Creating Value with Cryptocurrency: White Paper

By: Gabriel Dusil, Co-founder & Board Member, Adel Michal Vavrek, Founder & Board Member, Adel Travin Keith, Marketing Manager, Adel

Ecosystem

This white paper outlines Adel’s advantages from three vantage points: a) Blockchain technology, b) the Nxt (and soon, Ardor) platforms on which Adel is built, and c) additional business processes Adel has introduced into its ecosystem to provide effective, community-based development and funding.

Legitimizing Cryptocurrencies

Since the inception of Bitcoin in 2009 by Satoshi Nakamoto, there have been numerous developments into blockchain technology. Adel will further these developments by creating an ecosystem to promote the use of blockchain technology and create solutions in various industries. The ecosystem will leverage the expertise of the Adel Board, the R&D team, the Project Review Committee, and members of the community, while at the same time creating a supportive environment for innovative projects. Adel’s token, known as Adelphoi, will be used as a basis for distributing rewards from these projects. The success of these projects will thus directly influence the value of Adelphoi.

All members of the Adel community will work for the benefit of the ecosystem. Projects have the potential to span profitable industries such as IT, banking (FinTech), insurance, healthcare, and humanitarian initiatives. Participation in these projects will be possible by holding the Adelphoi token. Each project will thus create unique opportunities for community members through the creation of new businesses and employment opportunities.

Advantages: Blockchain & Cryptocurrency

Bitcoin is a decentralized, distributed application that uses a public ledger – the blockchain – to store and transmit cryptographically secured tokens. Representation of wealth is recognized when both Ecosystem Advantages the sending and receiving parties mutually agree on this premise. The blockchain paradigm requires mandatory publication of the source code under established open source licenses. This has resulted in a vibrant community of developers who have created many variations of the original protocol, ranging from simple copies of the code to truly evolutionary improvements.

Blockchain v2.0: Utility Beyond Money

The widely-known blockchain evangelist, Andreas Antonopoulos, has likened Bitcoin to ‘money being the email of the blockchain’. He was comparing the invention of blockchain to the introduction of the internet in the early 1990s, when people could not differentiate the internet from its first application: email. Once a second application of the internet was introduced around 1995 – the World Wide Web or WWW – it became clear that email and the HTTP protocol were applications that ran on top of the internet. Likewise, this explains the confusion of Bitcoin and cryptocurrencies in general to the blockchain, where currency is the first use case of blockchain technology. With this realization, there has been an emergence of innovative applications that plan on taking advantage of decentralized open ledgers, i.e. the blockchain.

There are several well-documented advantages related to using blockchain technologies for financial and administrative purposes. These advantages are listed below in order to demonstrate the unique suitability of emerging blockchain technologies for the administration of economic systems:

  • Mobility: Cryptocurrency users do not need to carry credit or debit cards. All they need is access to their online wallet to initiate a transaction. However, cryptocurrency credit or debit cards are slowly becoming mainstream.
  • Resilience: Blockchain technology has a high level of redundancy and high availability which is unrivaled in the corporate world. For example, the computers that manage the Bitcoin blockchain are collectively over 43,000 times more powerful than the top 500 supercomputers on the planet combinedi . One cannot feasibly compromise these networks without acquiring a large amount of computing power to compete with the rest of the network. This often leads to a negative incentive.
  • Privacy: Most blockchain platforms are not fully anonymous but pseudonymous. If a user wishes to remain anonymous, they can choose to be and are usually able to maintain their anonymity. In fiat transfers, the sender’s and the recipient’s personal details are captured by all transfer intermediaries. These details can be used for invasive marketing purposes or more dangerous purposes such as identity theft, which is becoming more prolific.
  • Cryptographic Proof: With blockchain technology, one does not rely on the trust of a third party. Thus, blockchain networks are usually called “trustless” systems. Preventing duplicate transactions or improperly generating coins is achieved through the use of an electronic payment system based on cryptographic proof and an open ledger which is auditable to anyone.
  • A Better Financial System: Two and a half billion people on the planet do not have a bank accountii. Cryptocurrencies are perfect for extending financial services to remote locations and for helping to modernize developing countries by bringing them further into the global economy.
  • Serving Digital Society: Blockchain has the potential for much more than just cryptocurrencies. New functionalities are being explored that utilize an open and auditable public ledger with the use of smart contracts, such as the voting feature on the Nxt blockchain.
  • No Permissions: No permission is needed to send or receive cryptocurrencies, whether this be from banks, intermediaries, governments, or other trusted third parties. The transfer of coins is agreed upon only between the sender and the recipient, and the owner has full control of his/her funds at all times. No authority can freeze a cryptocurrency account and prevent transactions from that account.
  • Lower Transaction Fees: Credit card companies charge up to 3% per transaction, and in some cases, an additional charge per transaction. With some remittance systems, fees can be as high as 10% – 30% of the transferred amount. Cryptocurrency fees are orders of far smaller magnitude.
  • Account Security: Account control lies with the user via their private key. This private key can be kept offline (i.e. cold storage) for security purposes, and only have a small portion of funds online (i.e. hot wallet) for project capital and operational costs. Cold storage ensures that invested funds are not easily accessible to hackers.

