Building Smart Coins

Smart Coins are a combination of the fungible qualities of traditional cryptocurrencies and the non-fungible properties of NFTs, with the almost limitless ways Smart Contracts can manage valuable properties of both.

Notice I said “manage valuable properties”. Management of properties means the ability to add, edit, and delete properties, not just assign them.

NFTs are a subset of Smart Contracts, essentially Apps for Blockchains that can support them. For example, there’s really no practical way to “program” a Bitcoin-style Blockchain to allow for anything other than simple transaction-based transfers of coins from one holder to another.

Ethereum and Ethereum-compatible Blockchains (actually, any Blockchain that allows for programming) enjoy a foundation that allows online applications (Decentralized Apps, or DApps) to be built and accessed.

What makes DApps different from traditional online applications is:

1. Traditional online application platforms have comparably very large processing, storage, and memory resources.

2. DApps record each use as a transaction on the Blockchain.

3. External, real-time data and other resources are not directly available to DApps.

This leads to some interesting differences in how DApps are coded and used,

Oracles

If extra resources are needed to fully complete the instructions of a Smart Contract, an external source of those resources called an Oracle is employed.

But still, the results provided by the Oracle to the DApp is stored as a transaction, to ensure that the record of exactly what happened at that time and with that data, is forever available on the Blockchain.

This leads to the question, suppose a Blockchain is fully decentralized and immutable, but Oracles are not?

One prominent solution to this problem is Chainlink. Chainlink provides Oracle services that reduce centralization of Oracle processing and real-time data.

Interplanetary File System (IPFS)

On a related topic, Blockchains are not the place to store large amounts of data, primarily becuase of the cost, but also due to the fact that most Blockchains maintain decentralization by copying themselves to everyone participating directly in the Blockchain.

So off-chain storage is popular, and some users believe decentralized storage would be best.

IPFS fits that requirement, and it is technically free.

Yet some large files, such as videos, cannot be delivered effectively with IPFS.

So other storage solutions such as Amazon Web Services (AWS) offer excellent off-chain storage, and there are ways to at least encrypt stored files so that they can be shown to be unchanged. AWS also provides in-house blockchain services that reduce the cost and increase the effectiveness of large file delivery.

Creating Cryptocurrency Coins and NFTs

A Cryptocurrency Coin can easily be created by anyone with a few simple steps. In fact, entire Blockchains (including Bitcoin and Ethereum) can be copied. Not just the data in them but the entire source code that makes them in the first place, with all their features.

So while it’s easy to create a Crypto Coin (often referred to as a token if it’s not the “native” coin of the underlying Blockchain), the hard part is making a coin that has legitimate value (see the last Post for more on value) with massive buy-in, utility, scarcity, and liquidity.

Creating NFTs is also easy. Just go to any number of popular Websites, and you can easily mint a basic NFT.

But again, creating a high-value NFT is hard.

The Point

Smart Coins are a combination of the best features of Crypto Coins, NFTs, and Smart Contracts in general.

So how would a Smart Coin be a better coin than a typical Crypto Coin and also better than an NFT?

Imagine a Smart Coin that can be spent like an ordinary currency, but comes with these properties:

1. It is deflationary, meaning its value is designed to increase over time in a reasonable way, rather than decrease like USD. This is partly due to having a limited supply, but also due to some coin value management functions built-in.

2. It can be tracked down to the coin (or a group of coins) for the purpose of assigning special properties to those coins, and these properties can be literally anything that can be coded. This is where enormous utility comes in.

3. It creates and increases its own marketplace with every new participant, and will jump to a much higher level of liquidity when it is listed on coin exchanges. This creates liquidity.

So the final question for generating value is, how to gain massive belief?

It’s not easy or simple, but it is straightforward.

First off, build in good tokenomics, including a Foundation focused on solving human health-related threats, fair distribution of the coins, mitigate or eliminate the possibility of hacks, rug-pulls, and so on, provide rewards for participants most willing to help build the ecosystem, emphasize shared governance, and basically incentivize eveyone to do the right thing.

Then build in excellent coin management, perfect privacy to protect legitimate uses and users, automatic wealth-increasing functionality, and constant focus of all social, cutural, regulatory, and competitive aspects of the coin and its impact on traditional norms.

In the next few posts we’ll dive much deeper into making Twistabit Smart Coins a valuable part of daily life, fulfilling many of the ordinary and extraordinary dreams and desires of people.