The general problems of the current large core crypto coin systems and the solutions
through the Factorial-Coin Principle Crypto System.
- Solution to Scalability Problem of Cryptocurrencies :
- Problem :
Many cryptocurrencies, such as Bitcoin and Ethereum, struggle to process a large number of transactions quickly. This leads to longer waiting times and higher transaction costs. - Consequence :
This hinders the mass adoption of cryptocurrencies for daily transactions. - Solution :
The solution to the scalability problem involves implementing an advanced voting system for processing transactions, combined with a validation system that characterises transactions as valid payments in a transaction-voting pool. - Functioning of the system :
- Transaction validation :
- Transactions are first validated by nodes in the network before being included in the transaction-voting-pool. These nodes mark the transactions as valid payments by validating them and then asking for the transaction to be signed.
- Once a transaction is validated and signed, the user can assume it will be processed. This reduces the normal delay associated with processing transactions, with only minimal impact on the spendability of the transferred coins.
- Voting system :
- The voting system operates as an advanced neural network consisting of a collection of core nodes, which all strive to reach a unanimous consensus on the order of transactions.
- This innovative approach ensures the correct order of transactions through a multi-layered encrypted chain of transaction seals, including inbound and outbound blocks for each type of transaction.
- By using complex encryption methods and distributed consensus algorithms, this system provides an unparalleled level of security and reliability, enabling the blockchain network to function as a reliable and efficient digital transaction infrastructure.
- Core-nodes and ledger-key :
- Core-nodes have the correct ledger-key and enforce the correct sequence of transactions. Nodes that get out of sync must resynchronise to rejoin the voting system of online core-nodes.
- This prevents forks in the blockchain, as only the longest and correct ledger is handled by the core-nodes.
- Technical requirements :
- To stay in sync with the core nodes, nodes must have a fast internet connection and sufficient processing power (CPU).
- As a result, even with slow Internet connections, keeping up with the core nodes can sometimes cause problems.
- Confirmation and processing :
- After a transaction is validated, the user receives confirmation of the payment in the digital system, similar to an iDeal payment.
- Although the actual processing of the transaction may take some time, this does confirm the payment immediately.
- Coins can only be spent again after successful processing.
- Priority scheme :
- There is a priority scheme that determines the voting rules of the nodes, allowing important transactions to be processed faster. In addition, increasing transaction fees can help speed up processing for users of this system.
- There is a priority scheme that determines the voting rules of the nodes, allowing important transactions to be processed faster. In addition, increasing transaction fees can help speed up processing for users of this system.
- Transaction validation :
- Problem :
- Solution for Energy Consumption of Cryptocurrencies :
- Problem :
Mining cryptocurrencies like Bitcoin requires huge amounts of energy. This is due to the use of Proof-of-Work (PoW) algorithms that require intensive computing power. - Consequence :
This leads to environmental problems and criticism of crypto’s sustainability. - Solution :
The solution to the energy consumption of cryptocurrencies consists of a system where nodes can independently validate their own ledger without the need for energy-intensive mining. This is achieved through a simple and flexible ledger structure and an alternative approach to creating new coins. - Functioning of the system :
- Independent Validation by Nodes :
- Nodes have full control over their own ledger and can validate transactions independently.
- This eliminates the need for an energy-intensive mining system to process transactions.
- Wallets communicate directly with individual nodes to set up transactions, sign them and await processing if necessary.
- Coin Creation via Coinbase Server :
- The miners are responsible for mining new coins based on the methods used by the coinbase server.
- The coinbase server and the ledger work together to facilitate the creation of new coins for the wallets that the miners mine for.
- Nodes are individually rewarded for facilitating the riddles the miners have to solve. The miners deliver the solutions securely and receive coins for the solutions found. The coinbase server handles the release of coinbases to the nodes for the solutions won, and both the node and the miner are paid via a coinbase block.
- Efficient Use of CPU Power :
- Instead of wasting pure computing power, the CPU power used can be converted into valuable research results.
