The First Wave:

#Anoncoins

The first wave was anoncoins. Their central innovation was the decentralized validation of asset transfer. The wave began with Bitcoin, but it’s since been overshadowed – in a technical sense – by Ethereum, and a number of other anonymous tokens.

All anoncoins are intent upon complete anonymity. They believe it’s the only solution to liberating finance from the inefficient centralized institutions that currently control it. In some part, this belief is a reaction to the unscrupulousness demonstrated by many of those institutions, much of which was highlighted by the GFC.

But while the goals of anoncoins are worthwhile, they share what could be considered a fatal flaw. They allow for an entry into unrecognized transactions, which violates the basic principles that protect society from crime, and individuals from financial exploitation.

The Second Wave:

#Bankcoins

The second wave has been made up of institutional initiatives, of which Ripple is the most prominent.

The aim of Bankcoins is to empower banks and other centralized financial institutions to facilitate peer-to-peer transactions.

This wave adopted the label of decentralized cryptocurrency, but depends on centralized permissioned networks to govern outcomes. This wave, rather than trying to allow for free financial innovation, is displaying an intention to control it.

It seeks to constrain innovation within the institutions that maintain the inefficient bank practices that anoncoins want to get away from.

The Third Wave:

#Bizcoins

The third wave, is the emergence of solutions which will liberate the potential of cryptocurrencies and see their widespread adoption. It would fulfill what the first wave couldn’t. This wave takes as its foundation the decentralized ethos underlying the early Internet and cryptocurrencies, and expands upon it.

Articles and studies which predict that the fundamental advantages of decentralization will result in a newly decentralized Internet are many. This theory lies behind the promise of Bizcoins, which are cryptocoins designed to enable easy adoption by users and businesses.

We see CRDZ as being part of this movement, as it’s a decentralized commerce platform designed to unleash the potential of any business. Key to its design, is how it offers access ramps to customers that are independent of regulations.

Confidential Coexistence

Critical to business acceptance is giving organizations the ability to confidentially coexist on a common chain.

Alleviate compliance

Confidential regulatory reporting obligations – defined within the Compliance Council's constitution – will liberate service providers from regulatory reporting. This will reduce costs and ensure accurate reporting.

Scale

By introducing regulation-free access ramps, CRDZ will leverage the power of organizations to grow the network. Any business, large or small, will be able to contribute to user adoption, free of the regulatory conditions that impede existing crypto initiatives.

Owner Held Credentials

OHC (Self Sovereign Credentials) are the pinnacle of any blockchain initiative intent upon enabling expeditious, confidential access to services and secure asset based transactions.

Identity enabled security

Anonymous transactions – which too easily enable theft and extortion – will be replaced by identity driven security. This will release the potential of blockchain technology and increases confidence in its sustainable future, while also providing confidence to both CRDZ investors and the CRDZ community.

Smart Contracts

Developers implementing smart contracts will be able to choose between Ethereum’s Solidity and other favored languages relevant to their application.

Jurisdictional compliance

Confidentiality works both ways, CRDZ has determined methods that protect users’ identities and transactions from unconstrained inspection and yet offers regulators ‘Need To Know’ access to suspicious transactions (SAR's, STR's).

Censorship Resistant

Critical to the success of crypto initiatives is the ability to grow the network without undue regulatory interference and potential legal recourse. CRDZ access nodes (herein known as Pioneers), are liberated from regulatory responsibility or recourse.

Enterprise ready

There are many crypto initiatives created with an anonymity-first approach, but very few that have been designed from the ground up to serve the needs of commercial privacy. CRDZ is an exception.

Expeditious Governance

The potential inefficiencies of decentralized governance will be alleviated by community sanctioned councils of expertise, operating under code-enabled constitutions. Councils facilitate the efficient filtering and refinement of a community endorsed prioritization of proposals.

Incentivized Participation

Every pioneer on the network will earn rewards when participating in the consensus model. This will attract more pioneers because they’ll see the advantages of growing the reach of their own services while contributing to the diversity and robustness of the network.

Lack of Intrinsic Value

Anonymous coins have little or no intrinsic commercial value. There are rare exceptions, but most can’t purchase anything apart from other cryptocurrencies, which severely limits their utility.

Manipulation

So long as there is a lack of adoption of cryptocurrencies as an alternative means of exchange, they will remain primarily instruments for speculative investment. Much of the current interest in them is based solely on the prospect of making short term, massive profits.

Security Concerns

The lack of security in the crypto space is obvious. We’ve seen it in the hacking of exchanges and user wallets. But perhaps the most spectacular examples have been the collapse and bankruptcy of major exchanges, such as Mt Gox and Youbit (South Korea), where client investments were wiped out.

Banking Influence

Banks are impeding the buying and selling of crypto. Recently, some of the world’s largest banks announced that customers are now prohibited from buying cryptocurrencies with credit cards. Other banks have refused to process transactions specifically related to cryptocurrencies.

