Early Concepts and Developments
Brandon “Synth” Smietana, an early developer in the Bitcoin community, first envisioned the Skycoin project in 2013. With a mission to support a decentralized, peer-to-peer internet service, the project was launched with the Skycoin cryptocurrency (SKY). Despite these goals, Skycoin has faced criticism and allegations of being an elaborate fraud, which its supporters strongly deny.
Skycoin’s blockchain introduced all 100 million SKY tokens upon its inception, in contrast to other cryptocurrencies like Bitcoin where tokens are mined via proof-of-work systems. Most of these tokens remain locked and inaccessible to developers. By July 4, 2023, the project reached a market capitalization of $1.53 million, according to CoinMarketCap data.
Consensus Algorithm: Obelisk
The weaknesses of Bitcoin’s proof-of-work system, such as energy inefficiency and risks of centralized control by miners, were identified by Smietana during his earlier projects. In response, he developed the Obelisk consensus algorithm for Skycoin, focusing on decentralization and resistance to attacks.
Within this framework, influence across the network is distributed, with consensus decisions influenced by each node’s score. Each node holds its own blockchain, acting as a public broadcasting channel. Nodes can sever ties with less trustworthy or malicious nodes, maintaining network integrity.
As a unique ecosystem, Skycoin’s hardware and software are designed to support its blockchain solution. This includes features reminiscent of other projects like Ethereum, aiming for competitive distinction.
Skycoin Hours: Incentivizing the Network
To further incentivize network participation, Skycoin introduced Coin Hours, a secondary currency linked to Skycoin. Users earn one Coin Hour for each Skycoin held in a wallet for an hour, which can be traded for bandwidth and other services on the platform.
Innovations: Fiber and KittyCash
Skycoin’s Fiber platform facilitates decentralized applications, resembling parallel blockchain strands. Capable of handling 300 transactions per second, Fiber boasts low energy usage and absence of transaction fees, a feat Bitcoin and Ethereum cannot match due to scalability limitations.
Meanwhile, in 2018, Skycoin launched KittyCash—a feline-themed collectibles game similar to an Ethereum counterpart. Skycoin claims the game, run on Fiber, offers lower transaction costs and increased speed.
Skywire: The Mesh Network
Skywire presents a faster, more accessible, and incentivized mesh network compared to existing internet services. Its mainnet for developers debuted in March 2019, followed by a public launch in 2020. With Skywire, user data is exchanged without sacrificing anonymity, routed through nodes offering computation, storage, and bandwidth for Skycoin and Coin Hours.
Within this unique network system, Skywire nodes facilitate data exchange securely, maintaining anonymity.
Skyminer Hardware and Wallet Solutions
Skyminers, multi-processor rigs functioning as Skywire network nodes, enable service provision for cryptocurrency. The company also mentions potential wireless antennas, allowing Skyminers to operate as local ISPs. For crypto storage, Skycoin’s hardware wallet offers an economical alternative, though initially limited to Skycoin.
Controversies and Critiques
Skycoin’s ambitious projects have invited skepticism and criticism, particularly regarding the concentration of token control among developers. Smietana’s business dealings have also been questioned, following a 2018 incident where his family was held hostage, allegedly linked to Skycoin’s internal controversies and supposed insider trading.
Critics also question the viability of the technology, with concerns about unsupported decentralization claims. Additionally, Skycoin’s Wikipedia page was removed, citing disinformation spread to inflate cryptocurrency prices.
Financial Impact and Market Presence
With the wide array of crypto scams in 2017-2018, verifying project legitimacy became crucial to investor protection. Skycoin faced delisting from Binance on November 5, 2021, due to reputational damage from allegedly false information aimed at extortion attempts.
For potential investors or buyers interested in Skycoin, it remains accessible on exchanges like LBank, Bitbns, XBTS, and CoinDCX. Each Skycoin was valued at $0.07 as of July 4, 2023.
Ultimately, the claims made by Skycoin regarding a revolutionary hardware and software ecosystem around the Obelisk consensus algorithm are significant. However, its ambitious promises have raised suspicions and controversies surrounding its leadership and project integrity.