- This can be used, for example, for scientific research, similar to earlier projects such as SETI@home and Folding@home, where the computing power of many computers was shared for research purposes. As a result, this also represents another form of value.
- Optional Mining Methods :
- The mining method can be adapted to solve simpler puzzles, which works like a random lottery and is suitable for all systems without the need for special and expensive hardware.
- Examples include using factorial mastermind methods that do not require heavy computing power and are therefore more energy-efficient.
- Environmentally Friendly Approach :
- By shifting from energy-intensive PoW to more efficient and useful computations, the energy consumption is drastically reduced and mostly useful where needed.
- This makes the system more sustainable and environmentally friendly, reducing criticism of the environmental impact of cryptocurrencies.
- Independent Validation by Nodes :
- Problem :
- Solution to Regulatory and Legal Issues of Cryptocurrencies :
- Problem :
Cryptocurrencies often operate in a legal grey area. Governments struggle to regulate these new technologies and there is a lack of consistent regulation worldwide. - Consequence :
This can lead to uncertainty and risk for investors and companies working with crypto. - Solution :
The solution to the regulatory and legal issues surrounding cryptocurrencies lies in the development of a public, open-source backend development community that can ensure software security. This requires a coordinated approach where various stakeholders, including governments, work together on transparency and security. - Operation of the system :
- Open-Source Development Community :
- Create a public open-source development community where developers come together to check and improve code.
- By using an open-source model, the code becomes accessible to everyone, allowing bugs and vulnerabilities to be identified and fixed faster.
- Multilayer Supervision :
- The system should take into account different layers of users: end-users, administrators, developers and programmers.
- Programmers, as the primary code inspectors, should have mechanisms within the community to check and validate each other, providing an additional layer of security.
- Government Criteria and Oversight :
- Governments can set specific criteria and standards for cryptocurrencies to ensure they meet legal and security requirements.
- Government agencies can use their own programmers to monitor the open-source code and ensure that it meets the established standards.
- Central and Decentralised Control :
- While many aspects of cryptocurrencies are decentralised, there are central points that need more oversight.
- Government control should focus on these central points, such as exchanges and wallet providers, to ensure they comply with legal requirements.
- Accountability and Trust :
- At the heart of the solution is ensuring accountability and trust through transparency and decentralised control.
- By creating a trustless system in which every transaction and change is publicly accountable, trust in the system is increased without depending on a central authority.
- International Cooperation :
- Consistent regulation worldwide requires cooperation between different governments and international organisations.
- By sharing best practices and standards, countries can develop a more unified approach to regulating cryptocurrencies.
- Open-Source Development Community :
- Problem :
- Solution for Security Problems of Cryptocurrencies :
- Problem :
Despite the strong cryptographic security of blockchain technology, there are still significant risks such as hacks, fraud and loss of private keys. - Consequence :
This can lead to large financial losses for users and damages trust in the system. - Solution :
The solution to the security problems of cryptocurrencies lies in strengthening accountability and security around private keys, along with a robust open-source infrastructure as described in section 3. The goal is to put users at the centre of controlling their funds, while the system as a whole ensures maximum security and integrity. - Functioning of the system :
- Strengthened Responsibility of Private Keys :
- Users should have full responsibility for their private keys. Like the PIN of a bank card, private keys should be kept secure.
- Users can keep their wallet access data physically, e.g. on paper, and store it in a secure place.
- Open-Source Security Monitoring :
- An open-source development community ensures continuous monitoring and improvement of security protocols.
- This ensures transparency and allows the community to quickly identify and fix potential vulnerabilities.
- Access security :
- Security access to private keys can be enhanced through encrypted storage and multi-factor authentication (MFA).
- Hardware wallets and secure enclave technologies can be used to store and manage private keys securely.
- Education and Awareness :
- Users should be educated on best practices for managing their private keys and security awareness.
- Educational programmes and clear manuals can help educate users on how to keep their funds safe.
