Data privacy, security, and governance are synonymous with trust. Most enterprises acknowledge that blockchain technology is the infrastructure of the future economy, but without trust, as economists warn us, economic activity and value creation decline. More enterprises are exploring the new generation of high-performance blockchains. They no longer have to compromise on features such as scalability and transaction speed to transact permissionless and frictionlessly at a low cost on peer-to-peer networks. Until now, however, they have still had to compromise on data privacy and anonymity to comply with regulatory oversight. And this is where the new blockchain concept comes in - Concordium has solved this dilemma by building a blockchain with an identification layer at the protocol level with advanced privacy algorithms to maintain anonymity.
The article explores why Concordium is a state-of-the-science blockchain for the future economy, and dive into underpinning the privacy-preserving and regulatory friendly blockchain. Concordium comes with interesting dApps such as their MySoMeID, a SoMe agnostic app allowing users to validate their SoMe accounts with their ID and use of Zero Knowledge proof and solving the problems of false accounts.
I. What Is Concordium?
Concordium is a blockchain built for businesses unique in meeting the business imperatives of confidentiality and accountability when transacting globally. The blockchain is the first to provide Layer 1 identification at the protocol level to verify participants’ identities and support regulatory compliance. These features are delivered on a high-performance enterprise-grade blockchain that addresses the major impediments to global adoption of the blockchain, including:
- low and stable transaction costs pegged to EURO to provide businesses with predictability.
- limitless scalability from 2023, making it suitable for use cases with any level of required capacity, thereby enabling companies to grow without constraints.
- immediate transaction finality to reduce transaction roll back risk and insure speed.
- interoperability with bridge and via shards from 2023, with the benefits of built-in identification.
Concordium makes digital ID sharing possible across applications by providing built-in user identification at the blockchain layer.
II. Concordium’s Unique
At the heart of Concordium is a large research team of over three dozen scientists and technologists and leading blockchain research partners. Their work has culminated in a number of advanced blockchain features for the Concordium enterprise-grade blockchain, including:
Identity Layer
Each Concordium user creates a Concordium ID by obtaining a Verified Concordium Identity from a trusted third-party Identity Issuer. Issuers provide off-chain verification of identity and other attributes that can be added, such as credentials and affiliations. ZKPs are used to keep data private and off-chain. Identities are private at the protocol layer with ID accountability, allowing regulators to revoke privacy to monitor and enforce regulatory compliance. If actors are acting suspiciously, identification can be enabled at the request of regulators through the Anonymity Revoker. Concordium’s solution is an identity disclosure mechanism that can be triggered by a regulator called anonymity, or privacy, revoker. Each Concordium account can be traced back to its originator (individual or business) through an identity object issued by a third-party ID issuer. Regulators must obtain a court order to demand an anonymity revoker to decrypt the user identity.
Privacy Issue Focus
Zero-Knowledge Proofs & ID are two core technologies of the Concordium built-in identity layer (In case of confusion about ZKP, read a detailed article about that here). This allows the verifiers to perform their tasks without storing information on-chain. This means that the users’ private information is never actually stored on the blockchain. Still, Concordium says that users suspected of fraudulent activities can have these rights revoked, and information can be shared with law enforcement.
Instant And Real Finalization
Fast finality is a major advance in the current block-by-block processing of blockchain transactions. The Concordium Platform consensus model uses the more resource-efficient proof-of-stake (PoS) consensus mechanism based on a two-layer consensus design, combining a Nakamoto-style consensus (NSC) blockchain and finality layer.
On this Nakomoto-style PoS network, transactions are immediately and immutably verified instead of waiting for an entire block to be validated. The
Concordium finalization approach eliminates the risk that a block will be rolled back, efficiently adding blocks using NSC while the finalization layer ensures blocks are quickly and securely declared final.
Low And Stable Transaction Fees
From supply chain networks to gaming and NFT platforms on the blockchain, highly volatile Ethereum prices have led to highly unpredictable business forecasting and slow and even abandoned adoption for many blockchain businesses. To allow firms to develop and operate viable business models, Concordium has developed a stabilized transaction fee mechanism anchored to the Euro to keep the price, and thus operating costs, low and predictable. The transaction fee is initially set at 1 Euro Cent and will decrease over time as the transaction per minute increases
Scalability
Sharding provides limitless capacity by automatically running shards in parallel to avoid network constraints as data capacity increases. Typically, each node has to process all transactions and execute all smart contracts in a node network. Sharding divides the network into smaller parts called shards, essentially independent blockchains that run many transactions in parallel.
The Concordium blockchain also uses Intershards to support cross-communication among smart contracts and private shards to keep shard transactions private from the control chain.
Interoperable
Interoperability enables businesses to create substantial value from Concordium blockchain’s innovative features and users can use the built-in identification to lower counterparty risk when interacting with other blockchains. Concordium is developing a novel approach that uses sharding, specifically intershard signaling, to allow users to send short authenticated messages to other chains without operating from the Concordium Platform.
