What is the SuperNET?
According to their wiki:
“The SuperNET is a conglomerate of innovative, reliable and decentralized blockchain technologies. A cutting edge trading toolbox & an investment stock exchange, built on top of a strong anonymity network.”
All participating cryptocurrencies can be accessed via one client that users can download, or in the future access via the web. Up until now, SuperNET’s expanding ecosystem was only accessible through a modified version of the NXT wallet. It was just as easy to install, but dependency on NXT wallet gave away its infancy as a project.
Today, SuperNET celebrates this milestone client release with a new GUI. The layout and general feel of the new wallet differs from NXT’s elegant though more complex client, through which any cryptocurrency can flow.
However, as a beta release it is not yet perfectly smooth, and while testing it I had to refresh the client a few times. SuperNET project manager, T3cltd says:
“As it is an ongoing beta project it’ll not be ‘complete’ for some time, so the multi-wallet function that exists initially is being built on week by week from now.”
Users should expect continual growth and incremental updates instead of one big release.
Here is a sneak peak:
Time to Rethink Centralized Exchanges
Beyond the look and feel of the new GUI, there are about a dozen developers and server admins guarding the foundations of the decentralized cryptocurrency exchange.
And it could not come at a better time. In February alone, we witnessed multiple exchange hacks. The BTER and Bitstamp heists alone totaled over US$6.5 million, although these numbers pale in comparison to the thefts and losses of fiat currency in the traditional financial system.
Decentralization could be the answer to prevent similar heists in the future resulting from the single point of failure in the cryptocurrency industry, i.e. centralized exchanges.
Most centralized exchanges store the private keys to your bitcoin and dogecoin under the control of one group or entity, such is the case for exchange hot wallets at least. You can tell this is the case by looking at the initial number of bitcoin addresses. If it starts with 1, such as 1PDsr, then there is only one private key to that particular address. If it starts with 3, such as 3Sjdu, then it is a multi-signature address, and 2 to 15 keys are needed to access it.
SuperNET stores your coins on 2-of-3 multi-signature addresses, each hosted on its own server, with a copy of each blockchain. Together they are referred to as clusters.
Each server is maintained by teams and individuals from separate companies, or from various online communities, such as the developers of the cryptocurrencies involved. For withdrawls to occur, the servers must reach consensus about a transaction and wait for confirmations as usual.
Some examples of these teams are MyNXT as well as Coinomat and Frohike, each acting as guardians of the bitcoin Multigateway (MGW) cluster.
With the new release comes a new cluster, bringing five new coins to the decentralized exchange. Each new server is operated and maintained by the development teams of three of the five new coins, Opal, Bitstar and Vericoin.
On future versions of this platform, InstantDEX will be activated, allegedly allowing for instant conversion between coins, which honor the spot price. MGW serves as escrow and clearing house, automating the withdrawals when confirmations set in.
This model, and the software that runs makes it possible, is a fresh and perhaps groundbreaking application of multi-signature technology that may even disrupt the cryptocurrency market itself. The MGW software is scalable beyond 2-of-3 multi-sig, limited only by the blockchains in question. Since most alternate cryptocurrencies support n-of-15 multi-signature, there are many combinations possible, though the best arrangements are likely yet to be found.
Like any other cutting-edge technology, little research exists so far on how to best organize this multi-signature system. Lead developer James Lee says it has proven no easy feat to coordinate with interested hosts and maintain live support, particularly at the quality that consumers expect.
To achieve this, the community has established a central product management team (CPMT) to sustain live and consistently fast withdraw times solving related problems, which have emerged during the earlier stages of MGW. The software is open source, so interested parties are welcome to play around with, review, and experiment with the code.
A step in the right direction
MGW is considered decentralized because there is not one single company that signs transactions and because as open source software, anyone can host parallel clusters. However, it is not fully decentralized because users are still transferring full control of their coins to another group as the trade is being done.
This is important to keep in mind as like with any other exchange, it is recommended to withdraw large amounts to the safety of your own wallets when possible, and according to James Lee this will be automated.