Advantages Nxt & Ardor

Satoshi Nakamoto set out to create a decentralized digital currency that does not rely on centralized trust. He set out to programmatically remove the need for centralized trust by creating a decentralized and distributed ledger solution for monetary applications that prevents duplicate transactions and uses an open ledger that could be audited by anyone. Blockchain technologies are widely perceived as providing fiduciary integrity in the present macro-economic climate that is fraught with moral hazard, corruption, and systemic risks.

Since the launch of Bitcoin in 2009, several observations can be made with the benefit of hindsight: the blockchain is revolutionary in its design and has successfully proven its resilience in the goals it set out to achieve. However, weaknesses have surfaced in the services that complement Bitcoin. These services are mainly those that allow secure storage and trading of Bitcoin. These services have become susceptible to attacks from criminal individuals and organizations across the world who seek out flaws in the systems associated with the cryptocurrency with the goal of exploiting these weaknesses for their own benefit.

Since the launch of Bitcoin in 2009, significant developments have been made to the code. As of today, only around 15% of the code initially created by Satoshi remains in the core software. As is the nature of open source software, some developments have continued outside Bitcoin, such as with Litecoin and Namecoin. Eventually, as more attention was drawn to Bitcoin, especially due to the price spike to over $1000 in 2013, more clones were made. These new systems either proposed significant changes to the technology or just had minor adjustments as a clone of Bitcoin or another system. Nxt was also being created during this time. Unlike most of the platforms, Nxt was developed from scratch in Java, though it contained some of the same principles that Bitcoin introduced and built on them. The platform introduced a wide range of features to the wider community such as colored coins, later known as Assets, that can be created and transacted on top of the Nxt blockchain. This feature, along with many others, has led to it being the pioneering platform of what is now called Blockchain 2.0. In 2017, Nxt’s core developers will be releasing Ardor, a blockchain platform that utilizes Nxt technology and allows users to create their own blockchains known as child chains, which are secured by the Ardor main chain.

In this section, we present the most salient features of the Nxt and, soon, Ardor platforms. This second-generation blockchain is utilized to implement different modules in the Adel ecosystem. A community that wishes to establish a viable economic ecosystem needs to address these issues and implement measures to mitigate risk. The following cutting-edge monetary and administrative features illustrate why the founders of Adel have chosen these platforms:

  • Proof of Stake: This is a method of gaining network consensus and preventing double spending that is used by Nxt and will be used by Ardor. In this system, the active node (a device running the Nxt client and actively contributing to the network by forging the next block, thereby processing the pending transactions and acquiring the transaction fees), is determined by assessing the NXT balances of all nodes actively forging and gives a higher chance to forge to those that own a larger amount of NXT (i.e. their stake in the network). In this manner, each unit of NXT is akin to that of a mining rig for the purposes of determining who mines the next block in a Proof of Work system, where a higher level of hashing power gives a greater chance of mining the next block and claim its rewards. Since the determining factor is the balance of NXT and not computing power, the amount of energy used by all forgers is much less than that of a Proof of Work system. This makes it possible to forge NXT even with a Raspberry Pi.
  • Phased Transactions: With Nxt, a set of conditions can be set in order for transactions to execute. For example, one party can set up future transactions on the platform (i.e. set to execute at a particular time) which is perfect for enterprise workflow scenarios and scheduling future payments. Users can also choose to have transactions processed only when another transaction has occurred, or when approved by other accounts. This latter implementation is otherwise known as a multisignature, or multisig as multiple signatures. In this case, passphrase-signed approvals are required from more than one account.
  • Monetary System: With Nxt, users can create their own currencies for their specific needs. This could be used for special events that give out event tokens to be used for redeeming certain products or services, or for online shops that give out special credits to be used within their store.
  • Decentralized Voting: Decentralized polling for secure voting is possible with Nxt and will be used for various Adel projects, as well as for voting on the community itself.
  • Decentralized Marketplace: While not directly implemented into the Adel ecosystem, the ability of the Nxt platform to have a decentralized marketplace could be utilized for future projects.
  • Shuffling: In cases where increased anonymity is required, the Nxt platform allows users to mix their tokens with tokens from other users. This can be useful in projects where greater levels of anonymity are required with certain accounts.
  • Assets: Nxt allows for the easy creation of assets on the platform which are representations of certain products, be they digital or physical. An asset will be used to represent the contribution of a user in Adel projects to allow users to exchange these tokens with other users, as well as a determining factor of the amount of rewards they receive.
  • Asset Exchange: Traditional cryptocurrency exchanges require the use of a centralized platform, as is the case with BitFinex, Kraken and others. However, such centralized exchanges are always exposed to an inherent risk of failure, as was the case with Cryptsyiii and Mt. Goxiv. Nxt has developed a peer-to-peer internal exchange that offers decentralized trading, thus eliminating a single point of failure, as well as intermediary trading fees beyond the transaction feed.
  • Speed: The average transaction time of Nxt is approximately 60 seconds per block. However, for Ardor, the transaction time can be delayed per child chain in cases where a slower transaction time is desired.

Advantages: Adel

  • The Adel ecosystem is relatively independent of governments, international or domestic politics, and fiat economies. Its value is in leveraging a state-of-the-art blockchain in Nxt and Ardor, as well as the Adel ecosystem, and combining these technologies with best-in-class business practices. The Adel ecosystem is designed to implement the latest in security features while also adopting best practices in business services. In creating a legitimate business on top of cryptocurrency technology, Adel will demonstrate innovation and leadership with an organizational structure that is both sustainable and profitable. Here are some of the advantages of the Adel ecosystem:
  • Project Approvals: The establishment of a Project Review Committee which not only ensures that Adel will launch profitable businesses, but also represents legitimate, legal and ethical projects. This is fundamental to the integrity of Adel and is vital to further legitimizing cryptocurrencies. Successful projects will prove sustainable, long-term growth, as well as global monetization potential for blockchain technologies.
  • Decision Leadership: Adel believes in utilizing expert decision makers to guide decisions in the community. Once a decision has been authorized by the leadership, it is then submitted to the community for consensus, enhancement and further decisions. This way, Adel establishes efficiency in the decision processes that guide the ecosystem, while also utilizing the experience and expertise of the community.
  • Open & Transparent: Adel establishes auditable financial transactions for all projects and provides the foundation for a self-regulated community capable of making important economic decisions. The voting system establishes the opinion of the majority (according to the weight of the respective community holder’s Adelphoi). Social forums allow for open and constructive communications between community members who can ask questions, make comments and offer suggestions.
  •  Integrity: As outlined in our white paper, “Maintaining Integrity in Equity Funding “, Adel’s integrity is the foundation of our success and for the sustainability of a profitable ecosystem. This integrity applies to all of Adel’s staff, as well as its community members.
  • Support : After a project has been launched on Adel, whether it be from a proposal by the R&D team or an innovator from the community, the project manager will be adequately supported by the Adel staff, as well as community members participating throughout the lifetime of the project. This can either be in the form of expert advisory services, finding employees, and assistance with securing external funding, such as with venture capitalists.

Author: Dylan Jones

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  1. Nxt news – February 2017 (I): If You Want Something New, You Have to Stop Doing Something Old – NXTER.ORG - […] syndicated the fourth whitepaper of Adel, which has been recently published. The article called Creating Value with Cryptocurrency goes over the possibilities that…

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