- Decentralised Monitoring and Accountability :
- As with regulation (point 3), the focus should be on a trustless system in which users have central control over their funds.
- All other components of the system should support this control and ensure the integrity of transactions.
- Backup and Recovery Options :
- Providing secure backup and recovery options for private keys can help users recover their funds in case of loss.
- This can be done, for instance, through recovery phrases or by using shared secret keys stored in pieces in different secure locations.
- Strengthened Responsibility of Private Keys :
- Problem :
- Solution for User Experience and Adoption of Cryptocurrencies :
- Problem :
For the average user, cryptocurrencies can be complex and difficult to understand. The technical knowledge required to work securely with crypto is often a barrier. - Consequence :
This limits the adoption of cryptocurrencies by the general public and hinders their use for day-to-day transactions. - Solution :
The solution to the problems around user experience and adoption lies in simplifying the cryptocurrency experience, similar to how fiat money is managed. This can be achieved by providing a clear and user-friendly interface, supported by a simple but robust system architecture as described in section 3. - Operation of the system :
- Simplicity and Clarity :
- Develop user-friendly interfaces for wallets and other crypto applications that are simple and intuitive.
- Ensure that the interface hides the complexity of the underlying technology so that users without technical knowledge can easily work with crypto.
- System components :
- Coinbase server : Responsible for creating new coins, paying out transaction fees, and managing security and functionality updates for the node software.
- Nodes : These are crucial to the functioning of the network and provide services such as distributing mining puzzles, processing transactions, and maintaining the blockchain.
- Node-list service : Maintains a list of online core nodes, which is essential for network communication.
- Explorer : Allows users to view their transaction history.
- Wallets : User applications for creating and managing transactions and crypto wallets.
- Miners : For just mining new coins, they can function individually or as a pool.
- Public Components :
- Node : More suitable for administrators (Admins) because of the technical knowledge required for installation and maintenance.
- Wallet and Miner : Designed for all users, regardless of their technical knowledge, and usable on different devices.
- Management by the Development Community :
- Most system components are centrally managed by an open-source development community, ensuring consistency, security and simplicity.
- The community ensures that the software does what it is supposed to do without unnecessary complications, contributing to a better user experience.
- Education and Support :
- Offer clear manuals and educational resources to help users understand and use cryptocurrencies.
- Support users with customer service that can help them with problems or queries.
- Multi-platform Support :
- Ensure that wallets and miners are available on different devices and operating systems so that users have flexibility in their choice of hardware.
- This makes it easier for users to access their funds and manage transactions wherever they are.
- Simplicity and Clarity :
- Problem :
- Solution to Volatility Problems of Cryptocurrencies :
- Problem :
Cryptocurrencies are known for their extreme price volatility. The value of a coin can rise or fall dramatically within a short period of time. - Consequence :
This makes cryptocurrencies unreliable as a stable store of value and difficult to use as a means of payment. - Solution :
The solution to cryptocurrencies’ volatility problems lies in implementing an economic model that guarantees stability over time. This can be achieved through a controlled and predictable release of new coins, combined with a specialised exchange that promotes price stability. - Functioning of the system :
- Economic Model of Core Coin (FCC) :
- The Core Coin FCC (Factorial Core Coin) follows an economic model in which a fixed quantity of new coins is released periodically.
- This model is designed to minimise inflation over time, gradually stabilising the value of the coin.
- Gradual Stabilisation :
- With the continuous but controlled release of new coins, the inflationary impact becomes smaller and smaller as the total amount of circulating capital grows.
- This reduces volatility over time, making the coin more reliable as a store of value and a means of payment.
- Factorial Exchange :
- A specialised exchange, the Factorial Exchange, is introduced to stabilise the value of FCC and other factorial-principle coins.
- This exchange provides a controlled exchange between FCC and other cryptocurrencies, minimising large price changes.
- Integration of Community and Research Coins :
- Any new community or research coin incorporated into the factorial exchange system must follow an economic model that takes stability into account.
