UVCoin – A New Cryptocurrency With Improved Scalability and Control Over Monetary Supply
Apart from their booming success, presently available cryptocurrencies suffer from multiple limitations. By far, the most demanding of these limitations is their poor scalability. The most used cryptocurrency network right now is bitcoin, which can handle no more than 7 transactions per second; this is significantly low when compared to Paypal which can handle over 100 transaction per second, and Visa which handles around 2,000 to 7,000 transactions per second. The poor scalability of bitcoin, and cryptocurrency in general, can be attributed to reliance on broadcast and proof-of-work PoW schemes which expend enormous amounts of computational power, which can sometimes be compared to the power consumption of a power plant, in order to efficiently manage the public ledger and to render double spending attacks markedly expensive to launch in terms of computational resources. Another important limitation of today’s cryptocurrencies is lack of control over the monetary supply, which offers minimal flexibility for macroeconomic policies and high volatility in their value as currencies.
To mitigate these issues, a group of researchers introduced UVCoin, a new altcoin framework that decouples the process of generation of monetary supply from the continuous process of maintenance of the public ledger. The creators of UVCoin were inspired by their urge to design a more scalable cryptocurrency.
An Overview of UVCoin:
At a more advanced level, UVCoin presents a level of decentralization into the two conventionally decentralized basic components of a blockchain public ledger; generation of monetary supply and the framework of the public ledger for transactions. The UVCoin framework presents two basic structural entities; the central bank, which is a centralized entity that has full control over the monetary supply, and a distributed group of mintettes, which are collectively responsible for maintenance of the public ledger. The interaction between these two entities along with an overview of UVCoin are shown in the below figure.
Mintettes gather transactions from users across the network and coalesce them into blocks, as is the case with most cryptocurrencies; however, the mintettes differ from conventional miners on today’s cryptocurrency networks in that instead of solving hard computational problems, each mintette is authorized by the central bank to gather transactions. This process of authorization is made possible via a PKI-type functionality; in other words, the central bank will firstly sign the mintette’s public key, and then each lower level block will have to include one of these digital signatures to be marked as valid. An epoch refers to the time interval during which mintettes can produce a block, while an epoch’s length may vary according to the mintette.
Due to the fact that these blocks won’t eventually be included in the main blockchain, they are marked as “lower level” blocks. Collectively, mintettes are responsible for maintaining a consistent public ledger, and to accomplish this, they internally communicate along the course of an epoch and eventually, reference their own proceeding blocks, as well as the preceding blocks of other mintettes too. As such, the lower level blocks comprise a cross-referenced chain. In the end of a predefined longer interval, known as a “period”, the mintettes will introduce their blocks to the central bank, which will then arrange these lower level blocks to build a consistent version of the history in the form of a new higher level block.
Higher level blocks are what is eventually incorporated into the blockchain, i.e. a UVCoin user will only have to keep track of the higher level blocks, yet if he/she wants to monitor the behavior of the central bank and the minetettes, lower level blocks can be tracked too.
Using UVCoin can be similar to using other cryptocurrencies, as its blockchain framework resembles that of other coins, as users can generate new pseudonyms and create transactions just like they do today with other crypto.
The creators of UVCoin emphasized that the coin was designed to act as a framework rather than to become just another altcoin, so developers can work on implementing new techniques from other cryptocurrencies to successfully achieve the goals of the coin, namely improving scalability and imposing control over the monetary supply.