What Is Aeternity?

With so many blockchains and tokens coming onto the market in recent years, it can be hard to stand out from the rest of the crowd. Many tokens try to find a niche that has not been exploited yet, so they can find their own corner of the market to expand without facing existing competition.

Aeternity is not one of those coins. Aeternity aspires to be a generalist solution that can be applied to any and all situations that might come to mind when you think of the term “smart contract.” Aeternity has big ambitions, and hopes to become one of the top players in the crypto space by bringing in features existing blockchains don’t have, such as a native ability to use real world data, and solutions to problems seen in other cryptocurrencies, such as how to scale.

It was launched as an ERC-20 token in order to facilitate a round of ICO funding, but will become a fully realized blockchain on its own when the mainnet goes live in mid-2018. Aeternity is the name of the project, and the name of the main token is Aeon (AE).

What Does Aeternity Do?

It would be simpler to answer the question, what doesn’t Aeternity do? And one answer comes up front and center: it does not seem to have any particular ambition to become a currency for daily use.

Of course, currency can be seen as a type of transaction that exists of a subset of all smart contracts, so using AE as a currency is certainly not out of the question. But with their focus on real world data handling, it’s clear that currency is not their priority.

The Aeternity whitepaper outlines three areas where blockchain technology needs improvement, and proposes their own solution for each in turn.

The first problem is that of stateful design, which is another way of describing how most blockchains calculate transactions or other operations on-chain.

Aeternity proposes that much of the information that goes into any one transaction can be done off-chain, in an integrated side channel, leaving only the bare essential information to be passed to the main chain. This minimizes on-chain transactions, freeing up resources, and creating efficiencies.

While other blockchains have proposed sidechain solutions before, they have often come after the fact, necessitating retrofit solutions. By starting with off-chain solutions built into the foundations, meaning less stateful calculations on-chain, Aeternity hopes to avoid the pitfalls that come with layering solutions on top of existing systems as problems arise.

The second problem Aeternity seeks to address is how to integrate real world information onto the blockchain in a reliable way. For instance, someone may want to purchase a ticket to an event, but not if it rains on the day of the event. An ideal system would be able to process payment for the ticket only when it is known that it is not raining.

Aeternity proposes an “oracle” system, which consists of a combination of two proposed methods. One is non-human sources, such as real world sensors that can provide data to the blockchain without human intervention. For example, if a rain sensor was placed at the venue for an event, then whether or not it was raining could be broadcast to the blockchain, and transactions reliant on that information could be processed.

Another way for oracles to gather information is by human consensus. Users can post “yes or no” questions to the blockchain with deadlines. Users can vote for one of two outcomes, and in most cases must prove their stake in the outcome by paying Aeon for the right to be heard. The answer with the higher consensus is then considered to be true.

With oracles, Aeternity can potentially offer smart contracts that are contingent on necessary information separate from the two parties involved, but without having to trust any third party.

The third problem Aeternity hopes to solve is consensus when it comes to developing the Aeternity blockchain and ecosystem itself. Other blockchains have struggled with concerns over mining centralization with Proof-of-Work algorithms, and others have struggled with concerns over control being seized by those with more wealth in Proof-of-Stake models. Aeternity proposes a hybrid of both Proof-of-Work and Proof-of-Stake, in hopes that the two modes of consensus can counterbalance each other.

History of Aeternity

Aeternity was started in the beginning of 2017, and launched its ICO in June of that year. They initially launched as an ERC-20 token, but this appears to have only been an intermediate step to enable early funding.

When the mainnet becomes fully operational in mid-2018, then presumably one can exchange existing AE tokens for tokens on the new blockchain. However, at this time, it is not clear if it will be a straight 1-for-1 exchange, or an exchange based on relative values.

The Aeternity Team

According to the Aeternity website, the team is made up of roughly fifty people, with Yanislav Malahov as the founder.

Malahov ironically refers to himself as the “Godfather of Ethereum”, having worked with Vitalik Buterin on a project involving colored coins just prior to Buterin’s creation of Ethereum.

In a blog post, Malahov states that it’s possible that it was within conversations he had with Buterin where the inspiration for Ethereum was born. Regardless of whether or not Malahov had any influence on the creation of Ethereum, there is no doubt he has been involved in research and development of cryptocurrency from the earliest days.

The team appears to have a well rounded group of engineers and business developers; however, they do not list not list any major financial investors. They may not need them, as they raised roughly $23 million in their ICO.

Competitors and Challenges

Whereas some other smart contract focused projects might target a particular niche, Aeternity is aspiring to be the world’s default smart contract blockchain. This generalist approach means they are in direct competition with the biggest smart contract blockchain on the market today, Ethereum.

Aeternity has a long way to go to catch up to the established brand recognition that Ethereum enjoys, but nothing is impossible in the cryptocurrency world. If Ethereum stumbles, then opportunities may arise for alternate choices, and Aeternity could be a contender.

The debate between Proof-of-Work and Proof-of-Stake as a method for consensus is often debated on ideological grounds, not technical. Opposing sides believe the other creates opportunity for influence on a blockchain to be centralized, which many in the crypto space feel is unacceptable. Entrenched factions may see any amount of consensus done in the way they oppose as being a loss of trust. Aeternity will have to sell the idea as a compromise that allows both sides to win, and that might require more marketing than technical demonstrations of speed or efficiency.

How to Purchase and Store Aeternity Tokens (AE)

Aeternity is available on most major exchanges, where it can be traded with Ethereum or Bitcoin. As an ERC-20 token, AE can be stored on any compatible wallet such as MyEtherWallet, Trezor, or Ledger.

When the mainnet goes live, the Aeternity blockchain will have its own tokens, and the ERC-20 tokens will switch to this native token. At that time, presumably there will be a dedicated Aeternity wallet application made available, but at this time there is no specific information on when that might happen, or what form it might take.

Conclusion

Aeternity has a ways to go to establish a reliable network of real word data input to provide objective information for their oracles, but if they can achieve their goals, they will fill a need, especially in the realm of the Internet of Things (IoT).

Their main challenge is catching up with established blockchains, namely Ethereum. Not only does Ethereum have a lot more name recognition and market capitalization, but also a large community of developers who might be able to expand Ethereum so that it can apply to everything Aeternity hopes to do.

That said, Ethereum does have scaling issues it must address, and Aeternity has built in scaling solutions that the Aeternity team believes could take it even farther.

The team behind Aeternity looks stable, and their proposed technologies appear to have a sound footing. The real challenge ahead of them is the scale of their aspirations. It’s a long climb from an ICO to becoming the world’s default choice smart contract system. But, as they say, if you shoot for the stars, you may land on the moon — so if they can create a stable working blockchain, they may find a niche even if they don’t reach the top.