- This reduces the impact of price changes on the value of these coins.
- Expansion of Trading Opportunities :
- The Factorial Exchange allows other community or research coins to be exchanged for other crypto or fiat currencies through FCC.
- This facilitates cross-border trade and promotes economic interaction between different communities.
- Reliable Value Exchange :
- The primary purpose of crypto, like fiat currency, is to exchange the real value of labour.
- Ensuring stability at the core increases trust in cryptocurrencies and enhances their usefulness as a reliable value exchange.
- Economic Model of Core Coin (FCC) :
- Problem :
- Solution to Lack of Interoperability of Cryptocurrencies :
- Problem :
Different blockchain platforms often cannot communicate with each other. This makes it difficult for different systems to work together. - Consequence :
This limits the efficiency and ease of use of cryptocurrencies in various applications and ecosystems. - Solution :
The solution to the lack of interoperability between different blockchain platforms lies in the development of specialised exchanges that provide seamless communication and exchange capabilities between different cryptocurrencies. This includes the implementation of the Factorial Exchange for the FactorialCoin collection and other economic models. - Operation of the system :
- Special Exchanges :
- Develop exchanges specifically designed to connect different blockchain platforms.
- These exchanges act as bridges, allowing seamless exchange of assets between different blockchains.
- Factorial Exchange :
- The Factorial Exchange was created to ensure interoperability between the FactorialCoin collection and other cryptocurrencies.
- This exchange supports different economic models and offers extensive exchange opportunities within the exchange market.
- Integrated Exchanges :
- The Factorial Exchange and other specialised exchanges offer opportunities not only to exchange between different cryptocurrencies, but also to integrate fiat currencies.
- This makes it easier for users to access a wide range of financial products and services.
- Standardisation and Protocols :
- Implementation of standardisation and interoperability protocols such as Atomic Swaps, which allow direct peer-to-peer exchange between different blockchains without intermediaries.
- Use of technologies such as cross-chain bridges and interoperability frameworks to facilitate communication between different blockchains.
- Interoperable Wallets :
- Develop wallets that support multiple blockchains and allow users to manage different cryptocurrencies from a single interface.
- This increases the ease of use and makes it easier for users to perform transactions between different blockchain ecosystems.
- Education and Information :
- Provide users with educational resources and support to help them understand how to effectively use interoperability features.
- This helps lower technical barriers and promotes wider adoption of interoperable solutions.
- Community and Developer Collaboration :
- Promote collaboration between different blockchain developers and communities to work jointly on interoperability solutions.
- Open-source projects and joint development initiatives can help create universal standards and protocols.
- Special Exchanges :
- Problem :
- Solution to Privacy Issues of Cryptocurrencies :
- Problem :
While many people think cryptocurrencies are completely anonymous, this is often not the case. Blockchain transactions are usually pseudonymous, not anonymous, meaning that transactions are publicly traceable. - Consequence :
Users who value privacy may be exposed to risks if their transactions are linked to their identity. - Solution :
The solution to privacy issues in cryptocurrencies lies in implementing methods that ensure anonymity and privacy for users. This can be achieved through technological measures and user practices that conceal transactions and limit their traceability. - Operation of the system :
- Ledger-Block-Model of FactorialCoin :
- FactorialCoin’s ledger-block model ensures that transactions show validity only, without being linked to specific identities.
- This protects users’ privacy and reduces the traceability of transactions.
- Use of Multiple Wallets :
- Users can enhance their privacy by using a separate wallet for each interaction with a third party.
- Using multiple wallets makes it more difficult to link transactions to a specific identity.
- Wallet Bundling :
- Wallet providers can offer bundle wallets, where transactions are bundled and anonymised before they are executed.
- This bundling provides additional privacy protection for users by masking transactions and reducing traceability.
- Automatic Wallet Creation :
- Miners can be configured to automatically create new wallets for any or a number of coinbases they win.
