The mysterious Ravencoin cryptocurrency has released a whitepaper
The new paper highlights the impressive benefits of asset digitisation.
The developers of the enigmatic Ravencoin cryptocurrency have released the project's whitepaper and timeline.
With the exception of a small handful of people who knew about the coin, Ravencoin first came to public attention when the CEO of Overstock.com mentioned that he had put millions of dollars behind it and that he thought it was one of the strongest coins around. But with the exception of miners drawn in by Ravencoin's unique mining algorithm, a lot of people didn't know what exactly they were looking at.
The whitepaper now brings a lot more clarity to Ravencoin, especially around its actual intended function of "asset digitisation." It also brings a few typos (it says Ravencoin was announced in October 2018) and a few slightly strained raven-related quotes.
How does Ravencoin allow for digitisation of assets?
The Ravencoin system is designed to securely allow for the transfer and exchange of digital assets, the paper explains. This alone makes it much like any other cryptocurrency.
Its unique feature is that it allows users to create and manipulate their own digital assets for transfer on the blockchain, for a nominal cost to be paid in Ravencoin. These assets can be given unique names and identifiers and can serve as a digital representation of physical assets or non-physical assets such as a share of ownership. These can be used to prove authenticity, be transferred and sold or kept track of more easily.
The paper gives the example of a child setting up a lemonade stand.
"Suppose she creates 10,000 LEMONADE tokens. These tokens could be used to raise funds for the lemonade stand at AUD$0.01 per LEMONADE token allowing her to raise AUD$100 to build her business. These tokens can be sold and transferred easily by the owners.
"Suppose the lemonade stand does extraordinarily well because the neighborhood is invested in this entrepreneurial project. Now our fictional eight-year-old wants to reward those who believed in her project. With one command, she can send profits – denominated in any value RVN [Ravencoin] may have – to LEMONADE token holders. There could even be new holders of LEMONADE tokens that she's never met. The built-in ease of use should allow anyone, anywhere in the world to do so on a mobile phone, or computer running Windows, Mac, or Linux."
It also suggests the idea of an artist creating unique digital tokens to accompany different artworks, which would be transferred alongside the physical art itself as a kind of proof of ownership and authenticity. It wouldn't be the first blockchain startup to get involved in the multi-trillion dollar arts and collectibles industry.
It also allows for communication based on token ownership, with the token holders being able to opt-in to it.
For example, a company might create a product called RED. They give each unit a unique digital token and register them as RED1, RED2, etc. They transfer these digital tokens to new users along with the physical product itself.
Unfortunately, due to a manufacturing error, all REDs made after a certain date need to be recalled. Rather than simply publishing announcements and hoping that affected users see it, they can directly contact every single affected customer. Even if the unit changed hands after being initially purchased, as long as the digital token was also transferred, they can speak directly to the specific customers that need to be aware of it.
It also allows for other communication, such as lodging votes. The whitepaper points out how unreasonably difficult and old-fashioned the shareholder voting system is.
"One of the problems, among many, with the existing US financial system is that all the shares are held in street name. In this age of fast communication, this makes holding a vote ridiculously difficult. A public company that issues shares on Nasdaq, as an example, will have to pay a quasimonopoly company just to get the mailing addresses of their own shareholders at a given point in time. Then, a physical (dead tree) mailing must be sent out to shareholders with information on how to vote along with a proxy voting form."
The whole process is slow, time-consuming, expensive, environmentally destructive and involves a lot of people throwing around a lot of confidential information (their home address) to multiple stakeholders. Ravencoin proposes to digitise it instead.
"By using the messaging system, the holders of a token can be notified of the vote, and by automatically issuing a VOTE token to every holder of a token, the vote can be automated from the client or through a web or mobile interface using the protocol built into Ravencoin. Tokens are created to represent votes. Ravencoin will create an exact number of VOTE tokens and distribute them 1:1 to the token holders. These votes can be sent via the protocol to addresses that tally the votes. Because the voting tokens move the same way as assets, delegation of votes – sometimes known as delegative or liquid democracy – is possible."
The benefits of tokenisation are clear, and Ravencoin might be a suitable platform for it. But it remains to be seen whether Ravencoin becomes the tokenisation platform. The same type of system could be introduced on another platform such as Ethereum, and to a certain extent, some unique digital goods, such as video game items, are already inhabiting its blockchain.
Standardisation and global acceptance will be needed to bring the full benefits that Ravencoin wants, and Ravencoin might simply not have enough clout to get that far, even with backing from Overstock.com, whose interest in Ravencoin's asset digitisation is now a lot clearer.
There are also doubts about how viable Ravencoin's blockchain architecture is in the long run. It uses a unique proof-of-work mining system, which might be more responsible and reliable than bitcoin, but proof-of-work blockchains are already somewhat obsolete.
Ravencoin's goals, meanwhile, are very much geared towards the long term, and in the future it might be more likely that a prominent existing system adds Ravencoin-like asset digitisation features rather than Ravencoin itself becoming the gold standard.