuable currency and private keys out to third parties who have in some cases defrauded users.
A huge part of security and integrity is ensuring that your currency cannot be copied, modified or changed by a third party. Initially entirely open source, trustless, public blockchains seemed like a good idea but this has created many scams, loss of value, loss of interest.
Sonajin cannot be copied or forked, our patented hybrid blockchain will be kept with integrity and security.
Currencies that solve some of the problems
Ripple is a currency which has nearly solved all of these problems, however it is completely centralized by a company based in the USA and run on IBM computing resources, also based in the USA. Ripple has solved the transaction speed and decentralized risk issue in terms of the public being able to attack it. But they've centralized this under a company located on the PRISM network and have also had major banks involved. Ripple will certainly work for payments but the crypto community has legitimate issues with trust in this case and Ripple and Lumens have not even created trustworthy wallets. Because all the wallets have been created by third parties the possibility exists that malicious code could be introduced or activated in the future (the risk for Ripple is much higher than Litecoin, Bitcoin, and Ethereum which at least provide their own wallets).
Some industry analysts have said because of Ripple's relationship with large banks that it may eventually have incentive to dump XRP altogether in exchange for large payments from the banking industry.
At the end of the day, Ripple Labs is valuable because of their ability to provide great value to financial institution. But if an organization like SWIFT begins to win the market, Ripple Labs will be forced to respond. As Ripple already owns 55% of all XRP, it would be easy for their organization to either sell XRP as a market discount, or give it away entirely to new organizations who want to join their network. Increasing the price of XRP does not strengthen their position in winning the financial institutions market. When competition get intense, XRP will be one of the first factors to be eliminated, either through devaluing XRP significantly or giving it away entirely.
This is ultimately the fate of XRP is: at best, a potential incentive to have new organizations join their business, at worst, an additional cost that is completely eliminated by giving away XRP (or close to it). In either case, the value of XRP is simply not supported by it’s use case and will be unlikely to retain it’s value.
Sonajin is not based in the US and will not allow banking or third parties to control it. The Sonajin blockchain will be an open, community based decentralized currency which has central control, which solves the problem of lack of security, slow transaction speeds and trust from the start.
Inflexibility of current currencies
Nearly all of the top currencies are completely inflexible both from a technical perspective and community perspective. This is why we've seen such infighting with forks of both Ethereum and Bitcoin. It is stressful for the community, users and developers to worry about this. A good portion of these issues are the technology itself where things like block-size limits, block time and fees are hardcoded. Usage of any payment system is not constant or always predictable and there needs to be a way to adjust things on the fly without having to resync the entire blockchain or cause a hardfork over what really amounts to a simple change of settings on the blockchain. It shouldn't be controversial, difficult or cause any harm to the users especially.
Cryptocurrency is hard to use
The major currencies that do provide their own wallets such as Bitcoin, Litecoin and Ethereum generally require you to sync the entire blockchain. This is a huge waste of time and resources. We are talking about syncing tens or hundreds of gigs of blockchain data to your computer or device. Ethereum does have the MIST web wallet but it even warns about security issues.
Ethereum is particularly hard to use with users reporting basic issues such as extremely high memory usage, high CPU usage which slows down your computer. Even worse a lot of users find the client crashes, doesn't report pending transactions or even have proper balance history (even Litecoin and Bitcoin provide this).
It is also possible to lose currency by sending to the wrong address or by accidentally providing a Litecoin address to Bitcoin or vice versa. This is a basic safety feature that these currencies should check to make sure the address is valid on the network and prevent erroneous transactions.
There are also no proper notifications, it's not reasonable to expect users to keep their wallets open 24/7 to watch for incoming or outgoing transaction confirmations. Why can't this be done by sending a simple e-mail notification that they can double verify themselves?
On top of that the top currencies are extremely slow and don't allow you to send or receive in real time. This means they can't be used for daily transactions or replace your current bank.
Ease of Use
Most wallets and currencies are very difficult to use, confusing and prone to error.
The Sonajin wallet will never let you send to an invalid address or send your coins into the abyss like other currencies.
Hardfork's are both a value and security risk. By keeping our technology private, no one will be able to fork Sonajin and create scams and confusion from it.
We do not recognize or understand the term "unconfirmed transaction" or "the safe number of confirmations". Our blockchain will only notify of transactions once they are confirmed. This will be done quickly because public nodes will not be possible.
No need to sync the entire blockchain.
All wallets will connect to our trusted network and nodes so confirmations can be trusted in near real-time.
Multi-signature technology with 1 or more signatories. Other keys could be created with the sole intention of being a signatory for a specific wallet. You could require 1 or more signatories and give out signing keys to as many parties as you want. It is still critical to ensure only trusted parties have access and you could require X amount of conferring signatories similar to Power of Attorney which requiring consensus between the other parties.
No public ledger means no one can track or identify your payments. Only the sender and receiver can view the payment details.
The blockchain nodes will be private and trusted, increasing both security and transaction times since untrustworthy nodes and users will not be able to broadcast fraudulent transactions. Our network will still achieve consensus and verify the transaction is real, valid and confirmed.
Simple API to receive, confirm and send payments.
A simple API built into the wallet with multiple permission levels. You could even run a separate wallet node that just processes specific transactions such as incoming only using your public key. You can also generate new receiving addresses with just your public key.
It will be easy and quick to check things such as total received history, balance, total sent, create a new address and other essential features. You can also search transaction history based on user ID or e-mail address.
High Transaction Rate
Consensus and confirmations are quick and easy on our network because we don't rely on public trustless nodes.
Sonajin will be able to scale up as necessary to easily surpass modern payment systems and beyond.