- This ensures anonymity from the start of the transaction process and minimises the possibility of transaction traceability.
- Use of Voucher Wallets :
- Shops can use receipt wallets to manage transactions and track their inventory without linking transactions to specific customer identities.
- These receipt wallets provide an additional layer of privacy protection for both shops and their customers.
- Education and Awareness :
- Users should be educated on the need for privacy protection when using cryptocurrencies and how to implement effective privacy practices.
- This helps users safeguard their privacy and be aware of the risks of transaction traceability.
- Ledger-Block-Model of FactorialCoin :
- Problem :
- Solution to Lack of Mainstream Acceptability of Cryptocurrencies :
- Problem :
Despite the growing popularity of cryptocurrencies, many businesses and governments still do not accept them as legitimate means of payment. - Consequence :
This limits the use of cryptocurrencies in daily life and hinders their widespread acceptance. - Solution :
The solution to the lack of mainstream acceptability of cryptocurrencies lies in improving connectivity between crypto and fiat currencies, and promoting better functionality and acceptance of cryptocurrencies as liquid instruments of trade freedom. - Operation of the system :
- Connection with Fiat money via Exchanges :
- Exchanges have connections to fiat currencies that allow any cryptocurrency to connect to traditional money systems.
- This allows cryptocurrency assets to be converted into fiat currencies for daily transactions and payments.
- Reduced Transaction Costs :
- Exchanges can work on reducing transaction costs and delays in converting cryptocurrencies to fiat currency and vice versa.
- Lower transaction costs make cryptocurrencies more attractive for daily use and promote their acceptance.
- Proper Functionality of Coins :
- It is essential to give each cryptocurrency the right functionality to suit the intended usage scenarios and needs of users.
- By ensuring proper functionality, cryptocurrencies can stand out as liquid instruments for trading freedom.
- Better Regulation and Policy :
- Governments and regulators can work on developing clear and consistent regulation and policies for cryptocurrencies.
- A clear legal framework can increase trust and contribute to wider use and acceptance of cryptocurrencies.
- Education and Awareness :
- It is important to educate users and businesses about the benefits and opportunities of cryptocurrencies for day-to-day transactions.
- By raising awareness, users and businesses can be encouraged to accept and use cryptocurrencies.
- Enhanced User Experience :
- Develop user-friendly wallets and payment solutions that make it easy for users to use cryptocurrencies for daily transactions.
- An improved user experience can help increase acceptance and adoption of cryptocurrencies.
- Connection with Fiat money via Exchanges :
- Problem :
- Solution to Complex Governance Structures of Cryptocurrencies :
- Problem :
The governance of many cryptocurrency networks can be complex and sometimes contentious, with different stakeholders vying for influence. - Consequence :
This can lead to forks, discord within the community and uncertainty about the future of a specific cryptocurrency. - Solution :
The solution to complex governance structures of cryptocurrencies lies in reducing the likelihood of forks and providing clear governance guidelines. This can be achieved through a flexible approach that supports different economic models and communities within an overarching system. - Functioning of the system :
- Prevention of Forks :
- The design of the factorialcoin system minimises the risk of forks.
- Each community can have its own coin within the same generic software framework, decentralising power struggles and reducing the need for forks.
- Support for Different Economic Models :
- The factorialcoin system provides support for different economic models and research applications, allowing different communities to have their own coin with specific objectives and governance structures.
- This helps reduce community discord by accommodating different interests.
- Decentralised Power Distribution :
- By creating different coins within the same system, power is decentralised and distributed to different communities.
- This reduces the chances of central control and conflict within the community.
- Clear Guidelines for Governance :
- The factorialcoin system provides clear guidelines for governance within each community, making decision-making transparent and structured.
- This helps avoid controversies and uncertainties about the future of a specific cryptocurrency.
- Support trading freedoms :
- The objectives of the factorialcoin system focus on supporting trading freedoms and connecting different communities to the global currency market.
