A guest blog from Douglas Drummond, CTO of the ScotCoin Project.
It has barely been a decade since the initial release of Bitcoin and the world’s premier cryptocurrency has gone from strength to strength.
Secured by the power of discrete mathematics, Bitcoin provided truly novel solutions to classical problems with digital money systems (such as the Double Spend) and managed to do so in an environment that is highly resistant to hostile actors that might seek to corrupt the system.
The blockchain is a ledger distributed in its entirety to every node on the network and Bitcoin’s Proof of Work (PoW) algorithm ensures that significant computing resources must be expended by a nodes to propose adding a block of transactions. Only when the majority of the participants on the network agree that the work performed by the node is valid is the block added to the chain and distributed amongst all other nodes.
This “mining” process emits new Bitcoins to the node that provides the first valid solution. This ensures a truly decentralised database of transactions with no single point of failure that is capable of having entries added to it without a central body (i.e. a Bank) directly updating that ledger. Bitcoin does all of this whilst being completely open to the public allowing anybody to participate in maintaining the ledger.
The History of ScotCoin
Around the time of 2013, Scotcoin was created as a potential answer to the currency problem posed by the impending Scottish Independence referendum of 2014. As a hard fork of Bitcoin codebase, a handful of engineers worked together modifying the code to create a new blockchain and distributed Scotcointo network participants.
Whilst the blockchain itself was secure, it would prove that the team trying to maintain the network would be unable to fight off hostile actors denying service to the crucial end-points exposed to the public. The team then sought to migrate to the Bitcoin blockchain using a suite of tools known as Counterparty which extended Bitcoin by “writing in the margin” of standard Bitcoin transactions.
The Evolution of Cryptocurrencies
Fast forwarding a couple of years since these developments, this nascent blockchain technology would see rapid development and evolve into other new crypocurrencies seeking to explore the possibilities of this new digital frontier. Ethereum emerged in 2015 as a Turing complete programmable blockchain upon which users could publish their own code in the form of smart contracts with Ether (ETH) being the “gas” fuelling the execution of the code.
This innovation would lead to the development of new types of crypto assets such as limited issue non-fungible tokens and artwork. It also led to the development of standards which would ultimately power stablecoins (see: Tether, DAI and others) and what would become known as ERC-20 tokens: deflationary, limited supply crypto assets running as smart contracts on the Ethereum blockchain that implement a specific set of functions (for example: balanceOf, transfer, approve amongst others).
This would truly open the floodgates for projects all over the world to issue their own tokens in a manner that could very easily be integrated with existing crypto exchanges since they all implemented that common ERC-20 interface.
Another couple of years would pass and the price of Bitcoin would prove to only be going in one direction: up. The average fee for a Counterparty transaction on the Bitcoin blockchain would approach $5 making it very expensive to transact with Scotcoin version 2.0. This led to the Scotcoin team looking for alternatives since it was always intended to be a practical crypto asset, usable for day-to-day purchases.
However, the team were very aware of the dangers of “switching out one blockchain for another”: what would happen if the price of ETH made it just as unusable? It was only relatively recently in 2019/2020 with the latest development of Ethereum that the team behind Scotcoin took the decision to move to the Ethereum blockchain as an ERC-20 token. Moving away from a Proof of Work algorithm to a novel Proof of Stake model and other improvements such as sharding meant that Ethereum represented a mature, competent and arguably the best overall long-term platform whilst staying true to the decentralised nature of crypto.
This brings us up to date in late 2020 where the Counterparty verison of Scotcoin has now been deprecated in favour of the new ERC-20 solution and the Scotcoin Project team has been busy migrating holders to the new environment. At the same time research and development has already begun on sharded side-chains which may be verified and “rolled up” into the main chain.
With further improvements to the fee structure required by the public blockchain means that previously impractical applications can now be fleshed out such as a Universal Basic Income whereby small quantities of Scotcoin can be airdropped to community members on a regular basis without having to spend thousands of ETH on the associated transaction fees. This represents a means of introducing a new money supply directly into the hands of the populace without the need for a large institution to oversee the process. A mere handful of adminstrators would be more than capable of verifying the correct operation of the smart contracts.
Another potential application of Scotcoin is to create a microcosm of useful spending. For example it is feasible that a network of charities and food banks could begin accepting Scotcoin for their goods. Those in direct receipt via UBI or even by donations such as promissory notes containing the private keys to a pre-funded wallet would be able to exchange their Scotcoin for food, clothing and other vital supplies.
Ideally, a government level agency would enable a “buyback” of this Scotcoin at 100% of market value from these authorised retailers. This ensures that Scotcoin can easily be spent and redeemed with these whitelisted retailers whilst simultaneously discouraging use for illegal or criminal purposes.
Alternatively, it may even be that the future of Scotcoin lies directly in the hands of the Scottish Government and the team still stand by to offer this IP for free. With Government level intervention it would be possible to create a nationwide blockchain that is maintained in a distributed manner using spare computing cycles in council offices across the land: the blockchain would be maintained for the benefit of the Scottish population.
Users of the network would have their identities shielded yet each would be able to prove their uniqueness and identity using zero knowledge proofs. Additionally, given that we know that all users and nodes participating in the network are honest, we entirely do away with the need for transaction fees, making the coin useful for everyday purchases.
All of these aspects combine to open up applications such as acccessing public services anywhere identity must be verified: Council Tax, the NHS, even voting.
With adequate support and investment, this author firmly believes blockchain technology has the potential to revolutionise our society, making it a fairer and more equitable place with value making its way directly into the hands of the people, especially those most in need.
Free Ebook – ScotCoin have authored a comprehensive introductory guide: “Blockchain, Bitcoin and What the Difference Means to You”.
If you would like a free copy please email email@example.com.
Douglas has spent many years building websites and working with the Internet since the dawn of time just after the release of Windows 95. He has been writing bad procedural PHP code ever since and still refuses to admit Nginx is superior to Apache. More recently, Douglas has spent the last few years researching cryptocurrencies and blockchain technologies, becoming the CTO of The Scotoin Project. He looks forward to developing practical applications that can make society a fairer and more equitable place.