Regulatory Uncertainty

There are governments and regulatory bodies looking to impose harsh regulations on cryptocurrencies. Some are taking more drastic steps, such as moving to ban anonymous cryptocurrencies completely – as recently seen in China and India.

Why CRDZ Cares

CRDZ cares because we hold an unwavering belief that blockchain technology can solve real business problems, but that this will only be achieved if business and users have confidence that the technology meets the needs of basic commercial transactions.

Identified users

We believe identity is the basis for commercial use, trust, mainstream adoption and inevitable commercial success. Critical to identified use and regulatory support is confidentiality and KYC methods used for confirming the validity of the transacting party However until a user’s credentials are under their control, rather than in trusted centralized systems, privacy will continue to be an issue.

Confidential transactions

By its very nature blockchain is open and all transactions are stored and visible in the public ledger. So whilst it speaks to anonymity, blockchain actually provides pseudonymity instead. This may be acceptable to some users but for business this is untenable. This type of data, customers, suppliers, other contracting parties, sales, transaction volumes and values, is considered sacrosanct and at the heart of competitive advantage. They can’t put their faith in a network which could reveal confidential data.

Regulatory reassurance

As a result of the recent investment in cryptocurrencies by the general public, regulators will play an increasing role in protecting investors. Many consider it impossible to support the tenets of a liberated financial system and the needs of the regulator, but to ignore the importance of regulations, is to deny business a role in developing the market for decentralized technologies.

Commercial developers

Commercial development cannot commence until such time there is a platform that supports credentialed use, confidential coexistence of participants and regulatory support. The absence of credentialed use means developers are unable to target a shared base of increasing users, and as a consequence services that attempt to build siloed identity demanding applications, atop an anonymous platform, fail to garner the network effect that would be possible with an credentialed enabling platform.

Assured security

Security of transactions and money is paramount before businesses and users will trust their credentials and transactions to any platform or infrastructure. We have witnessed many examples of compromised security at all levels within the current crypto ecosystem. From users losing their private key data and not being able to access wallets or hackers stealing funds direct from user and exchange wallets.

Ease of Use

As a consequence of anonymous cryptographic addresses, transacting using anonymous platforms is complex and risky, as a result of having to identify recipients independent of transacting network. While those seeking to circumvent transaction detection will tolerate complexities, mainstream commercial users won’t.

Regulatory resistance

The most common way for users to access cryptocurrencies is via exchanges, as banks to date deny direct exchanges due to a lack of regulatory endorsement. The risk hanging over the heads of cryptocurrency enthusiasts is the perilous nature of exchanges, which are vulnerable to hacking, corruption and regulatory action. It is certain that regulators will clamp down on exchanges, even if we don’t know the particular events that will trigger the clampdowns.

Complex user experience

Users want things to be simple, so it’s essential their experience with blockchain services is intuitive, and as easy to use as other payment systems. This is very far from the experience of today’s cryptocurrencies. They remain very complex, requiring a fairly high degree of technical sophistication to use. As a result mainstream users and businesses are not prepared to embrace them.

Lack of Commerce

Users will only engage with a new technology or service if it provides an improved value proposition. Instead, even the most basic commercial services are difficult to implement on cryptocurrencies, as any form of identified use requires extra layers to be placed on top of existing anonymous platforms. There are hundreds of so called ‘killer apps’ waiting to be developed but they need the conventions of commerce to be respected, i.e. identified confidential use and confidential compliance.

Crypto market volatility

The meteoric rise in the price of cryptocurrencies, and the surrounding hype about amazing profits, has seen a number of hopeful everyday investors jump into the market. Unfortunately, many of those same investors then experienced spectacular losses in the first part of 2018. Given the size of the market, its volatility, and the potential losses for regular, uninformed investors, regulators need to take note and recognize the risk associated with anonymous coins and tokens.

The role of regulators

Regulators protect investors – and indeed society – from illicit activities and unfair, and manipulated markets, while supporting and encouraging innovation. Contrary to some crypto purists, we believe that a healthy and sustainable long term cryptocurrency market will benefit from the protection regulation brings. We also believe regulatory compliance can be achieved while protecting user privacy. The key is to maintain user privacy while giving regulators access to suspicious transactions.

Current Approach

Regulators are currently enforcing KYC and AML/CTF regulation on exchanges. This approach seriously compromises the effectiveness of the regulatory control, as users are only one step from anonymous wallets and unreported transactions. Equally compromised are identity based tokens sitting on top of anonymous chains, as these enable identified holders to transact with anonymous tokens, free of potential regulatory detection. Unless presented with effective alternatives to anonymity, regulatory action like that seen in China might become more common, and cryptocurrencies would fall victim to their own intransigence.