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07.08.2019

What is money?



What is money and how does Crypto or Digital Currency fit in?
There’s an old saying that states: “Money makes the world go-round.”
Well that is not exactly true, but it does impart an idea of energy, and on a functional level, money can perhaps be best described as energy.
But is it really?
Money itself is not energy. It does not push, pull, lift, or otherwise move anything or make anything happen. So, what is it?
As stated by Sean Worthington, the author of the book “Beyond Bitcoin: The future of Digital Currency.



Money is DATA
Monetary systems are, in fact, information systems.

This is such a brilliant, simple and elegant definition, because financial communication systems, in whatever form, be it shells, coins, beads, tally-sticks made of wood, numbers on a credit card, paper, or rocks from the island of Yap as shown below, are all part of an information system. They are systems containing symbols or a combination of symbols; in other words, (DATA) that is a representation of money. They represent stored, and exchangeable energy that has the capacity to do work that is needed to accomplish something.

These rocks on the island of Yap symbolize how wealthy each of their owners are.
This is a centralized public information system.
To simplify further, energy in the form of money can be equated to a symbol representing the potential to DO, that when utilized can accomplish something.
Money can then be said to be DATA about transferrable energy or about the power to DO something, even as simple as doing something like buying, with the end-product being to HAVE.
You’ve probably heard someone say, “Oh, if I only had a million dollars, I could DO what I want to and be happy.”
That’s because money represents the capability of creating change. People want to HAVE money so that they can DO things and BE happy. Many psychologists and some lottery winners might tell you that the “have-do-be” sequence does not often lead to happiness, but it does give an idea of how some may consider money.
How people consider money because there is a psychological element to money; a very important one, and that is:

CONFIDENCE
The DATA, no matter how it is represented (shells, coins, paper, digits, etc.), says that “Joe” has X number of credits in his account.
Confidence begins with:

  • Knowing that the data saying “Joe has those credits” is true.
  • Knowing that those credits (shells, coins, paper, digits, etc.) are real — and not false like a counterfeit $100 bill.

One must be confident that the system that says “Joe has the credits in his account” is dependablycorrect and that the money is real.
Services such as Visa and MasterCard provide guarantees to merchants that the customer has the necessary credits and that so long as the transaction does not turn out to be fraudulent, they will pay the amount being charged or debited.
Many stores and banks now have counterfeit detection devices (scanners, etc.) to ensure that a $100 bill being handed to them is a legitimate bill.
Physical Integrity: involves maintaining the consistency, accuracy, and trustworthiness of data over its entire life cycle. Data must not be changed in transit, and steps must be taken to ensure that data cannot be altered by unauthorized people.
There are currently two types of decentralized physical integrity systems.
Cryptocurrencies such as Bitcoin, Ethereum and many others, are based upon the underlying Blockchain technology that sprung upon the world over ten years ago, in 2008.
Blockchain is a continually growing public ledger system that uses sophisticated cryptography, called elliptic curve cryptography, which requires a public key and a private key for access.
Blockchain ensures integrity via a decentralized community of independent monitors called “miners,” whose cross-validated recognition must represent a consensus.
A consensus does not require total agreement but does require agreement between most of the independent miner nodes in the system. Once a consensus is reached and it is recorded on the public ledger, it is then an agreed-upon reality, one that cannot be changed except by another consensus, meaning a new majority of independent agreement from “miners” who do not have a vested interest in just promoting their own thing.
The other is not a cryptocurrency, but rather a new digital cloud-based currency called CloudCoin™. This new cloud-based currency is not dependent on encryption to lock the money (valuable data) away somewhere. With CloudCoin™ the encryption is within the resource itself … the coin contains the encryption.
A major difference between the two is that while Blockchain is a record-keeping ledger system, CloudCoin™ is simply an authentication system. (Think paper money and counterfeit detection machines.) CloudCoin™ simply authenticates that the money is real and transfers ownership of it. That’s all. There is no ledger. The money is not logged or tracked. It’s like paying with a paper currency.
But instead of being authenticated by one server, similar to what happens with a counterfeit detection terminal, CloudCoins™ are simultaneously authenticated by multiple clouds of servers. These clouds have what is called a root-server with a number of other clouds below it that carry out specific functions.
CloudCoin™ has 25 different root-server clouds for each CloudCoin™.
That equals more root-server clouds than service the entire world-wide Internet’s DNS (domain name system,) which is comprised of 13.
As can be seen in the chart below, each root-server cloud has a hierarchy of servers below it to carry out specific functions. In the DNS system, server nodes beneath the root-server handle different functions.


