Sovereign Cryptocurrencies: A Foundation for a Grassroots Digital Economy

Abstract

The ecosystem of cryptocurrencies benefits the few and exacerbates economic inequality. Here, we aim to offer an egalitarian and inclusive alternative by morphing the concepts, tools and technologies developed by the cryptocurrencies ecosystem, together with the distributed computing technology that enabled it, into novel foundations for grassroots cryptoeconomy. The foundations are layered, with each layer consisting of a cryptoeconomic component and a computational component, supporting the layers above.The cryptoeconomic layers include, from the ground up: (i) Self-sovereign personal cryptocurrencies, a novel concept, that achieves liquidity through personal currency exchange and equality of coin-value through coin redemption among liquid personal currencies; (ii) non-fungible tokens (NFTs) trade network, an abstract counterpart of asset-transfer objects; both layers are augmented with novel consensus-free multisignature accounts; and (iii) digital social contracts/democratic DAOs, which are consensus-based smart contracts autonomously executed by their vetted participants, rather than by third-party miners. The economic layers are designed so that they can be implemented by their corresponding computational layers -an established hierarchy in distributed computing: (i) dissemination with leader-based double-spending prevention; (ii) reliable broadcast, supermajority-based double-spending prevention; and (iii) ordering, based on blockchain consensus, State-Machine Replication, or Byzantine Atomic Broadcast. Importantly, the first two layers are consensus-free, whereas the third layer-like mainstream cryptocurrencies-is consensus-based.Trust is a key differentiator between mainstream cryptocurrencies, which purport to be trustless, and grassroots cryptoeconomy, which is trust-based: Personal cryptocurrencies assume trust in the person issuing a currency; multi-signature accounts assume trust in the specified supermajority of the designated signatories; the NFT trade network assumes trust in two-thirds of the traders; and consensus-based digital social contracts assume trust in two-thirds of the parties to the contract.Mathematical uniformity within the layered architecture is achieved by specifying all components-both cryptoeconomic and computational-as distributed multiagent transition systems. This facilitates specifying the horizontal implementations of cryptoeconomic components by computational components as mappings among the transition systems that specify them, in line with the vertical implementations of each computational component by the component below it. The vertical implementations are known, and so are horizontal implementations at the consensus-based third layer and the implementation of asset-transfer objects by reliable broadcast.Here, our focus is the cryptoeconomic components of the novel consensus-free zone -self-sovereign personal cryptocurrencies, an NFT trade network, and their multisignature accounts: We formalize them; demonstrate their economic functionality via use cases; present and...

Grassroots Distributed Systems: Concept, Examples, Implementation and Applications

“…Sovereign cryptocurrencies were introduced in reference [22], with an implementation by the All-to-All Dissemination protocol AD (Appendiex B). However, sovereign cryptocurrencies do not need all-to-all dissemination: It is enough that dissemination 'follows the money'.…”

“…Thus, we contend that by following this principle, the Grassroots Dissemination protocol GD can provide a correct implementation of sovereign cryptocurrencies. Proving this claim formally requires importing the entire mathematical machinery of sovereign cryptocurrencies [22] and hence is beyond the scope of this paper.…”

“…Another contribution is a specification and a proven implementation for the model of asynchrony of perhaps the first grassroots dissemination protocol. The result is powerful enough to realize serverless social networking and sovereign cryptocurrencies [22]. The protocol is specified by the rather-abstract Grassroots Dissemination protocol and implemented by the blocklace-based Cordial Grassroots Dissemination protocol, both specified as asynchronous distributed multiagent transitions systems [21], with pseudocode realizing the latter for the model of asynchrony.…”