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A new world with cryptocurrencies

The world of cryptocurrencies started with the enigmatic person or collective Satoshi Nakamoto. His origin or place of residence remains unknown. Everyone talks about him, but nobody really knows him.

In 2008 he published his white paper, introducing a disruptive technology that would turn the global monetary system around, and would initiate the fall of the current bank wall.

Satoshi not only launched the theory, but also designed it and put it into our hands. The following year he launched a free software application to create the first cryptocurrency, Bitcoin. Then the race began. Hundreds of coins have been developed from this initial one, each with its own peculiarities, but generally respecting basic features such as blockchains, encryption, pre-coined money supply, etc.

We are at a historic moment. Peer society alternatives have been growing fast, and cryptocurrencies provide us with just the tool that was missing to enable us to change the rules of the game.

A revolution of economic, technological and social systems is taking off.

What is a cryptocurrency?

It is a digital currency, or virtual money based on a peer-to-peer, decentralized exchange network protected by cryptography.

This means that, in the first place, it isn’t a material currency, but rather that everything works virtually from our computers and the Internet. Second, it is protected by encryption, hence the name “cryptocurrency”. This is a way to secure the system and the transactions through mathematical algorithms which convert the information in an encrypted block, only readable with the correct key, with a level of encryption that’s impossible to decipher with today’s known technology.

Coins are not actually units as we may think, but pieces of information, specifically they’re exchanges of keys which are recorded on a public accounts book which everyone can see and check, and which is is almost impossible to fake. To put it simply, what actually happens when you give someone else a coin is that you sign a transaction with your private key, transferring a value (“coins”) to another person’s direction. These signatures make up chains that are verified and confirmed by an entire community of people who use their own computers to verify that the transactions are correct.

As complex as the system may seem, it is actually very simple, and enough technology has been developed to make a cryptocurrency payment as easy as paying with your code-protected credit card.

The innovation and main difference of cryptocurrencies as compared to central money is, in the first place, cryptocurrencies are neither saved nor controlled by any central bank or State. In this system, you own all your money, and the system is secure thanks to peer2peer technology. Secondly, counterfeiting is currently unfeasible.

Thus, cryptocurrencies give us immunity to interference and manipulation by central banks and return us our freedom of economic management

How are notes and balances secured?

Satoshi’s great contribution to humankind is the blockchain. It consists of a p2p program which collects all the transactions done in a period of time in a block and joins them together in “chains”, resulting in something resembling a ledger containing all transactions, which are then distributed and verified to avoid fraud.

In order for a block to be added in the chain, it must be submitted to automatized voting among all the computers connected to the net, so they can determine whether the block contains valid information or not. Once the node accepts a block as valid (which means that all transactions contained are true), other nodes confirm its validity by building the next blocks on the same chain. Therefore, each block maintains a mathematical relationship with the previous block and the future one. This whole process has its foundations laid in the mathematical algorithms specially designed for this purpose.

The blockchain provides the world’s first decentralized, incorruptible system for registering any financial or legal contract, so it’s already being used for multiple purposes, and new ones will gradually appear. Each computer which downloads the program acts as a notary, and all computers working simultaneously decide according to mathematical laws.

How are coins created?

The software released for Bitcoin was designed in such a way that only 21 million coins could be created. For Faircoin, there are 50 million coins plus those which are generated through the minting system explained below.

There are different ways to create these coins. The most common and widespread methods are POW and POS. Both are designed with a feedback system, ie, in order to get coins from the system, you must contribute to making the system work properly. Let’s take a closer look into the way this functions.

POW (Proof Of Work)

This is a validation system based on work, also called mining. It is dependent on computing power. Miners are those who participate in the network, contributing with their computer and the energy expenditure derived from mining.

Mining itself is performed on different nodes working in unison through the POW infrastructure. The more computing power supplied to the system, the more likely it is for a block to be completed.

For each block completed and added to the blockchain, the creator node is awarded a certain amount of coins, in the case of bitcoins, 25BTC.

This system values the work of the mining community in completing the blocks, and compensates it with coins. This is the system used for bitcoins and is known as MINING.

POS (Proof Of Stake)

In this case, the system validation is based on demonstrating that you own the coins by using “money age”. New coins are created once you prove that you have been saving a certain amount for a certain time, and through this saving, you also contribute to the network’s security. This method began with Peercoin and is also currently used in Faircoin. The process is known as MINTING.

Both methods are widely used by different cryptocurrencies, separately or as a hybrid. However, POS arose to overcome some disadvantages of POW: on the one hand, there is the problem of energy consumption. As the system has grown, along with the number of transactions, it is increasingly difficult to mine a block and it requires more and more computing power, therefore becoming an ecological and economic issue.

On the other hand, since transactions are validated by miners, if 51% of the computing power of mining nodes were to unite, they could seize control of transactions and therefore of the registered coins. This is known as a 51% attack.