The DNS system was developed by Paul Mockapetris who was a fresh out school Computer Science graduate.
The DMS translates numerical addresses like, 74.125.224.72 into names like Google.
The system is very secure and robust. It is considered the most critical infrastructure on the planet. Lucky for us it’s a very robust, fault-tolerant system and a redundant one. First, each of the 13 root servers are situated in different geographical regions of the world. No one ever expected all 13 DNS root-servers to be up all the time, and historically they haven’t been. That’s why DNS redundancy was implemented as a failsafe solution or backup mechanism. This means that if one of the DNS root-servers goes down it is replaced by another. It also means that an incoming duty request can be received and processed by any of the different root-servers and passed along to another. The system was developed in this way in coordination with the military who wanted to ensure a safe and stable system.

The DNS has been operating since 1985 and though there’s been a few hiccups, it has never been brought down!
The RAIDA
The underlying technology for CloudCoin is called RAIDA(Redundant Array of Independent Detection Agents). RAIDA is a post-blockchain process; a decentralized counterfeit detection and monetary transfer system that has many independent agents or clouds strategically placed in different countries around the world.



The RAIDA has been built in a similar fashion to the DNS server network which as mentioned has been in uninterrupted operation since 1985.
The DNS system has 13 root servers and approximately 750 sub-server nodes, while RAIDA is built with 25 root servers called Sentinels and 800 sub-server nodes called Detection Agents.
Like Blockchain, it works through independent consensus of agreement. However, unlike the Blockchain, the CloudCoin™ system does not contain any sort of ledger and is totally private

CONFIDENCE is the key word.

  • Confidence that the credits are there.
  • Confidence that the money is not counterfeit.
  • Confidence that the system is robust and can withstand attack.
  • Confidence that ownership of the underlying money itself can be transmitted safely.
  • Confidence that lost coins can be recovered. (No permanent loss.)
  • Confidence that the money will be accepted by others. The value of cryptocurrencies like Bitcoin or Ethereum are consensus-based, meaning that its value varies based upon the majority agreement of the people using it. CloudCoin™ is also a consensus-based currency.

The most basic confidence of those listed above is the last. Do you have the confidence that the “money” will be accepted by others?
Blockchain based currencies like Bitcoin have already been on the market for about ten years, and though volatile, though many hackings have occurred, and though people have lost over 3 million Bitcoins which could not be recovered, it has still developed a large following. According to new research from Chainalysis, a digital forensics firm that studies the bitcoin blockchain, 3.79 million bitcoins are already gone for good based on a high estimate — and 2.78 million based on a low one. Those numbers imply 17% to 23% of existing bitcoins, which are today worth around $11,000 each, are lost.
In ten years, Bitcoin went from being worth less than a penny each to its current valuation (9 August 2019) of over $11,000 each.
CloudCoin™ is now where Bitcoin was eight years ago, selling for a few cents, but the advanced technology embodied by CloudCoin™ is on track to replace the ten-year-old blockchain technology, in large part because it cannot be hacked, lost coins can be recovered, it’s faster and more dependable.
The world runs on confidence
… and falls apart when it’s not there
Though governments attempt to enforce the use of their fiat currencies, if the confidence in any fiat currency drops, including the dollar, the value and desirability of that currency drops.

