Cypherium was created to counter some of the problems facing the original Bitcoin blockchain, primarily scalability. The intention is for it to use a hybrid consensus mechanism to speed up transaction processing with much lower fees than the earlier blockchains.
At present, blockchain scalability is achieved with controversial forks to the original protocol. The hybrid consensus model should be able to process thousands of transactions per second with no minimum fees.
The intention is to use the secure and permissionless attributes found in proof of work (POW) systems in combination with Practical Byzantine Fault Tolerant (PBFT) systems. In its simplest form, a Byzantine fault is one that appears different to different observers and originated with Byzantine Generals that were not sure if they could trust other Generals within the army that were laying siege to a city.
A detailed analysis of how the Generals overcame these problems, and how it relates to cryptography, is available from this Wiki site. One significant difference between the consensus proposed by Cypherium and that of Bitcoin is the proportion of nodes that are required to validate the transaction before it can be added to the blockchain. Bitcoin works on a simple majority of 51% whereas Cypherium’s whitepaper states they will use a two-thirds majority.
With the high level of mining currently located in China, there are some concerns that it would be possible to achieve the 51% consensus from rogue nodes. It would take a considerable effort to do this but, with hundreds of billions of dollars tied up in cryptocurrency, it can’t just be dismissed as being too complicated.
Cypherium is also expected to use multi-layer governance that will separate the protocol from the application. In essence, this means that software developers will be able to construct and execute smart contracts on a mini fork, independent of the primary protocol. The mini fork can then be deleted when the smart contract is deployed.
A pre-sale for Cypherium began in December 2017 with a relatively large minimum stake from investors of 20 ETH, when ETH was around $1,000. As with many ICOs, the pre-sale was not available to participants from China and the U.S. China banned participation in token sales, and the SEC in the USA consider many of them to be securities.
Some users on Reddit were annoyed that the pre-sale wasn’t followed up with an ICO. The early presentations produced by the Cypherium team had a timeline showing a private placement followed by an ICO. Cypherium managed to reach their hard cap goal of $25 million without an ICO. Their tokens are currently expected to be available, via crypto exchanges, from the second quarter of 2018. They will be using a ticker of CYPHER when the token hits the exchanges.
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Financial analyst, smartphone app designer, technical writer, and crypto enthusiast. Blockchain verified graduate of MOOC 9, DFIN-511: Introduction to Digital Currencies, run by the University of Nicosia.