Technology

Trust in Cryptography

Existing financial systems require the management of a central account. The balance of each individual is recorded and controlled from a central ledger, and the user is not in control of his own funds. These systems require costly and time consuming compliance and settlement procedures which place an increasing burden on the global economy. Recent cross-disciplinary innovations in computer science, mathematics, and finance eliminate the need for central  account management – each individual is able to maintain total control over his funds. No third party has the ability to modify this balance thereby improving security and reliability, and reducing risk and the need for manual processes. This results in efficient, streamlined systems that enable financial institutions to dramatically reduce costs and deliver greater value and an array of new advanced services to users.

Two kinds of cryptographic technologies are driving the revolution in digital finance – consensus systems (such as the Bitcoin blockchain) and contracting systems (such as Monetas).

The Monetas Digital Contracting System for Efficient Transaction Processing

The Monetas platform is an advanced digital contracting technology. It uses a cryptographically secured digital notary to deterministically provide instant, irreversible settlement of transactions. The Monetas platform automates today’s legal notary process. It is a hybrid peer-to-peer, client-server network application with the notary operating as an always-on, globally-accessible web service. It is a powerful, flexible, secure software technology that can be used in a myriad of ways – from replacing cash and debt for simple payment and remittance flows, to democratizing currency exchange, derivatives trading, smart contracts, and much more.

The Monetas notary provides global connectivity and interoperability. This enables anyone to transfer and exchange currencies and other assets, easily and efficiently, even across borders. The Monetas platform provides consumers with the benefits of both legacy financial systems and modern technologies such as distributed ledger technologies. The Monetas platform and blockchain technologies are complementary, providing consumers and businesses with the best of both worlds – the ability to store assets securely on the blockchain, and then trade those assets efficiently and securely off-blockchain using the Monetas platform.

Consensus Systems for Secure Asset Storage

Consensus systems such as the Bitcoin blockchain are probabilistic distributed consensus databases that record transactions in a ledger distributed among many different parties. They can only be updated by the consensus of the participants in the system and, once a record has been entered, information can never be erased nor changed. Assets are exclusively controlled by the individual end user, and these systems require no trusted intermediaries.Consensus systems are secure and stable, distributed, and trustless, serving as a benchmark for secure asset storage. This level of security comes with a number of drawbacks, however, which make these systems unsuitable for handling the world’s transactions.

  • Consensus systems are slow. The Bitcoin blockchain can currently handle a maximum of 7 transactions per second globally in comparison to a popular credit card processor, which can handle up to 56,000 transactions per second.
  • Consensus systems are expensive.The total cost of operating the global Bitcoin network translates to about $10 per transaction. This cost is not paid directly by the user, but by the global network of computers which receive a ‘block reward’ of new bitcoins. The block reward will decrease over time, so fees will grow much larger in the future.
  • Consensus systems are public. All blockchain transactions are public which does not respect the privacy needs of individuals and organizations.