EXCHANGE
The next basic element regarding money is that it is a method of exchange; one that grew out of the limited usefulness of direct barter through the adoption of a symbolic representation of value which we call money. The invention and acceptance of different forms of money allowed the formation of cities, provinces, states, countries and finally, world commerce.
Exchange could now take place indirectly. It was no longer necessary to exchange eggs for vegetables. You could exchange your eggs for “money” and then trade that with others for food, clothing, shelter, etc.
Many different types of money evolved in different areas. Money changing became a business that is spoken about in the Bible. Many systems evolved, and as they did, they were tied together by associations like the Knights Templar, and then formularized banking began in Italy which expanded the ability to trade across large expanses, cumulating in the interlinked world-wide banking system we have today.
However, without confidence or trust in the medium of exchange or in the system or people running the system, it does not work. As trust erodes, people look for solutions, such as cryptocurrencies or CloudCoin™ that operate independent of trust that can be co-opted.
Lest that seem over-simplified, it should be stated that exchange is a method of communication … and given that the communication is true, if that exchange is blocked, restricted, or dictated by some “power,” then it would be like a violation of the First Amendment of the U.S. Constitution which is, of course, “Freedom of Speech.”
So, what does this have to do with cryptocurrencies or digital systems like CloudCoin?
A very bright man by the name of Jim Rickards, who is a well-known and well-respected monetary economist, has stated that you cannot really discuss cryptocurrencies in general because each one of them is different. In large part, the reason so many different cryptocurrencies exist is that the original goal of Bitcoin has not been fulfilled. Each represents an attempted solution to a failure of one kind or another.
Mr. Rickards also believes that only a select few cryptocurrencies will survive and, without naming any one, he listed what he feels are the main characteristics that one should look for when examining them. He calls it his COINN system, and states that an optimum system fits all of them.

COINN
C = Consensus: Consensus basically stands for general agreement, but in this case, it refers to agreement from independent participants. You can think of it like the unpaid listings in a Google search, or information in Wikipedia that gets input from many sources, and then based upon the level of agreement, provides the most agreed upon or valued answers and/or rankings. With Google, the more “hits” a webpage or article receives, the higher up in the search it will be placed.
With a cryptocurrency, the independent nodes are operated by “miners” who ensure the validity of transactions, and it’s their job to see that the system works as it should. When a majority of miners are in agreement, a consensus has been reached.
However, the safety of this system could be compromised if a few major players hold anything close to a majority of the currency. It has been said (though not verified) that upwards of 40% of the Bitcoins being traded are owned by a few thousand people. That’s the equivalent of 1% who, when joined together into groups, have the ability to manipulate the market outside of the consensus safety measures provided by the system itself.
Of course, this is nothing new. Just think of price fixing in major industries, or look at the interlocking interests of the banking system, and its control of the currency, value of gold, etc.
So, what do knowledgeable people think about the different systems and cryptocurrencies that exist? This COINN system developed by Jim Richards is a good starting pointfor evaluation. Think of it as a guide.
CloudCoin™ is still new and going through its growing stage just like Bitcoin did, but more knowledgeable people are agreeing that CloudCoin™ runs on a better and more secure technology platform than Bitcoin and any of the other blockchain-based cryptocurrencies do.
O = OPEN-SOURCE: Open-source is the opposite of what is called a “Permissioned System” and is important enough to cover here. There are a couple of points to consider when discussing “open-source.”
Permissioned Systems
“Permissioned Systems” are centralized systems that require a public ledger of some sort and are controlled by the powers running the system.
Permissioned systems restrict avenues of communication and freedom of communication. In computer terminology, open-source refers to Open-Source Software (OSS) which is a type of computer software in which source code is released under a license in which the copyright holder grants users the rights to study, change, and distribute the software to anyone and for any purpose other than creating malware. Open-source software may be developed in a collaborative public manner. Both the Blockchain and CloudCoin are open-source. The CloudCoin Consortium was set up to enable the world to use CloudCoins free of charge and have many developers who share their work with them.
In finance, permissioned systems are made up of powers that dictate what can and cannot be used as a medium of exchange, when and where you can use it, where you must use it, whether you can freely give it to others, whether or not you can take it out of the country, which channels (like banks) you must use, how much interest you are allowed to charge when making a loan versus how much a bank may charge, how much you can withdraw at any time, etc., etc. With permissioned systems, the list of what you must do and cannot do with money gets longer all the time.
In fact, right now when you deposit money in the bank, it is no longer legally yours.
Here’s an interesting quote by one of history’s most prominent bankers, which emphasizes the necessity of a free system:
“I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets.
The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.”
  • Nathan Mayer Rothschild
Attributed to European banker Mayer Amschel Rothschild. In 1815 Rothschild basically took over England’s banking system and formed “The Bank of England,” which was a privately-owned bank that would act as the banker to the Government. He and other bankers then went on to attempt the takeover of the American banking system.
The rise of cryptocurrency has been largely in response to Permissioned Financial Systems, which have been misused and have violated the trust placed in them and are now out of the control of the private citizen.
A true open sourcefinancial system does not dictate where, when, or how you can use your money and it’s private. It does not monitor or make recordings of how much you have or what you do with it.

