Skycoin, Skywire and Skyminer: a Primer

Skycoin, the cryptocurrency

Skycoin (SKY) is a decentralized blockchain-based cryptocurrency that makes significant code improvements compared to Bitcoin. It addresses many emergent problems in Bitcoin and Ethereum that only became apparent after their initial real-world usage. Skycoin has superseded the Proof-of-Work and Proof-of-Stake consensus algorithms, and separated the functions of coin creation, block consensus and block creation. It uses a new consensus algorithm called Obelisk, which is based on Web-of-Trust dynamics and doesn’t require energy-intensive hashing.

Separating the function of securing the Skycoin chain from coin creation and block consensus ensures that malicious actors cannot 51% attack Skycoin to reverse transactions or steal coins. Skycoin has faster block time to ensure high transaction throughput, and will support G Maxwell’s CoinJoin privacy functionality at the base layer. The total supply of Skycoins is one hundred million, released over 25 years in a tapered distribution similar to Bitcoin.

Skycoin, the organization

Skycoin also refers to the Skycoin organization, a tight consortium of developers who maintain and engineer the various Skycoin software and hardware projects under the stewardship of project figurehead Synth, core developer Steve and other pseudonymous Skycoin developers. The Skycoin organization includes the Skycoin hardware incubator located in China that prototypes and produces official Skyminers, hardware wallets and WiFi antennas. All code development is decentralized with contributors from around the world.

Skywire, the networking protocol

Skywire is a networking protocol for a new, high speed, encrypted internet based on software-defined networking. It implements many speed and privacy features which aren’t used on the current internet protocol (IPv4/IPv6). Internet packets on Skywire are encrypted as they move between decentralized nodes, ensuring that traffic cannot be read, blocked or throttled. Skywire creates a peer-to-peer decentralized internet based on payments for bandwidth usage and provision by people with spare computing power. Skywire solves several internet protocol-level problems including deep-packet inspection, which in turn provides a solution to Net Neutrality traffic throttling, dragnet surveillance and cyberbalkanization. Skywire will be the foundation for decentralized computation and storage in addition to bandwidth provision.

Skywire was created to answer the urgent need for an uncensorable platform for cryptocurrency payments. Running on the current internet, Bitcoin and Skycoin transactions can be blocked or censored under certain attack conditions and by state-run internet through packet-sniffing. Only by routing payments through an encrypted, decentralized internet can monetary transactions be truly free from interference by governments and malicious parties. This was the founding ethos upon which Satoshi Nakamoto created Bitcoin, and this is the ethos that drives Skywire and Skycoin development. Skywire was inspired by the CJDNS encrypted networking protocol.

Skywire, the physical MESH network

Skywire also refers to the physical infrastructure hardware of the new decentralized internet that runs the networking software of the same name. The Skywire MESH networks and community wireless internet service providers (wISPs) will be built by the people, using WiFi antennas, HAM radios and other wireless broadcasting equipment.

MESH networks are necessary to bridge the last mile from the internet exchange node to the household, where corporate ISPs leverage wired infrastructure monopolies to price-gouge customers. wISPs will allow vast swathes of rural and underserved regions in developing countries to access low-cost internet. Skywire will drive competition by offering wireless internet sources from neighbors and community members. Skywire will be the most advanced incentivized MESH network in the world, custom-built by people in any city, municipality or town, based on their own resources, bandwidth need and topological requirements.

Skyminer, the hardware device

The Skyminer is the hardware device on which the Skycoin ecosystem runs. It functions as a MESH network computing unit and a personal cloud computer. The Skyminer currently processes encrypted bandwidth on Skywire network, with each computing board acting as a VPN node. On the rollout of the mainnet and WiFi antennas, the Skyminer will be wired to to a directional WiFi antenna (or other wireless transmitter) placed on a prominence (e.g. roof or tower) to connect to other Skyminers in the local area.

There are currently two types of Skyminers. The Official Skyminer uses 8 Orange Pi Prime computing boards. Non-official DIY miners are made by Skyfleet community members using a range of computing boards including Raspberry Pis, Odroids, or SoPines. By leveraging large numbers of low-cost computing boards, Skyminers are infinitely scalable parallel computing units.

The future development of the Skyminer will include units with 32, 64, 128 computing boards and will support network-attached storage, further expanding the power and function of the devices to create a decentralized network of computation and storage in addition to bandwidth provision. The Skyminer hardware will be the ideal device for running Bitcoin and Skycoin full nodes, as all transactions are uncensorable on the encrypted Skywire protocol.

Skyminers are key to true decentralization of internet and cryptocurrency transmission because decentralization occurs at the hardware level, an essential point that has been overlooked in the decade since Bitcoin’s creation.

What is the connection between Skycoin and Skywire?

Payments for bandwidth on the Skywire internet will use Skycoin’s inflationary derived currency, Coin Hours. A single Coin Hour is generated every hour for each Skycoin that is held in an official wallet. Coin Hours act as fuel for micro-transactions on the Skywire network. Coin Hour payments serve an anti-spam function and permit economic activity by solving the hoarding problem of fixed-supply coins. Routing internet traffic through Skywire will require users to hold Skycoin in the dedicated Skycoin desktop, mobile and hardware wallets.

In summary, both Skycoin and Skywire are distributed software networks that facilitate uncensorable peer-to-peer transactions (SKY) and uncensorable peer-to-peer internet communication (Skywire), respectively. Both projects leverage the decentralized hardware backbone provided by Skyminers. All Skycoin projects arise from the cypherpunk movement that seeks to offer individual freedom through encryption, and aim to facilitate worldwide adoption of trustless digital money.

Skywire can be considered as an ‘app’ that runs on top of the blockchain foundation provided by Skycoin, and they act synergistically.