“I will make some [decentralized] tradebots that will do the ‘deposit, trade, withdraw’ that we all recommend people to do, but sometimes are forgetting to do, well this will be automated. So your funds will be in MGW just for the duration of the trade.”
Though MGW is not as decentralized as we would all like, SuperNET is certainly breaking the bounds of centralized exchanges, and the legacy of centralized banking that proceeds them. With hackers getting more sophisticated and aggressive, innovation in this area of the industry cannot come soon enough.
A New Era of Cryptocurrencies
The new client will continue to allow users access to the full suite of NXT technologies. This includes the new Monetary System (MS), which in essence allows anyone to create a cryptocurrency—even ones that can be mined—without having to worry about their network security or having a mining pool raise the difficulty “to the moon” and then dump the profits.
All MS currencies will function on top of NXT and, as such, piggyback on its proven (albeit controversial) proof-of-stake technology.
Moreover, NXT is not the only coin that SuperNET allows access to. Alongside a handful of cryptocurrencies including bitcoin and dogecoin, five new communities have joined the party and are officially tradable on the wallet. Here’s a quick rundown of the new coins:
- Opal—an information and finance exchange platform developing decentralized storage and featuring privacy tools such as stealth addresses.
- Bitstar— a 30-second block time hybrid coin with high-interest returns. The team of developers have partnered up with T3CLtd, a Cyprus BTM company and the SuperNET to bring multicoin ATMs to the market.
- VPNcoin—as the name suggests, this is a decentralized virtual private network being developed—now with the help of the SuperNET—and designed to bring full IP privacy to the masses.
- Vericoin—allows you to “spend VRC anywhere bitcoin is accepted” while enabling transfer of VRC through text messages. They also have a strong focus on financial privacy.
- BitcoinDark—promises one of the most advanced crypto-currency anonymity technologies yet to see the market, and not just for its native coin. All SuperNET coins will benefit from its technology. BitcoinDark is a very special addition and deserves its own section to be briefed.
A New Era of Financial Privacy
“My goal is to make it impractical for any organization to do automated mass surveillance on all citizens, just by monitoring and analyzing blockchains and internet packet traffic. Of course, if they assign operatives to personally monitor someone, they will be able to find out anything they want, especially with physical coercion or sending you pretty girls. However, when everything is debugged and my algorithms are validated via independent review, I believe we will achieve this goal of anonymous transactions.”
—James Lee, aka Jl777
The lead developer of the SuperNET, James Lee, posted this back in November while discussing an anonymity feature of Teleport, the main privacy technology built with BitcoinDark (BTCD). Teleport has been specifically designed to prevent Bitcoin’s information leak issues while being flexible enough to cooperate with other privacy coins, such as those based on ring signatures or mixing.
Within Teleport’s tool kit is Clonesmear, a feature that can randomly delay transactions within a specified range from being recorded on the blockchain, to blur associations with the identities and IP addresses that sent them.
Alongside it are Dead Drop Addresses, which are dead ends for investigators, leaving them with a village-worth of possible recipients of a transaction.
Today, Teleport is built right into the new SuperNET software. However, with this release, it will only be available to advanced users through the use of its API. Btcddev, core developer, tells us that “Teleport will be asleep,” i.e. disabled in the background, until testing and debugging has finished.
The tiny BitcoinDark blockchain will be included in every client from now on, setting the stage for a vast amount of developments to come. Among them is the crowdfunded, and until recently, mysterious InstantDEX, which Lee says is almost finished.
All crypto-to-crypto trades will be converted to BitcoinDark, so in order to trade bitcoin for dogecoin, SuperNET will automatically exchange BTC for BTCD, and in turn BTCD for DOGE. This is expected to raise the volume and thus stability of BitcoinDark dramatically as the use of InstantDEX grows, while giving users one-click access to strong anonymity.
Most of these developments are expected to come out in 2015, which could make it the year of decentralized cryptocurrency exchanges. Hopefully this marks the beginning of the end for bitcoin bank heists.