Bitcoin and the Blockchain is pseudonymous, not anonymous.


CloudCoin and the RAIDA is anonymous.
I = Impenetrable: This means that it is robust to attack. Many of the existing blockchain based cybercoin systems have been broken into by hackers, and that includes the biggest and most well-known like Bitcoin and Ethereum. Hackers are thieves who steal information, identities, money from bank accounts, etc. Equifax, Yahoo, LinkedIn, JPMorgan, Home Depot, Sony, Chipotle, Wells Fargo, Capital One, and Hilton Hotels are a few of the well-known hacks.

Cryptocurrencies and Blockchain are not impenetrable.
CloudCoin and the RAIDA are considered the most impenetrable.
N = No Nonsense Governance: This means that the governing of the system must be fast and accurate. When your Visa or MasterCard is run, it only takes a few seconds for the merchant to get verification. It would be nonsense for a retail transaction to take 10 minutes or more. Bitcoin transaction time is too slow for retail use.
When the merchant gets verification from Visa, etc., he is getting a guarantee that so long as there has not been any fraud (like a stolen card), that the money or credits will be sent to his account. It is not an instant transfer of funds, but a guarantee that the funds are there and that they will be paid. Actual payment generally takes a couple of days.
The TPS (Transaction Speed per Second) is very high with credit cards like VISA, making them viable at a checkout counter.
With CloudCoin, not only is the verification instantaneous, but the transfer of funds can be immediate as well.

Another aspect of good governance must do with the cost of transaction. With something like Visa, it’s a few percent. With Bitcoin, running the transaction was as high as $41.62 in Jan 2018, and since Bitcoins often require multiple confirmations, the cost is now (July 2019) listed at about $1.70. These fees also apply to peer-to-peer transactions.
The transaction fees on Bitcoin also seem to depend on the volume of trading. The more trading going on, the more crowded the network is and the higher the transaction fee. There have even been instances during network traffic jams, when miners asked for surcharges in order for a user’s transactions to be placed in a “fast lane.” This is certainly not very workable in the everyday world if an increase in success equals an increase in volume which bogs things down and then increases transaction costs.
Bank transfers can be quite expensive and prohibitive especially for smaller transactions. International transactions are often difficult, time consuming, subject to restrictions and expensive.

With CloudCoin™ peer-to-peer transactions anywhere in the world can not only be instantaneous, but there are virtually no transaction fees on these direct exchanges.
N = Nimble: This one relates to the ability of the currency to respond to the changing economy and to its speed, which is measured in Transactions Per Second (TPS). An alternative currency must have speed that is at least comparable to VISA™ to be viable for everyday commerce. One of the reasons alternative cryptocurrencies have popped up is to attempt to solve slow transaction speeds which inhibit retail use. Unfortunately, solutions to one aspect of the blockchain usually sacrifice some other desirable element.
Next, if a currency becomes very popular and the price escalates greatly like Bitcoin has, each coin becomes unwieldly and hard to deal with. If a Bitcoin is valued at $11,000.00, what fraction of a Bitcoin are you going to need to pay for an $18.00 pizza? The fractions become very confusing and hard to deal with. This inhibits, not enhances, commerce.

CloudCoin™ deals in simple integers like $1.00, $5.00, $25.00, $100.00, $250.00, all of which are recognizable, understandable, and easy to deal with.
THE VERDICT
The Blockchain, meaning the platform upon which all the different cryptocurrencies depend, has value in many areas where a distributed ledger is needed or required; however, as a currency it falls very short.
As they now exist, none of the cryptocurrencies could possibly serve as a national, let alone an international, currency. They have too many built-in economic and ecological problems. All knowledgeable crypto enthusiasts recognize the problems and hope that someday there will be a solution for the blockchain’s shortcomings as a monetary platform, but its fundamental nature makes that unlikely.
However, I believe that once crypto enthusiasts get out of their protective, self-defense mode, their extraordinary intelligence and insight will discover ways that combine the benefits of blockchain when a ledger is useful, with the freedom and ease of use of CloudCoin™ as a currency. This has the potential to solve many problems for business and for the peoples of the world….
CloudCoinConsortium with Cristopher Davis.
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