Gulden’s aim is to create a global payment solution that works, although being based on powerful technologies, just as easily as a debit card in everyday life. But without the card, intermediaries, restrictions and costs.
We live in a digital playground. The Internet connects everything. There are no boundaries. Why would your money?!
Gulden uses an in-house developed second generation blockchain and is a collaboration between experienced developers, a supportive community and the (by blockchain) elected Gulden Advisory Board. In order to get a bit of an idea of all the applied techniques, we have brought them together below with a short explanation on the ‘how and why’.
The Gulden Blockchain
Gulden started off with the Litecoin code as a basis. Litecoin was chosen because this cryptocurrency was faster than Bitcoin in daily use. On April 4, 2014, Gulden was launched and the first blocks were mined. On April 8, the first Gulden was traded for 0.00028996 euro. This value was established on an exchange and was therefore not predetermined. It was real supply and demand.
A lot has changed in recent years. Gulden has developed its own blockchain and around Gulden a whole community of developers, companies that accept Gulden, stock exchanges, traders, savers, miners etc. has arisen.
What makes the Gulden blockchain so unique is the clever use of a whole range of advanced and proprietary technologies.
The blockchain not only relies on the miners model, also called PoW (proof of work), but also adds witness (a kind of PoS on steroids) and techniques like Sonic, Delta and SegSig.
This results in a blockchain that is robust, safe and fast, but above all energy efficient. In addition, wallets and services have been built that are very user-friendly and mostly free of charge.
On average, a block is added to the blockchain once every 150 seconds. So 576 blocks come to market daily. These blocks are found by the miners and added to the network. The miners get a fee for this. Read the chapter about Sigma on how this works.
The miners are then checked by the witnesses, who also get a compensation. See the chapter on Witness for more information.
Finally, the GAB (Gulden Advisory Board) also receives a fee per block. This is spent on the development costs and assistance to third parties who also want to develop applications for Gulden.
The speed of a miner is expressed in Hashes per second. When we talk about a miner with a speed of 1 Megahash per second (1Mh/s), it means that the miner takes 1 million guesses per second to find the right solution to a sum.
The total computing power off all miners add up to the total Hashrate that is released on the Gulden Network. At the moment of writing (Nov 2019) the Gulden hashrate is about 1100MH/s, in short 1.100.000.000 hashes per second.
Because the speed of dissolving the calculation/guessing is a combination of the speed of the miner, the difficulty of the sum, the amount of miners and a portion luck, the time required to dissolve the sum varies. Sometimes it works within 20 seconds and sometimes it takes 10 minutes. On average, however, Gulden wants to arrive at 150 seconds per block found.
The Gulden network can autonomously decide to raise or lower the difficulty at the next block!
If there are many miners with fast devices and the sum is quickly solved, the network decides that the sum will be made more difficult at the next block and vice versa if many miners throw in the towel, on average it will take too long for the sum to be solved and the network decides that the sums can be made easier. In the formula to generate the sum there is a parameter called “difficulty” and that parameter can be set higher or lower. This autonomous process is controlled by the DELTA protocol. This is a continuous process.
Many blockchains use the Scrypt algorithm to mine. Gulden, on the other hand, uses the more modern SIGMA. This has a number of advantages: On the one hand, this algorithm makes it possible for many people to mine at home on a desktop computer. This strengthens the decentralized character of Gulden. On the other hand, it significantly reduces energy consumption because SIGMA does not require specialist heavy duty equipment.
SIGMA stands for Semi Iterated Global Memory Argon. Where Argon is an algorithm that won the first prize at the Luxembourg organized Password Hashing competition. The principle of Argon2 has been further developed by Malcolm – Gulden’s Lead Developer – and has become an algorithm of its own in the field of design and implementation.
At the time of writing (Oct 2019) there are about 300-400 miners active, of which the largest miner has a market share of about 4% compared to the total hashrate on the Gulden network.
The large number of “small” miners ensures a stable operating network.
Mining can be turned on with a few simple steps in the desktop wallet and offers everyone the opportunity to get in touch with crypto mining in an easily accessible way. Read more about SIGMA here.
In cryptography, a nonce is a random number that can only be used once in a cryptographic communication.
So when you try to exploit a block you create it only once, initially with a nonce of 0. Then you ‘hash’ it to see if it is valid, if it is not, move the nonce to 1 and try again, and so on.
In the case of most blockchains, the nonce is increased in this way between “0 and 4294967296”. In the case of SIGMA we have instead a pre-nonce and a post-nonce that range between 0-65536.
This is to prevent cheating and make mining ASIC/GPU resistant, so that mining is only really profitable on a desktop computer. A deeper explanation of how this works can be found in the SIGMA release notes.
With the SIGMA update, the Unity project was also fully implemented and completed at the same time.
More than 50 percent of the Gulden community chose to embrace Unity as the next project during a voting round in March 2018.
