The Dutch Linux Magazine recently placed a great article about the Gulden cryptocurrency. Below an edited version for the ardent GuldenBites readers.
Author: Arno Keij
From the Middle Ages until January 2002, Gulden was the Dutch currency and legal tender. On January 1st 2002 the Gulden was replaced by the Euro, to the sadness of many. But the Gulden is back. Not in the’ old-fashioned’ jacket as in coins and banknotes, but as Crypto Currency! Every day reports and news comes along about Bitcoin but you hardly hear anything about Gulden. The enormous price increase of Bitcoin last year is the main reason for this! This is good for people who trade in Bitcoins, but it does not achieve its goal of becoming an accepted payment method. That is why the developers of Gulden do not focus on people who want to make money quickly, but develop a currency that is safe, fast and user-friendly and therefore can be used as digital means of payment alongside the current fiat money system such as the Euro or the Dollar.
Background and Technology
Gulden is a currency based on blockchain technology (the cash book that is shared between all Gulden users), which means that nobody owns Gulden. The Gulden concept was conceived by Rijk Plasman in 2014 and can be seen as the Dutch version of the Bitcoin. Since Bitcoin is open source, it is possible for everyone to market their own version of Bitcoin. That sounds easier than it seems because some knowledge of C+++ and Java is required. The various varieties, the so-called’ Alternative Coins (Altcoins)’, are currently popping up as mushrooms. Gulden distinguishes itself from the rest because it has greatly improved the technique and operation of the digital currency. The code of Gulden is published on Github, making it possible for everyone to contribute to the project.
One of Gulden’s objectives is to make the digital currency very accessible to the average user, as Crypto Currency (Digital Money) is still seen as something for “Nerds”. The easiest way to get to Bitcoins or Altcoins is to buy them. This is not a user-friendly process because you have to go via an online trading venue, also called an exchange. Most Altcoins can only be bought with bitcoins via such an exchange. So you first need to have Bitcoins in your possession before you can buy any Altcoins. This also means paying exchange fees twice and calculating for exchange rate differences. At Gulden you don’t have this problem. You can buy Gulden directly from the wallets, with Euros. If you are finally the owner of an Altcoin, it is recommended that you do not leave the purchased coins online at an exchange. The best thing is to store them in your digital wallet on your computer or mobile phone. So, under own management, what the whole purpose of cryptocurrency is, to control your own money and not let a third party (bank) manage it.
For example, via the Android Gulden App/wallet it is possible, as just indicated, to buy directly Guldens with Euro. After payment via iDeal, the number of Guldens purchased will be sent directly to your wallet. If you plan to sell Guldens then you can directly transfer to any IBAN number from within the app. So you will receive the converted amount back in euros directly on your own account. In cryptoland this is a unique feature!
Because the Guldenblockchain network is formed by the users who run their wallet software on their computers and have a normal functioning Internet connection, it can be said: The more users, the more stable the network is. Via guldennodes.com you can find an overview with a large number of computers that serve the Gulden network.
Using a pre-installed mini computer such as a Raspberry Pi, you can run a node yourself. I recommend trying this, since it’s fun to do. After the Gulden 2.0 update you can then also use this Pi to witness, but more about this later on.
The Gulden thus combines the advantages of Bitcoin techniques with the user-friendliness of current standard payment methods such as the Euro. At the same time, the design errors made at Bitcoin where improved, making it possible, among other things, for transactions to take place more quickly at lower transaction costs.
Just like in the Bitcoin network, payments have to be checked in the Gulden network for double expenses and false Guldens. The approved payments must be recorded in the blockchain. To enable this validation and recording of payments, computer processing power is used. What the designers of the bitcoin protocol have invented, and what the Gulden also uses, is that the people who leave their computer on to validate and record payments (the miners) receive a reward for this. Or rather, if you use your computer or mining-hardware for mining, you have a chance of winning a reward and the one who is the first to solve a complex maths problem will be rewarded with 100 Gulden. On average Gulden takes 150 seconds to solve this maths problem and this is called finding a ‘block’. By comparison, Bitcoin miners take an average of 10 minutes to find a block.
Finding a block requires a lot of computing power. The degree of difficulty in solving the calculation is regulated in such a way that not more than a fixed amount of Gulden per day can be mined in the Gulden network. The more computers Guldens dig, the more difficult it becomes to find a block. A few years ago, it was possible to mine with your own computer profitably. You could use the power of your CPU or GPU to solve the math puzzles. The proceeds minus the energy costs then yielded a nice pocket money. Nowadays it is hardly profitable to mint that way anymore. The degree of difficulty in solving the puzzles is currently so high, and the algorithm used is so complex that only computers specially designed for this purpose can solve them. Because these powerhouses use a lot of energy, they are often hosted in countries where energy costs are low with the aim of maximising efficiency.
