Aeternity's potential to disrupt with decentralized oracle machines and state-channels

Aeternity is a new blockchain technology designed to deliver unmatched transparent governance as well as global scalability. This is simply not just a coin, it’s a lifestyle. They claim to be able to do rather a lot of what has been already done and to somehow do it better. Including privacy, security, trustless off-chain transactions, and if that’s not enough... at a low cost. Enlightening smart contracts, on a global scale. Well that’s quite the most ambitious load of work for the entire board. Gary the horse (and Tom) here at your service to take a closer look at this project...

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First of all, we should mention right off the bat that a lot of our understanding of Aeternity comes from a whitepaper which we later found to be outdated, however we haven't found any overly significant differences at the github repository they are using now instead. If we get anything wrong due to this, hopefully we will catch it sooner rather than later, and please kindly accept our apologies. A lot of our understanding comes from this CoinCentral.com article too, which is very concise and easy to understand.

One of the things that sets Aeternity apart from most is that it intends to use version of PoW that instead of being bandwidth bound, it is memory latency bound. The “Cuckoo Cycle” algorithm to be used by Aeternity in the future “is the first graph-theoretic proof-of-work, and the most memory bound, yet with instant verification,” according to the developer. They provide tools that they claim enables the users to "govern themselves effectively", keeping the majority of transactions off-chain in "state-channels," using the blockchain to settle any disputes. Another thing they provide is a decentralized and secure human friendly name system, providing similar functionality as traditional DNS, but theoretically more secure due to it's decentralized nature. As far as the name system goes, they have some competition there from Namecoin(NMC).

The other really important aspect of Aeternity is it's implementation of decentralized oracles to include reliable external information(weather conditions, prices of assets, GPS location of a particular item, etc) in the execution of smart contracts. They are essentially trying to compete with Ethereum as well, providing a platform for dApps("Aepps" in their case) with a potential solution to the congestion problem ETH was faced with shortly after CryptoKitties was released. In addition to providing the platform itself, they claim they will provide open-source examples of useful Aepps ahead of the upcoming mainnet launch. All said and done, the oracles will work within Aeternity's "prediction market" and provide access to data outside of the blockchain to the Aepps, without the security risk of being centralized, as they usually are. In the following diagram, it is shown how all this can work together to form a "digital insurance marketplace."

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Decentralized oracles offer a powerful tool for linking to the real world, and also a unique management system, which takes Aeternity to the next level. Nonetheless, most blockchain technologies have the drawback of being a closed structure, functioning on data delivered entirely by inside developments. But due to the Oracle Technology used by Aeternity, this will be no more an issue in Q2 – 2018. Oracles can easily exchange data with blockchain and the other world. (source)

 Here's another pretty simple diagram that shows how the prediction market works:

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This  YouTube video does a very good job of explaining exactly what Aeternity is and how it's underlying components fit together.

We believe this project definitely has a lot of a potential to beat others to the punch in the race for mass adoption, but of course there's a great deal of competition in the sector. Competing with etherum is no small feat, for sure. And just today there was news about MIT testing smart contracts and oracles using bitcoin and the lightning network, potentially eventually giving etherum(and the like) the most significant competition it's ever faced. Aeternity definitely has some features that might be attractive to big corporations sooner rather than later, though. The way things are headed, it's not all that far-fetched to envision it as a backbone for a new Amazon or Uber app, providing the most secure and reliable data possible.

There's still more we'd like to cover, such as the educational program they have and more about the team(one being Yanislav Malahov , the self-described "godfather of etherum"), but we decided that we will expand on it in a future article, or perhaps add to this article before time expires. We're aware that not many people have the attention span to read as much as you've already read if you made it this far though...

As usual we've done some analysis on the chart.

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Follow the live chart here if you'd like.