The tech that powers Constant: an introduction

Constant’s mission is to bring economic freedom to everyone. As a community-driven project, we want to share our plans and progress along the way. Today, we’d like to give you an overview of the technology powering Constant, as well as share what we’re building for the future and why.

Reimagining money

Money is one of the most important inventions in human history. From its first use in the Tang Dynasty (A.D. 618–907), we’ve enjoyed over a thousand years of paper currency. But now more than ever, its limitations are keenly felt.

The past few years have witnessed another invention: blockchain technology. This special peer-to-peer network has opened up new applications of money that weren’t possible before. A blockchain network runs exactly as programmed, without any possibility of downtime, censorship, fraud, or third-party interference.

With the advent of cryptocurrency — borderless, frictionless, and decentralized — the world is beginning to think more broadly about how money should, and can, behave.

Constant

Blockchain technology is still fairly new, so it’s hard to predict when mass adoption of various blockchains (and cryptocurrencies) might happen. When it does, it will be important to have a price-stable cryptocurrency seamlessly integrated into global economies.

We’re hoping to grow Constant into such a price-stable cryptocurrency. As a decentralized network, our aim is to build value for everyone rather than shareholders. In fact, the role of the shareholder is irrelevant. Once the network matures, our team will dissolve, and the community will run the network together.

Constant is open-source and we commit code daily on our Github repository. Its design is public and we publish design decisions weekly on its tech blog. Nobody owns or controls Constant and anyone can take part.

Our diverse team of 50 scientists, cryptographers, engineers, economists, and community managers is dedicated to working towards our mission. Most of us work together at our office in Saigon, while the rest of the team is distributed across the world.

The Constant Chain and its 5 goals

Initially, Constant was built on Ethereum as an ERC-20 token. While it’s convenient to bootstrap Constant on another blockchain, it limits what we can do. On Ethereum, the Solidity smart contract language is not expressive enough to implement our ideas, and the network is painfully slow and expensive for running consumer applications.

Most of our researchers and engineers are working on our own blockchain. This is important. By building our own blockchain from scratch, we’ll be able to tailor it to our exact needs. It will allow us to test new ideas faster around privacy, scalability, and the price stability mechanism — especially those that Ethereum doesn’t fit, such as fast Zero-Knowledge Proof generation.

Also, we believe it’s crucial for a native cryptocurrency to be price-stable. Ether price fluctuation has hindered the growth of its decentralized apps and utilities. On Feb 9, 2019, for example, at a market cap of $14 billion dollars, 93% of Ethereum decentralized apps had zero transactions.

When the price of Ether increases, it’s difficult for developers to plan operational costs and unattractive for users to use their apps because of high gas fees. When the price of Ether falls quickly, people may lose confidence in the currency and exit the network altogether.

Goal 1: Build an autonomous agent that adjusts the money supply automatically

We’re building Constant as a decentralized, borderless, stable cryptocurrency. There are existing attempts at building stablecoins — such as fiat-backed (Tether) and crypto-backed (DAI) — but we believe that rule-based algorithms (Seigniorage Shares), or more advanced learning algorithms (Reinforcement Learning), can eventually be made reliable enough to conduct monetary policy on autopilot most of the time.

We’re building an autonomous agent that can perform monetary policy tasks such as adjusting interest rates and conducting open market operations to manage the money supply — in real time.

Goal 2: Build a decentralized autonomous community

While conducting monetary policy is important, a more fundamental issue is the organization behind the monetary policy — the body that sets the rules of the game. We purposely rejected the concept of a centralized system such as a central bank. Instead, Constant is designed as a Decentralized Autonomous Community (Jentzsch 2016).

We’re building a decentralized autonomous community that collectively manages the network together.

Goal 3: Make privacy default

Our mission is to bring economic freedom to everyone, and we believe that privacy is essential to freedom on the internet. Privacy is a first-class citizen of the Constant Chain. Constant transactions are completely private. Like other cryptocurrencies, Constant transaction data is posted to a public blockchain, but unlike those cryptocurrencies, Constant ensures your personal and transaction data remain confidential. Zero-Knowledge Proofs allow transactions to be verified without revealing the sender, receiver, or transaction amount.

Goal 4: Build a scalable blockchain

Distributed ledger technology is a remarkable alternative to existing financial infrastructure:

  • Efficiency — it eliminates intermediaries and their ridiculous markups and allows peer-to-peer direct transactions.
  • Finality — it provides an immutable record that cannot be altered retrospectively. In terms of speed, settlement can be near real time.
  • Safety — it uses cryptographic proofs without a central authority or trusted third parties.

