Ergo & Its Founder Alex Chepurnoy
The nature of technology is iterative. We take what has worked in the past, and design the future. We carry the energy, information, and experience of the past forward. The technology we use would not exist without the past. Iteration and innovation are the two keys to technological advancements.
Ergo is led by a team of veterans in the blockchain industry. Alex Chepurnoy, the lead core developer, has been active in blockchain space since 2011. In early 2013 he worked on different services around Bitcoin and cryptocurrency trading.
Experience brings perspective. A broad perspective and intimate understanding of the technology involved is what drives the development of Ergo. Learn About Alex
Alex started in the blockchain space working on different services associated with bitcoin. Ergoscript was written from scratch. It is not a fork or version of Bitcoin. Ergo runs an advanced extended unspent transaction output (e-UTXO) account model.
This model is relatedly new and is used by Ergo, Cardano, and the Nervos blockchain. The extended UTXO model builds on the benefits of the UTXO model while enabling smart contract capabilities. The extended UTXO model is the next iteration, which will bring about revolutionary features that were not previously possible. UTXO Model
Alex was a core developer for NXT, which was revolutionary in developing Proof of Stake blockchain systems. Many will find it interesting that a developer who was a core innovator in Proof of Stake’s development would then move onto creating a Proof of Work blockchain. This seems counterintuitive, as marketing today pushes the message that Proof of Stake is the next big thing.
Alex worked on smartcontract.com in 2014. Smartcontract.com later was renamed Chainlink; perhaps you have heard of it? Blockchain systems are blind to the outside world. To create smart, flexible contract capabilities, a blockchain must adapt to the volatility of markets. Ergo has the ability to broadcast information into its native network and has the capacity to communicate across multiple blockchains as well. Oracle data ultimately puts the smart in a smart contract. Oracles
Ergo has a new model for oracle data that could offer greater benefits, easier access to oracle data for dapp developers, and greater resiliency against malicious actors broadcasting inaccurate data. Ergo Oracle Pools.
The future of blockchain is multichain. Ergo offers a wide array of tools to provide information and world-class privacy features to partnering projects.
Decentralized technologies are evolving technology. Understanding and adapting to new features and functionality is critical to the long-term development of any blockchain project. Alex alone has over 20 academic papers to his name. This means what as new innovative features are explored, Alex can read, understand, and build on emerging concepts. This maintains Ergo’s reputation of being one of the most technologically advanced Proof of Work projects in the blockchain space.
Perspective in Time
The world’s most well-known cryptocurrency, Bitcoin, turned 12 this year. The decentralized network effect changed our world. Any user with the hardware capacity could participate, mining the Proof of Work algorithm. The unspent transaction output (UTXO) transaction model began to see real-world use and adoption. Within a decade, millions of computing machines were participating in the bitcoin network.
After Bitcoin came Ethereum and the smart contract revolution, smart contracts enabled complex transactions, transaction protocols intended to execute, control or document relevant events. This led to the development of decentralized applications. Building on the concept of decentralization, the goal was to add logic to remove trusted intermediaries.
If the average investor looks into the cryptocurrency market today, the number of projects and information is overwhelming. The average investor is constantly subjected to “the next great thing” — the next great product to buy, company to invest in, or cryptocurrency to hold.
The sentiment and popularity ebb and flow. Many investors spend a lot of time and energy always trying to keep up to date with what is trending. Be careful jumping on what is trending; learn to think for yourself.
The first truth is that we are in the very early stages of blockchain and distributed systems technology in the scale of time.
Although bitcoin remains dominant, Proof of Work is losing some popularity to newer, less tested distributed consensus models.
There is a perception that Proof of Work is old. A large part of that is good marketing budgets in Proof of Stake projects.
The other aspect is because older projects (bitcoin/Ethereum) are slow to innovate.
The most common use of blockchain technology is financial contracts. Unfortunately, innovation has stagnated, and adoption stalled. We believe one of the main issues is that people have to rely on third-parties. By cutting out these middlemen, while maintaining the same level of security, we believe Ergo opens the door to more individuals to embrace blockchain technology.” — Alex Chepurnoy
I want every reader to consider that we are in the early stages of a technology that is only 12 years old. We truly are in the initial development phase. Blockchain technology is here to stay. Therefore it is important to keep a perspective beyond the end of your nose.
Why Proof of Work
Proof of Work is an emerging technology, and technology improves with time. The truth is many Proof of Work systems are not innovative. They do not improve and adapt over time. The blockchain market is in a period of rapid advancement.