On Concordium’s flexible, open development platform, expect to see the core built-in identification technology quickly adapt and evolve to meet more privacy needs of the enterprise blockchain market. The platform has implemented new consensus protocols and algorithms and well as the ID protocol, based on Peer reviewed science papers from COBRA institute at Århus university, Denmark, which Concordium is the founder of.
This adaptability, for example, will make it easy to customize and add new privacy attributes. Concordium currently supports several types of zero-knowledge proofs, Classic Sigma protocols proving identity, and Bulletproofs to confirm a value within a range. Next, the research team plans to add SNARKs, which can process larger snippets of information faster in a smaller package.
Dual Consensus System
Concordium provides businesses with fast, secure, and reliable transactions through a 2-Layer Consensus Mechanism combining a Nakamoto-style Blockchain with an innovative finalization layer.
When compared to the Nakamoto blockchain, the dual blockchain provides speed without sacrificing security by:
- Declaring blocks as final faster as long as corruption of the total stake is below 1/3.
- Delivering the same security guarantees even when corruption is between 1/3 and 1/2.
Two actors carry out consensus:
- Bakers: participate in lotteries to win the right to produce a block in exchange for a share of the gas fees collected, with the probability of winning tied to the amount of $CCD the Baker has staked.
- Finalizers: finalization is run by a finalization committee whose members are called finalizers. For finalization to work properly, honest finalizers need to hold more than 2⁄3 of the total stake among all finalizers. The finalization committee consists of bakers with at least 0.1% of the total stake, ensuring that there are at most 1,000 finalizers in the committee and that all nodes with a substantial stake can participate.
III. Team And Partners
Concordium’s novel regulated decentralized finance solution is the work of its research team comprised of some of the world’s leading cryptographic and blockchain researchers. Research Center Leader Professor Jesper Buus Nielsen and his colleagues have played a key role in solving the holy grail of cryptography and secure computation.
The Swiss-Danish research team based in Zug, Switzerland’s Crypto Valley, is among the most cited contributors to blockchain scholarly research, including pioneering foundational work in zero-knowledge proofs, multiparty computations, and Merkle-Damgard constructions.
In development since 2018, Concordium is built by an accomplished team of more than 80 members, many of which are software engineers, researchers, developers and advisors.The Management and Board of Concordium Foundation is formed of Lars Seier Christensen, Chairman of the Concordium Foundation, and co-founder and former CEO of the online trading and investment platform Saxo Bank.
The management team with Lone Fonss Schroer as CEO and her Fortune-500 positions in Marsk, Volvo Cars and Ikea; Uber and Silicon Valley Stealth Kjelstrøm Tech Startup´s Kåre Kjelstrøm as CTO, Jørgen Hauglund, the CFO with fortune 500 Maersk and ISS as well as banking top position background are ensuring that this is not a thinking process based blockchain as most are, but a blue chip piece of software which is absolutely best in class in terms of functionality, safety and usability. Professor Ueli Maurer, Head of the Information Security and Cryptography Research Group at ETH,Zurich; Simone Monnerat, an attorney-at-law, and civil law notary; Bjørn Krog Andersen,Head of Legal Compliance for Banking Circle; and Ian Zhang, who has more than two decades of experience in corporate finance are members of the Concordium Foundation board.
Concordium has a strong backing amongst traditional investors as well as with new tech/crypto investors.
IV. Tokenomics
The Concordium tokenomics model prioritizes the rewarding of Developers and Enterprise Partners with the Concordium native token CCD.
CCD has 10 billion CCD at launch and growth rate targeted long term at 2% per annum. As a native token of Concordium blockchain, CCD has many applications in the ecosystem. Such as network fees, payment token, staking reward and governance.
An underrated minus point in token allocation is that the number of tokens sold is too much compared to other layer 1 competitors, totaling 55.54% of the total supply. When the token is unlocked that will be a huge selling pressure. Instead, most of the supply should be used to incentivize programs or grants to attract more users and developers.
V. Evaluation On Concordium
Because of all of these aspects, Concordium has its sights set on the future. Concordium estimates that more and more businesses and individuals will wish to integrate their activity within a blockchain network. They are not the only ones who share this opinion. Its blockchain is focused on creating a framework that is compliant with regulators. Privacy, decentralization, as well as the smooth functioning of the network are other aspects that define the Concordium network. So far, over 225 nodes are operating with 2000-3000 new accounts registering per day, positioning as a leading blockchain in the enterprise blockchain market.
Having said that, as an investor, we should care more about the economy of the blockchain. Personal opinion, the token metric is quite bad for retail investors. But as the initial design, Concordium’s vision is to migrate business and enterprises to a trusted, public blockchain but with all benefits of a private one. Thus, the economic model is completely different from competitors in the current market.