Unity migrates all wallets (mobile and desktop) to a single unified back-end, rather than separate code for each. Benefits include: faster deployment of new features, changes and bug fixes made at once instead of multiple times; performance enhancements and lower battery consumption (mobile); easier deployment of dedicated Gulden builds for new platforms.
In addition to SIGMA, Gulden has a technology that adds a controlling extra step to the mining process: Witness. This gives Gulden its unprecedented high level of security.
Normally, a blockchain trusts that miners will agree whether a block can be considered valid and can then be added to the blockchain. The problem is that this can be manipulated. Also known as the 51% problem.
Gulden has implemented a solution that adds an extra layer. Blocks offered by a miner are first checked by a witness before it is added to the blockchain. This has a whole range of advantages.
One of these is that at least 71% of the mining power is needed, with on top of that 71% of the witness accounts, to have a chance to manipulate the blockchain.
In practice, this means that an attacker has to put so much money into the attack that he robs his ‘own’ bank.
Read more about the security of the network here.
Because the security is at such a high level, Gulden can work with confirmation times of only 1 block, where almost all other crypto coins need to work with 6 blocks. This results in huge speed gains. However, there are already plans on the table to speed up things even further.
Another advantage of the combination miner/witness is that no so-called ‘selfish’ mining advantage can be achieved. This effect occurs when a miner mines a block, and in the time it is dispersed over the network can gain an advantage by already mining the next block. Witness counteracts this, because the miner has to wait for the approval of the witness before he can continue.
Because Witness is essentially different from PoS (Proof of Stake), typical PoS imperfections are also combated:
– PoS unsecured private keys: Private keys in Gulden are always secured in witness.
– “Nothing at stake issue”: Because there is always enough PoW hash power present on the Guilder blockchain, this “Nothing at stake issue” cannot arise.
– PoS “Stake buildup”: The age of the coin is not used in Witness. Therefore, the Witness system is immune to this error.
– PoS “Stake grinding”: This effect can only occur if there is no PoW activity on the Gulden blockchain. Witness and PoW are inextricably linked. etc..
Since everyone can open a witness account in the desktop wallet, this system contributes to a further decentralization of the network.
The Witnesses are rewarded for their work. At the moment this can rise to interest rates above 12% and is therefore an excellent alternative to an old school savings account.
We had already mentioned that Gulden is built on incredibly powerful and well thought-out technology. The witnesskey is part of that. Most cryptocurrencies have two keys. The private key and the public key. For ease of use you won’t see these two terms often in Gulden, but for the tech nerds it might be nice to know: Gulden uses a third key, the witnesskey. You can export this key, so that you can also work with cloud services or on a Raspberry Pi mini computer without anyone being able to access your deposit. The only thing the key gives access to is the rewards. After the introduction of Phase4 you will get more functionalities in the wallets with this key. Read more about Witnesses here.
SIGMA and Witness are both part of the PoW² rollout that is currently underway. Step by step the technologies are released in phases. In the next phase (called phase4) SegSig becomes fully active. This offers a number of advantages:
- 58% space saving on all transactions.
- The throughput of transactions increases by 58%.
- No block size or frequency changes required.
- In combination with the planned Epoch project, users will be able to run Gulden nodes on the most modest hardware until far into the future.
- Improved transaction scripting system with which PoW² and SegSig code could be implemented as cleanly as possible.
Sonic is a technology introduced in 2018 that reduces the initial synchronization time when installing the desktop wallet. Previously it took up to four hours to fetch the entire blockchain. With Sonic, this has been brought under the hour. An enormous improvement, which makes the user-friendliness a lot better. In addition, the mobile wallets have also had a speed upgrade. When you open the app, it will be up to date in a few seconds.
From the graph below we can deduce that the average power consumption is approximately 92 Watt with an average hashrate of 2.5Mh/s. At the time of writing (Oct 2019), the total hashrate is estimated at about 1100Mh/s. We also know that 28800 Gulden are mined every day (a predetermined value from the Gulden network).
Crypto, and Bitcoin in particular, is often accused of consuming large amounts of energy. With Gulden, the situation is different. We can simply calculate how much energy the Gulden network consumes. On average, an efficiency of 42 Watt/Mh/s is achieved (see table above). At the current total hashrate of 1100Mh/s, this means that the electrical power of all the mininghardware together is 46kW. On an annual basis, Gulden therefore consumes 46kW * 8760 hours = 402MWh. This is in stark contrast to Bitcoin’s 73.12 TWh (a factor 180,000x higher). Read more about Gulden’s energy consumption here.
In order to avoid making this explanation too long, we didn’t discuss a number of things, such as how to link the wallets between desktop and mobile, how to pay with the wallets, what advantages an account at Nocks.com has, also for companies -after all, accepting Gulden payments is many times cheaper than debit cards or iDeal payments are-!
If there are any questions and / or you want to get more in-depth information or help then the Gulden Community on Slack is a good start. You can also follow the project at Github.
New applications and improvements are constantly being implemented. The community decides in consultation with the GAB which ones will be built first. As a result, Gulden is rightly a payment system for and by people.