CafeCoins Blockchain Architecture and Rewards System
The CafeCoin Foundation, creators of a new altcoin, have done their research and adapted the needed mechanisms in order to make their coin work.
An important aspect of cryptocurrency that needs significant planning and implementation is the blockchain architecture. The blockchain is the backbone of the entire cryptocurrency structure. The blockchain records all the transactions of every user that have ever been conducted in that system. This is what makes decentralized ledgers so useful the very fact that you dont have to trust the authority of a single entity. Every single transaction needs to be validated by every other user in the network, and if something doesnt check out, the transaction will not go through. With this, it is extremely difficult for external entities to trick the system into believing they have something that isnt actually there.
One of the main factors The Foundation has targeted is the fact that transaction fees can be quite expensive, and transaction times can be extremely long. The Foundation has designed a blockchain architecture that is geared to solving these problems. Aside from the design and technology that have gone into creating the CafeCoin blockchain architecture, certain protocols and processes have been implemented as well, which supplement the architecture in making sure CafeCoin overcomes the barriers that stopped other cryptocurrencies from achieving wide-scale adoption.
When it comes to blockchains, miners should also be mentioned. Miners are the ones who make use of high-powered hardware to make complicated mathematical equations in order to add transactional records to the public ledger. Without miners, transactions would not be validated, and in the end, all forms of cryptocurrency would fall apart at the seams. Of course, these miners do not do this service for free. Once a certain block is added to the chain, the miner who added that block will gain certain rewards that are usually in the form of coins of the cryptocurrency they were mining. The Foundation also created their own rewards system for those who will mine CafeCoin, which will be explained later.
The Proposed CafeCoin Blockchain Architecture
The Foundation will build upon the well-known and trusted Proof of Work system the Ethereum blockchain also utilizes. The Foundation will focus on the functionality of the protocol on the specific kind of transactions that are going to happen in CafeCoin. More importantly, CafeCoin will make use of smart contracts functions that are being used for transactions between the retail stores and customers, as well as peer-to-peer exchanges. CafeCoin will focus mainly on that ability of the system so as to cater to the needs of the users.
Aside from that though, the CafeCoin blockchain will also be able to store custom meta data about the transactions each user does. This meta data can be made available to merchants, but it can only be authorized by the consumer. The Foundation will also implement a unique, new proof-of-work algorithm for the validation of those transactions. This particular customer algorithm will have one-of-a-kind incentive structure compared to other cryptocurrencies.
Similar to the network in Ethereum, the CafeCoin token ecosystem will have two components. First is the CafeCoin itself, which is the token that will be used in transactions. CafeCoin tokens will also take into effect cost savings, as well as the tailored marketing functions of CafeCoin. The second component is Cafe, which is the digital representation of the cost of validating transactions and changing information on the CafeCoin blockchain.
Cafe will be what miners receive as a reward for confirming transactions. Gained Cafe is loaded into the users wallet, and it will be automatically used for payment in any other subsequent transactions. If users have yet to gather any Cafe, they are able to purchase some during transaction time, either by a single user, or evenly split between multiple people engaged in a transaction. So the three main ways of getting Cafe is to complete proof-of-work calculations by using an intuitive feature on the mobile application, buying Cafe as a percentage of CafeCoin at the time of transaction, and splitting costs between buyer and seller in a CafeCoin transaction before actually transacting.
Properties of the Blockchain
The CafeCoin blockchain, like other cryptocurrency blockchains, is a ledger of transactions that have occurred in the CafeCoin network. To make sure transactions are settled in a timely manner, the block size the CafeCoin will leverage is flexible, but small. This means it has a limited informational scope for transactions and will therefore have an efficient set of operational commands.
An example of the kind of meta data that users are able share to merchants is the quantity of goods transacted, the product sub-categories to make it easier to identify the goods used in the transaction, the savings the user made while leveraging CafeCoin, and the location of the transaction. Basic user information can also be included, but this is only done to keep the necessary requirements to comply with anti-money-laundering and know customer laws in different jurisdictions.
The data is stored in a layer of meta data that can be accessed through a hashlink that is stored in the transaction that can be unlocked by the user. The consumer will unlock this by sharing a merchant-specific key that is generated and stored within the CafeCoin mobile application. Merchants are able to offer incentives and personal promos in order to have consumers be more willing to give access to the data. However, the merchants are only able to see transactions they were part of, and cannot access information regarding other stores.
Proof of Work system and Incentive Structure of CafeHash
The proof-of-work algorithms that have been used to great effect by other cryptocurrencies like Bitcoin and Ethereum have four abilities. First, they decentralize the validation of transactions happening in the network. They validate the transactions between parties, and they give rewards that incentivize users to participate in the validation. Lastly, they create a mechanism that adds new currency into the coins economy in a controlled manner. In order to combat the speed and time issue regarding transactions, The Foundation will incentivize many users to engage in mining, and at the same time, dissuade large singular entities from monopolizing the work.
For sufficiently powerful smart phones, the mobile application of CafeCoin will have the ability to validate transactions. This application will also be available on desktops and tablets. However, only those devices that are registered to a CafeCoin account will have this ability. Aside from a device-generated fingerprint to associate the device to a user account, no information will be stored relating to the device. Users are also able to register any number of devices on the blockchain, but mining pools are strictly forbidden from participating in this activity.
In Closing
The CafeCoin Foundation utilizes similar technology and protocols set by other successful cryptocurrencies like Bitcoin and Ethereum. However, The Foundation made sure to adjust it to be tailor-fit for the needs of the users of CafeCoin. Because they identified the factors that are hindering cryptocurrency, they have put their effort into removing those roadblocks. With the systems and mechanisms implemented and adopted by The Foundation, they have gone one step further in achieving that goal.
Though there are many other protocol options that CafeCoin had considered, The Foundation found that the one they plan on implementing is the most optimal one. This will ensure the security and accuracy of CafeCoin, and will provide the needed utility to consumers and merchants alike.