The current protocol that Gulden uses for the intensive form of calculations (mining) is called Proof of Work, abbreviated to PoW, and the algorithm used for this is Scrypt. Among other things, it prevents double spents. PoW also allows distributed trustless consensus, which means that a payment can be made and received without the need for a third party (read bank). Because the PoW protocol is already reasonably dated, and also has limits, there are a number of crypto coins working on replacing the protocol.
At the time this article is written, the Gulden developers are working with a number of people from the Gulden community to test a new update, namely Gulden 2.0. This contains an new PoW² protocol completely developed by Gulden.
PoW² brings the blockchain to a new era according to the developers, with a level of safety that has never been reached before. The power of Proof of Work will be enriched with the power of Currency Holding Witnesses (also called Witnesses). The latter means that you can deposite Guldens for a longer period of time (1 month to 3 years). With this you contribute to the PoW² system and receive interest that is many times higher than at a regular bank.
Actually, interest is not the right word because it is more of a reward you get. The Gulden that you place in your witness account help to secure the Gulden blockchain network. And you are rewarded for that. How much depends on how long you deposite them, how many and how many deposits there are already on the network. The reward comes from the mining reward. Previously, the entire mining reward, 100 Gulden per 150 seconds, went to the miners, but now from this amount twenty Gulden go to the witness accounts and the miners are allowed to receive only 80 Gulden per 150 seconds. For energy efficient Witnessing you can simply place a Pi mini computer in your meter cupboard. After all, witnessing goes on day and night and you will only be rewarded if you are online 24/7.
PoW² also paves the way for faster transactions. Any transaction made with Gulden, Bitcoin or other digital currency must be validated with x number of confirmations (usually 6x) to ensure that a legitimate transaction takes place. Gulden in its current form validates transactions within 6 x 150 seconds is 15 minutes. In the case of Bitcoin in its current form it takes an average of 6 x 10 minutes, thus one hour and can take up to a few days, because there are more transactions taking place than the network can handle. PoW² ensures that in the end zero confirmations are needed to validate a transaction so you can have your coins directly available. This is a unique feature you will not find in any other coin!
Fraud and crime
Crypto Currencies, and especially the Bitcoin, are often in the news because of money laundering and fraud. This is because many criminals think that everything can be anonymous with Bitcoin. However, the opposite is true. The blockchain is public and anyone can follow all transactions. It may be difficult, but it can be done very well. In addition, it is almost impossible to exchange Bitcoin against Euro or Dollars without the government’ seeing’ this. But this reporting does have a lot of negative impact on cryptomoney. The media keeps repeating and copying itself that Bitcoin is only used by criminals and never digs deeper into the facts. Cryptomoney therefore has a bit of an image problem.
That’s why Gulden tries to do something about this negative image of cryptocurrencies. If you want to invest more than 50 euros a week in Gulden you need to register with Nocks.com, the Gulden Payment Provider. You can buy then for 500 Euro each time with a limit of 5000 Euro per month. If you want a higher limit (up to 100,000 Euros per month) then you need to fully legitimize yourself complete with ID authentication. Nocks thus complies with the KYC standards imposed by the Dutch Bank and financial institutions. Nocks is also the service party that enables the Gulden transfers directly to your IBAN account.
Community / Meetups
It is estimated that there are currently 150000 people worldwide who use Gulden or own Gulden. Where users are, there are questions, so it is possible to visit various websites with information about Gulden. It is also possible to register with the Gulden Community. This community ensures that new ideas come to life and that questions from new users are answered. On the Gulden Slack chatchannels everyone can ask questions, share ideas or get acquainted with the people behind Gulden. Periodically there are also regular meetups organized throughout the country which are accessible to everyone. During a meetup, the developers of Gulden will talk to you, but also people who are active with a project created by the community will keep you informed of the latest state of affairs. One of those projects is for example G-Dash, a web-based dashboard for your Gulden Wallet running on your linux server (or on a Raspberry Pi).
Will Gulden become Bitcoin’s replacement? No, Bitcoin certainly has a value, but it should no longer be seen as a new payment system because of the low transaction speed, low network capacity and the enormous transaction costs (November 2017 on average €15, – per transaction). It is more comparable to the current function of gold. So Bitcoin being the new gold, while Gulden can become the new world currency. Technically speaking, Gulden is far ahead of the Bitcoin and that is something we as Dutch people can be proud of. You can pay with Gulden at more than 200 stores and merchants and this number is growing daily. You can also pay your taxi ride, your house, your dentist, your beer and festival tickets with Gulden. So the “coin” has already proven itself in this stage and it is a matter of time until the general public realizes that “our” coin, which may feel a bit nostalgic, but by continuing to innovate, can conquer the world!
Oficial website: https://gulden.com here you can also find the official apps.
Gulden Roadmap: https://dev.gulden.com
More information on PoW²: https://gulden.com/nl/pow2
Gulden community: https://guldencom.slack.com
Gulden Information and FAQ’s: https://gulden.help/nl
Gulden information for retailers and merchants: http://guldenbites.nl/en/retailbites/