Settlement usually takes 2-3 seconds. We define settlement as absolute confirmation that the funds have been received. This is different from other currencies where you may be notified of an unconfirmed transaction but have to wait minutes or hours to be sure the currency is sent. Our system will only send notification of verified transactions.
Privacy - No third party can view your transaction history
No public ledger.
Fees will never be more than 1% of the transaction and will be adjusted accordingly. Money will never be trapped in a wallet and it will be simple to "empty your wallet" or "send all of your funds" without having to calculate the maximum amount or gas fees.
E-mail Notifications of Incoming/Outgoing Transactions
E-mail addresses can be stored on the blockchain and notifications can be sent to both parties when currency is sent or received. It is also another safeguard against potential hacks and currency thefts.
Usernames and Feedback built into the blockchain to avoid dealing with unreliable or untrustworthy entities.
The blockchain will have e-mail,username and a feedback system builtin to reduce incentive for fraud and scams. Users will be encouraged to rate the sending or receiving user.
First Party Open-Source Wallets for Linux, Windows, MAC, Android OS's.
We will create our own wallets for all major operating systems to ensure the integrity and security of Sonajin users. Third party wallets can be created, but for security we will always offer and encourage users to use our verified and safe wallets.
Environmentally Friendly and Sustainable
Mining is not sustainable, as blockchains grow larger and difficulty increases it may not be possible to have enough hardware or energy to keep mining.
It is a huge waste of energy and not at all sustainable. Mining farms are also a huge risk, the largest farms could control a currency. In the event of disaster if a lot of mining farms went offline how would transactions be processed considering that current currencies are already so slow?
Proof of Stake Membership Rewards
Verified users will receive monthly rewards in the form of currency based on a combination of their activity and overall holdings. This in turn encourages long-term holding and value of the network and currency.
100B with 55% allocated to the Sonajin team. The remainder will be sold to the public.
*More may be issued in the future according to usage patterns and demand.
Algorithm and Implementation
Multiple algorithms will be used to execute the mentioned feaetures of Sonajin via permissioned, private hybrid blockchain.
"Bitcoin assumes attackers won't have more than 10% of the network hash rate" - There is nothing special about the default, often-cited figure of 6 blocks. It was chosen based on the assumption that an attacker is unlikely to amass more than 10% of the hashrate, and that a negligible risk of less than 0.1% is acceptable. Both these figures are arbitrary, however; 6 blocks are overkill for casual attackers, and at the same time powerless against more dedicated attackers with much more than 10% hashrate.
"Vitalik Buterin Warns of ICO Scams and the usage of fake names, accounts and faces" - The problem has become so acute that Buterin himself took to Twitter on Wednesday to tell people to beware of “initial coin offerings” (ICOs) bearing his name. In a tweet, Buterin posted a screenshot from a good Samaritan on Reddit warning about a fishy coin project, adding that the caution could apply to other ICOs listing him as a partner.
"Ripple Owners may have incentive to sell or drop the entire currency" - Source
"90% of Ethereum Tokens will fail" - 90% of tokens will fail
"Ethereum Whitepaper Recognizes Centralization Risk" - https://github.com/ethereum/wiki/wiki/White-Paper#mining-centralization
The problem with such a large blockchain size is centralization risk. If the blockchain size increases to, say, 100 TB, then the likely scenario would be that only a very small number of large businesses would run full nodes, with all regular users using light SPV nodes. In such a situation, there arises the potential concern that the full nodes could band together and all agree to cheat in some profitable fashion
"Ethereum recognizes the difficulty with mixing currency with applications at the same time" - Ethereum is likely to suffer a similar growth pattern, worsened by the fact that there will be many applications on top of the Ethereum blockchain instead of just a currency as is the case with Bitcoin,
Difficulty syncing Ethereum Blockchain: https://forum.ethereum.org/discussion/16812/geth-just-filled-up-my-entire-hard-drive
"Ethereum recognizes the risk of public nodes" - https://github.com/ethereum/wiki/wiki/White-Paper#scalability
"Many ICOs are fraud according to Ethereum and Ripple founders" - https://www.cnbc.com/2017/11/17/many-icos-are-fraud-according-to-ethereum-co-founder-and-ripple-ceo.html
"Bitcoin mining terrifies energy experts as extremely wasteful and harmful" - https://www.inc.com/tom-popomaronis/american-power-consumed-by-bitcoin-mining-black-mirror-anyone.html
What's even scarier is that Bitcoin's carbon footprint can leave incredible environmental damage. Digiconomist estimates that Bitcoin mining creates 16,000 kilotons of carbon dioxide each year
"Ethereum is extremely flawed and secure as shown by the Parity hack" - https://themerkle.com/parity-hack-shows-the-ethereum-ecosystem-is-flawed-in-big-ways/
It is always easy to point the finger at the Parity team for their mistakes. While they are the sole party to blame for not fixing the exploit in time and postponing the fix for no good reason, the technology they have to work with is not without its flaws either. As much as most people would like to think otherwise, the Ethereum protocol and its technological features are a major security risk. Without proper coding and auditing, no money will ever be safe. Criminals know there are weaknesses and they will continue to exploit them for as long as they can.
"Example of Bitcoin Network Attack with bogus transactions" - https://www.ccn.com/antpool-founder-shares-post-claiming-hardfork-issue-comes-money/
Recently, BitClub, a small bitcoin mining pool with around 4 percent of the network’s hardware share, decided to attack the bitcoin network by malleating transactions, causing confusion and nearly bringing blockchain.info down.
It is this transaction malleability which has become the mining community’s first line of defense, making it hard for developers to implement second layer protocols. It’s claimed that the fix to this bug is through SegWit, which BitClub are supporting.