What is Aeternity?
The top 50 cryptocurrencies contain a lot of names that don’t receive most of the industry’s press, like Aeternity. Through a brief overview of what might make Aeternity unique as compared to the other leading crypto networks, it is hoped that investing in a lesser known crypto project will be seen as less of a risky exercise.
Aeternity’s testnet and native token were both launched last year. Overall, like Ethereum and NEO, it is primarily a platform for decentralized applications. Despite this general similarity to crypto-platforms that have been leading in value for quite some time, Aeternity offers a few features which may be said to differentiate it from its competitors.
Firstly, while Ethereum runs smart contracts publicly over its network, Aeternity runs all smart contracts privately, through what it calls “state channels.” Even so, to maintain a certain level of transparency, Aeternity resolves all smart contract related disputes on its Blockchain.
We can conceptualize these “state channels” as private, encrypted lines of communication between everyone that’s involved in a smart contract. Judging by diagrams related to their functionality, we can also think of them like sidechains. If you don’t remember, sidechains are just the ability in Blockchain tech for individual chains to be created and attached to a main chain, while still functioning separately from it.
The importance of sidechains as well as these state channels is in this off-chain functionality, which takes away the need for network fees every time they run a transaction. It’s also key to remember that with Aeternity, transactions don’t just have to involve coins. They can and aim to primarily involve, data.
In connection to these state channels which hold all Aeternity-based smart contracts, there’s the idea of Aeternity oracles. If Aeternity’s explanation of what they are is taken literally, then it’s best to think of oracles as special places that hold real-world data on the network’s mainchain. To be more precise, oracles actually serve to secure Aeternity’s smart contracts against risk.
All in all, it seems like an oracle is synonymous with a group of live data from the Internet of Things. Aeternity describes their utility by saying that they provide the data that smart contracts can act upon. Examples of this would be changes in share prices, property values and even weather conditions. The true extent of what this data can be based around is essentially limitless.
To mitigate for the risk of manipulation as data comes in as well as hacking after it is already on the network, Aeternity will also have a fully functional prediction market, which will serve as the place where network nodes or users can vote on the accuracy of Oracle data. This also means that while state channels are private, the data that can be used for the smart contracts related to them is public.
This voting is only a secondary security measure for Aeternity, which actually runs a hybrid Proof of Work and Proof of Stake algorithm to achieve consensus as well as govern the network.
This whole process is actually quite simple. The Proof of Work algorithm works in almost the same way that Bitcoin’s does, except that users who have devices with Dynamic Random Access Memory, or the memory that most personal computers have, apparently do better. This is where Aeternity’s largest differentiator could exist.
It calls its Proof of Work algorithm, the Cuckoo Cycle, which seems to be a souped up version of the Equihash algorithm.
According to Aeternity, while Equihash miners need to sort through roughly one million data points to achieve consensus, Cuckoo Cycle miners need to sort through one billion data points to do the same. This effectively makes it one of the hardest Blockchain networks on which to garner any sort of block reward.
This means that, contrary to Aeternity’s goal of decentralizing mining, this specialized algorithm does not actually cater to any device having a fair chance on the network. In one of their own blog posts, Aeternity seems to say that those who are most likely to achieve block rewards are the same as those who consistently do so on the Zcash network, which uses Equihash.
At this point, the highest performers on the Zcash network are reportedly nodes with specialized graphics cards from companies like NVIDIA. In addition to this, with the recent development of Equihash ASICs, a logical conclusion is that there’s really nothing that proves Aeternity has added any value with regards to equalizing PoW mining.
Even so, Oracles, in particular, serve to give Aeternity its fair chance at rising above the competition. According to sources like Coin Central, it’s important to remember that even though other networks have tried to implement Oracles, due to their nature as constant streams of data from one source, these efforts have largely failed.
Aeternity aims to decentralize oracles through what it calls its “oracle machine.” An easy way to understand this is to go back to our point about Aeternity’s prediction market and add that once data reaches Aeternity, the algorithms that run the network cause it to be unchangeable or immutable.
If this crypto project can continue to prove its uniqueness through its primary features as well as through consistently adding new data providers, then it could beat others to the punch in terms of becoming the data sharing economy of the future.