Ergo is designed as a self-correcting protocol. It has the ability to adapt and evolve. This allows the integration of new advances and leads to self-improvement in a decentralized manner.
Proof of Work offers unique benefits that are yet to be replicated. This first is security. Crpytography is built around secrity. Proof of Work is proven to be secure. PoW is the gold standard in securty.
The second is privacy; non-interactive zero-knowledge proofs, called sigma protocols, are used in Ergo. Ergo also uses Ergomix, a non-interactive mixer. Ergomix
The third is lite clients. In the 12 years since bitcoin release, the average consumer spends much more time on a cell phone than a traditional computer. Lite clients create a path to make full node security more accessible to the common user on mobile devices. Non-interactive proof of work (NiPoPoW) will build a way of having security guarantees in mobile clients. In time this may be feasible in wearable devices such as a smartwatch.SPV Security
Long Term Benefits of Mining Ergo
Ethereum is in the process of redesigning its underlying protocol from a Proof of Work to a Proof of Stake system. I wish them well in this endeavor.
However, I believe abandoning their large network of miners is sacrificing one of their greatest assets to chase what is popular. Any user’s ability to join the network and mine is one of the original aspects that drove decentralization and participation in distributed systems. Ergo remains committed to advancing Proof of Work.
One aspect that is unique to Ergo is the concept of storage rent. Storage Rent
Ergo’s initial emission to miners is relatively quick. However, the ability to recycle lost coins adds a secondary means of revenue to miners. It also benefits the lifespan of the network, creating a sustainable ecosystem. Anyone who understands market cycles recognizes there are always years of prosperity and challenging years. This secondary stream of revenue for miners will assist in profitability and encourage users to be active.
Essentially storage rent is a mechanism of paying miners to host inactive/unproductive data. Economies are built on the velocity of money. Having greater velocity and liquidity encourages growth.
Ergo has incorporated mining pools in the last year. This has lowered the entry barrier, allowing miners to access software that maximizes the use of their hardware. Pooling can allow the smaller actors to combine forces working together to produce blocks.
Stablecoin SigmaUSD and the Benefit to Miners
Miners that maintain the network are the lifeblood of a robust POW system. A decentralized system will have a variety of actors that allow the system to grow. It is essential to consider the proper incentives to serve the needs of the community. Ergo is built on solid technological foundations; the decentralized financial market is made with historical foundations in mind.
Traditionally central banks held gold as reserves that backed currency. The currency was used as a stable medium of exchange throughout economies. When stable or backed by assets, this system of banking allowed commerce and growth.
We have moved away from a system in which currency is backed by anything. The global reserve currency is run on a banking system that has 0% reserve requirements.
Governments around the world are in the process of continually feeding liquidity into the global economy. Central banks globally are creating money and debt at unprecedented rates. This debt will burden countless future generations, or debts will reach a default and restructuring point.
Digital Assets are a market alternative to the inflationary pressure of fiat currency. The “law” enshrined in the code creates scarcity at a predictable emission schedule. The resource in Ergo is ERG. Miners consume electricity and create this secure electronic asset.
In the global economy, gold is produced by miners and is sold to a variety of actors. Some gold miners may sell ore/refined products to open markets, create OTC contracts, or sell to the central bank to hold in reserve.
Ergo already has pathways to the open market via exchanges. OTC, dark pools and a DEX are in development for private P2P sales. SigmaUSD represents a 3rd option that allows miners access to liquidity, the ability to interact with a central contract or bank while circumventing the open market.
The economics of mining crypto is similar to the economics of trading. Some miners build long positions. They are project-oriented. They find a project they believe in and provide critical network infrastructure, maintenance, and development.
Other miners act as freelancers; they provide critical services to profitable projects. They often do not build reserves and are continually liquidating in the open market to cover their production cost. Learn about SigmaUSD
Learning Extended UTXO
The extended UTXO model is relatively new. When a new technology is introduced, there are always waves of adoption. Ergo is a wonderful opportunity for developers to begin experimenting and building with this new model.
On a proof of work protocol, all a developer needs to do is start mining ERG. As they are rewarded for their work, they can begin developing ways to utilize that asset that circumvents the marketplace. Essentially it is leveraging the technology you already possess rather than spending your money to participate. Learn ErgoScript
Ergo offers a wide variety of tools and smart contract capabilities that are open source and free to play with. This allows developers access to learn and develop using Extended UTXO with a low barrier of entry. Headless Dapps
This concept was a part of what initially drove Proof of Work. Proof of Work allowed users worldwide to use their computing power and their development skills to begin building value. Ergo offers innovative technology that is built on solid foundations, lessons of the past.