For a long time, folks have thought that centralized exchanges were the essential problem in cryptocurrency. When someone wants to convert one cryptocurrency to another, or to fiat, they have to trust that the exchange they’re going to use isn’t going to, in one way or another, rip them off. Now, two altcoins have begun laying the groundwork for a permanent solution to trusted third-party exchanges.
note: the author holds a small amount of both Burst and Qora.
CCN spoke extensively with members of the Burst and Qora development teams, who worked in conjunction with a group called CIYAM. Readers may remember Qora from an article earlier this year, but Burst is on another level. The way Burst works is it mines based on your hard drive storage space, rather than your CPU cycles, to reward coins. Qora is more of a NXT alt-coin that has completely rebuilt its wallet implementation. But now, both coins have an incredibly unique feature: cross-chain transactions.
The jargon in their press release is difficult to understand at first, so this writer contacted the people directly. Via Skype, we walked through the process of doing this. The core of the innovation is a feature called “Automated Transactions,” which are effectively the same thing as Smart Contracts. There are some automated transactions already available, such as a lottery automated transaction, from Burst. Without the aid of an exchange, using the automated transactions and something they called ACCT (“Atomic Cross-Chain Transfer“), a user can convert their coins between the two currencies. Automated Transactions can be used for a lot more than just this purpose, as has been mentioned.
In the example this writer walked through, he took 1500 Qora and created an AT to purchase 500 Burst from one of the developers. If you’re wondering, yes, he was required to have a wallet on both systems. The system asked for the Burst address where the Burst could be sent to, and then after the next Burst block, the developer was notified that an offer had been made to his address. He then accepted the offer; the Burst showed up in the writer’s Burst wallet, and the transaction was complete. The developer also had to go into his Qora wallet to complete the transaction.
All of this was done without the interference, or fee gathering, of any exchange or third-party. The technology can be expanded to any NXT-based currency pretty easily, and one of the developers has said that he has already investigated the possibility of doing it with Bitcoin-based currencies. The AT system would have to be hard-coded into the wallets so that it would take a lot of effort on the part of the development teams. However, once one Bitcoin-based currency has done it, others would be able to do it easier.
Innovation in Altcoins
One of the developers involved, Crypto Vrontis, says of the innovation:
An advantage regarding ACCT that I would like to mention is that besides the decentralized trading that ACCT enables is that Qora users can trade Qora with Burst in order to support a crowdfunding project and Burst users trade Bptocoinsnews.com/urst with Qora in order to use Qora’s blogging service.
This is in reference to a question the writer had regarding why folks would want to do this. NXT has long had the possibility of doing trustless trading of NXT-based assets, with any NXT account holder being able to create and issue their own assets for whatever reason they like. Qora and Burst inherently have this functionality as well, but there are some differentiators which at present NXT has not managed to implement.
Perhaps the future is a world where exchanges are unnecessary, and users can convert to other cryptocurrencies straight from their wallet, without risking the loss that too often is suffered at exchanges. It’s just the way it is: you put a lot of value in one place, people are going to want to steal it. ACCT via AT is one step in this direction, and it is proving why altcoins do indeed serve a purpose. Experimenting with something like this on Bitcoin Core or another major cryptocurrency would incur a lot of potential risks as well as criticism.