In opposition to this, POS does not require large energy resources for minting. Anyone, with just a computer and an unlocked wallet, can mint (see specifications below), so it’s a much greener way to maintain the system. Also, the only way a monopoly could arise in the case of POS would be if someone were to own more than 50% of minted coins — which would be meaningless in terms of economic terms for the owner to prejudice their own capital.

But neither mining nor minting can truly be considered fair, because both confer an advantage on the already rich. Therefore we decided to create a new version of FairCoin which corrects these issues. This is why we are developing Proof of Cooperation.

PoC (Proof of Cooperation)

POC is the unique validation system developed and used specially for FairCoin. In contrast to other cryptocurrencies FairCoin does not implement any mining or minting functionality, which are both competitive systems. Block generation is instead performed by so-called certified validation nodes (in short CVN). These nodes cooperate to secure the network. Therefore we call this system proof-of-cooperation (PoC).

PoC is an example of a consensus algorithm – which are always required in the P2P network of a crypto currency. Every node in such a network must obey to the same set of rules to maintain the networks integrity. All connected clients have the same data available to verify the state of the network.
To run a CVN one needs to undergo certification called “node certificaction procedure” and operated by FairCoop. There is no reward for block creation. Therefore, the money supply is not changed by creating blocks. The mandatory transaction fees go to the respective block creators to compensate them for their efforts in running a CVN.

The old version of the FairCoin wallet relied on mining (PoW) and minting (PoS) technology to secure the block chain. Proof-of-cooperation (PoC) is built on the code-base of a recent version of the Bitcoin core client and enables us to benefit from the latest developments made by the dedicated Bitcoin developers. Also the comprehensive infrastructure that already exists around Bitcoin can be adopted for FairCoin with minimal effort. The main advantages of Faircoin 2 are:

  • No more money creation. Faircoin 2, stops creating new coins. Certified nodes don’t need to do that in order to give security to transactions. Instead, Faircoin 2 helps to create the conditions for existing coins to be redistributed to amazing social projects worldwide, thanks to funds like Global South Fund, Commons Fund, Technological Infrastructure Fund and Refugees Fund.
  • Instant confirmations. Technically Faircoin 2 brings us important innovations for making Faircoin an important tool for online and physical payments; one of these is instant confirmations, which brings security to real time exchange relations in multiple situations.
  • Technical environment perfect for Micropayments. The high efficiency level of the Faircoin 2 network, trusted node relations, low energy cost and consequently low fees, make Faircoin the best currency for micropayments, which are very important for many needs like the gift economy and use in poor countries.

The PoC innovation finally makes FairCoin fair, secure, and power-saving on the base of cooperation instead of competition.

For more technical details please have a look at the white FairCoin2 Paper here: https://chain.fair-coin.org/download/FairCoin2-white-paper-V1.1.pdf

FairCoinFairCoin2_logo

Faircoin, the Faircoop ecosystem cryptocurrency

FairCoin is the monetary base system for FairCoop. The key purposes of FairCoin is to be used as a tool for economic redistribution, increasing justice, the empowerment of grassroots groups, the transformation of social and economic relations and the creation of commons.

How to start with Faircoin?

To use Faircoin, you first need a virtual wallet. Wallets are neccesary to keep your coins safe and for making transactions, both to receive and send Faircoins, by just entering a receiver address.

There are basically three types of wallets: the official wallet that is on your computer and two more lightweight wallets: Electrum wallet and Android wallet. The latter is for mobile devices. Here you can find a tutorial with info on the different wallets you have and how to install them. https://use.fair-coin.org/tutorials/

It is important to note that any transaction made is impossible to reverse, as it is recorded in the blockchain; therefore, users need to be careful, and also that now you are your own bank – so in the tutorial guides you will find some safety tips that we recommend you to follow in order to avoid the loss of your Faircoins.

Buy Faircoins

Currently you can buy Faircoins 1.) with fiat currencies on getfaircoin.net or 2.) with Bitcoins on bittrex.com. Because of its simpicity and the direct link to FairCoop we recommand the first option. Furthermore by chosing getfaircoin.net for your order you support the FairCoop ecosystem. Here is a link to the website with an easy to follow instruction: https://getfaircoin.net/about/ .

For the second option you must sign up with an email and password on the online exchange and send them your Bitcoins. You can buy Bitcoins in a number of places on the Internet.

Instead of holding your Faircoins in an exchange like Bittrex it is also recommended to download your own FairCoin wallet to store and self-manage your coins yourself, as well as for security reasons. Here’s the link to the tutorials if you’d like to know more: https://use.fair-coin.org/tutorials/ .

We could go on explaining, but the best way to learn is to download the wallet and start experimenting with your Faircoins.

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Comments 5

  1. Profile photo of Thomas König
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    Ben Johansen

    I know its not the agenda, but would it be an idea to also have a link on the GetFaircoin page to a sell faircoins? If some emergency is out and you need quick cash one can use.. Does such a place exist or do one have to buy into bitcoins and sell to get a “normal” currency?

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