We’re building a blockchain that provides:

  • Speed: fast clearance and settlement of transactions.
  • Low cost: elimination of intermediaries and centralized monolithic infrastructure costs.
  • Finality: irreversible peer-to-peer settlements of transactions, immutably recorded on a ledger that cannot be altered retrospectively.
  • Ubiquity: universal access for everyone (personal, business, non-profit, the unbanked) for multiple use cases, with cross-border functionality.
  • Convenience: easy access with just an internet connection.
  • Safety: a secure system that holds immutable records with cryptographic integrity without a central authority or a trusted third party.

Goal 5: Build useful applications

Different from other cryptocurrencies, Constant is designed for usability and real-world utility. Constant is upgraded money, a practical alternative that bypasses the limitations of fiat currency, built to integrate seamlessly into daily use. We’re building useful applications, initially with Remittance, Savings, and Investing & Lending, and soon will enable other developers to build their own applications with Constant.

Remittance

Sending Constant across the world is easier than walking your cash across the street, and much faster than relying on the traditional banking system. Constant doesn’t make you wait three business days, charge extra fees for making an international transfer, and doesn’t dictate minimum or maximum amounts you can send.

Savings

No matter where in the world you are, your Constant keeps the value of the USD. And you can withdraw as fiat at any time. So if you live in a country with high-inflation like Venezuela or Argentina, Constant offers you a stable, accessible alternative to local currency that didn’t exist before.

Investing & Lending

Blockchain introduces a whole new set of assets — crypto assets — such as tokenized gold (Digit), tokenized real estate and rental properties (Harbor), tokenized fine art (Maecenas), and tokenized company shares (Polymath). We’re building a peer-to-peer marketplace that connects crypto-asset investors and crypto-asset borrowers and facilitates the transaction.

A stable global zone in the crypto wild west

The Internet in 1994 looked nothing like what we have today. Blockchain’s 1994 is happening right now. The volatility of currencies like Bitcoin and Ether have attracted attention to the rapidly developing, increasingly divisive crypto sphere, populating it with bright-eyed developers and early adopters, alongside a majority of speculators and traders.

There is a great deal of evolution to come before crypto proves useful. The volatility that characterizes the current landscape has also made the prevalent narrative of financial revolution unconvincing at best. For crypto to be the new money, we should feel secure spending it, saving it, and getting paid in it. It needs to hold its value.

Constant is designed to meet these essential conditions, open up bigger possibilities, and bring the world closer together. By pioneering a stable global zone in the crypto wild west, Constant hopes to lead the shift towards real-world applicability. By building a freer and more useful money for anyone, anywhere, Constant hopes to help make the world go round better.

Please follow us on Medium for more news, views, and updates from the Constant team. If you have any questions or feedback, please join us on Telegram https://t.me/constantbanking

References

Andalfatto, D. 2015. Fedcoin: On the Desirability of a Government Cryptocurrency. Blog post.

Barrdear, J. 2016. The Macroeconomics of Central Bank Issued Digital Currencies. Bank of England Staff Working Paper 605.

Buterin, V. 1014. A Next Generation Smart Contract & Decentralized Application Platform. https://github.com/ethereum/wiki/wiki/White-Paper

Dowd, K. 1992. The Experience of Free Banking. New York: Routledge.

Dowd, K. 2014. New Private Monies. The Institute of Economic Affairs.

Fisher, I. 1913. A Compensated Dollar. Quarterly Journal of Economics 27: 213–235.

Fisher, I. 1920. Stabilizing the Dollar. New York: Macmillan.

Friedman, M. 1951. Commodity-reserve Currency. Journal of Political Economy 59: 203–232.

Friedman, M. 1960. A Program for Monetary Stability. Bronx: Fordham University Press.

Hayek, F. A. 1977. A Free-Market Monetary System. Journal of Libertarian Studies, Volume 3, Number 1. https://mises.org/daily/3204

Hayek, F. A. 1977. Denationalisation of Money. The Institute of Economic Affairs. https://mises.org/books/denationalisation.pdf

Jentzsch, C. 2016. Decentralized Autonomous Organization. https://download.slock.it/public/DAO/WhitePaper.pdf

Merkle, R.C. 1980. Protocols for public key cryptosystems. In Proc. 1980 Symposium on Security and Privacy, IEEE Computer Society, pages 122–133.

Nakamoto, S. 2008. Bitcoin: A Peer-to-Peer Electronic Cash System. www.bitcoin.org/bitcoin.pdf

Rogoff, K. 2014. Costs and benefits to phasing out paper currency. Presented at NBER Macroeconomics Annual Conference.

Sams, R. 2014. A Note on Cryptocurrency Stabilisation: Seigniorage Shares. https://github.com/rmsams/stablecoins/blob/master/paper.pdf

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