- This promotes a healthy and dynamic crypto community without one specific party becoming dominant.
- Prevention of Forks :
- Problem :
- Solution for Security of Smart Contracts :
- Problem :
While smart contracts are a powerful feature of blockchain technology, they are not error-free. Bugs in smart contracts can lead to significant financial losses. - Consequence :
Lack of robust auditing and verification processes can undermine trust in dApps and blockchain-based solutions. - Solution :
The solution to the security problem of smart contracts lies in implementing rigorous auditing and verification processes through an open-source community of programmers. These processes must be thoroughly implemented before smart contracts are widely accepted as an individual application. - Operation of the system :
- Open-source Community of Programmers :
- An open-source community of programmers is employed to scrutinise and audit smart contracts for errors and vulnerabilities.
- Through the power of collective expertise, potential bugs are identified and corrected before the smart contracts are implemented.
- In-depth Audits and Verification Processes :
- Rigorous auditing and verification processes are performed on all aspects of smart contracts, including code, logic and security measures.
- These processes provide in-depth analysis of potential vulnerabilities and risks, thereby improving the security of smart contracts.
- Transparency and Collaboration :
- Transparency and collaboration within the open source community are essential to ensure an effective auditing and verification process.
- By sharing knowledge and experience, programmers can work together to ensure and improve the security of smart contracts.
- Education and Awareness :
- It is important to educate users and developers about the risks of bugs in smart contracts and the importance of thorough auditing and verification processes.
- By raising awareness, users and developers can better understand how to protect against potential security risks.
- Open-source Community of Programmers :
- Problem :
- Solution for Network Centralisation in Cryptocurrencies :
- Problem :
Despite the promise of decentralisation, in practice many cryptocurrencies are quite centralised. A small number of miners or strikers can often have a disproportionate influence on decision-making. - Consequence :
This can lead to vulnerabilities and goes against the principles of decentralisation on which many blockchain systems are based. - Solution :
To counter network centralisation and maintain the principles of decentralisation, a solution is needed that reduces the influence of individual miners and places power with the decentralised nodes. This can be achieved by implementing an advanced voting system, separating functions between nodes and miners, and simplifying the ledger structure, allowing nodes to independently validate all offered transactions. - Operation of the system :
- Voting System as a Neural Network Model :
- The voting system is the beating heart of the blockchain network, designed as a complex neural network model to ensure an unwavering 100% consensus across all core nodes in the system.
- This sophisticated system works through a series of voting rounds, with each node casting its vote to determine the most appropriate transaction for processing. This process ensures that no individual entity, including miners, can exert a dominant influence on decision-making.
- By using principles of artificial intelligence and distributed computation, this neural network model provides a reliable method of reaching consensus in a decentralised environment.
- Separation of Node and Miner :
- The system is carefully designed with a clear separation of tasks between nodes and miners.
- Nodes are entrusted with the crucial role of validating and processing transactions in the ledger. This removes the traditional power vested in miners and transfers it to the decentralised nodes.
- This clear separation of responsibilities ensures a balanced and secure operation of the blockchain network, with each entity playing its specific role to ensure the integrity and reliability of the system.
- Decentralised Validation System :
- The decentralised validation system is the foundation of a reliable payment system, making the user experience similar to the efficient iDeal system.
- Once transactions are provided with the required signatures and validated by the distributed network, they are immediately considered paid. The actual processing of these transactions can take place later, with minimal impact on spendability.
- This approach ensures a seamless payment experience, handling transactions quickly and securely, without users having to worry about unnecessary delays or uncertainties.
- Limitation of Central Systems :
- Within the network, only those systems that cannot reliably operate decentrally, such as the coinbase server and the nodelist service, are considered central.
- This strategy of limiting and minimising the influence of central systems actively helps promote decentralisation of the entire network.
- Focusing on decentralised processes and systems increases network autonomy and creates a robust and resilient infrastructure that is less prone to failures and attacks.
- Voting System as a Neural Network Model :
- Problem :