Q&A Series: Provenance on the Coin
The following is a snapshot of a Q&A between Stephen Hill, CEO of World Reserve Trust and Prof Luc Moreau, Head of Informatics and Professor at Kings College London and Chief Scientific Officer advisor to World Reserve Trust.
Stephen Hill: Can you explain the various terms we use in our Whitepaper: Distributed Ledgers, Provenance, and “Provenance on Coins”
Specifically, what is a distributed ledger with respect to a digital currency?
Professor Moreau: At an abstract level, a distributed ledger replicates the functionality of a traditional ledger, recording transfer of a digital currency between wallets. Each entry in a distributed ledger describes a transaction. The inputs of a transaction are “coins”, with their denominations, in wallets; the outputs of the transactions are coins in destination wallets.
Technically, in a distributed ledger, coins tend to be uniquely identified by the unique ID of the transaction, and their “positions” in the outputs for that transaction.
If a coin appears in the input of a transaction, it means that the coin has been spent (i.e., transferred). If a coin appears in the output of a transaction, but not in the input of any transaction, it means that the coin is available for spending in the wallet.
Stephen Hill: What are the Key aspects of electronic ledgers?
Professor Moreau: Electronic ledgers offer strong mechanisms to ensure that a coin cannot be spent more than once (double spending avoidance).
Cryptographic algorithms are used so that only the owner of a coin can perform transactions with that coin and the electronic ledger offers immutable transaction records.
Stephen Hill: Can you explain where Blockchain fits with current distributed ledger convention?
Professor Moreau: A current aspect of cryptocurrency distributed ledger technology is that miners process transactions, verify them, and record them in a public record, called the blockchain. By successfully recording transactions in the public record, the miners create a consensus, allowing transactions to be confirmed. Bitcoin designed the mining process in such a way that 1) mining is increasingly hard, 2) miners are rewarded for mining blocks. Miners tend to be distributed across the network.
Stephen Hill: So do all distributed ledger technologies adopt such an approach?
Professor Moreau: Electronic ledgers may be more or less distributed, more or less permissioned while the function of mining seems to be common in most ledgers, i.e. checking and confirming transactions; not all DLTs adopt a reward mechanism.
Another important feature of Distributed Ledger Technology is the notion of “Smart Contract”, which is a computer program, not too dissimilar to a trigger in a database, which has the guarantee of being executed when some conditions hold.
Stephen Hill: We have introduced ‘Proof of Exploration’ to our blockchain and use smart contracts and serialized coins in our ‘WRTProv’ proof of concept prototype. Do existing distributed ledgers capture Provenance?
Professor Moreau: Yes! One would be able to construct a W3C PROV representation for each transaction. This PROV modelling of a DLT transaction displays the state of a wallet (wallet0) before transaction, and the state after (wallet1), and it shows the transacted coin (coin0) becoming (coin1) in the new wallet.
Stephen Hill: In our proof of concept prototype we illustrate unknown problems using visualisations and graphs.
Professor Moreau: It is my belief that all distributed ledgers can be converted to a similar W3C PROV representation, from which we can do searches, graph navigation, and queries.
Stephen Hill: Then is this equivalent to our offering of provenance on a coin?
Professor Moreau: No! The focus of distributed ledger technology is tracing the coin only. Provenance on the coin allows us to do much more.
Stephen Hill: World Reserve Trust has uniquely connected WRTProv with a distributed ledger, data visualisation and provenance on the coin.
What makes our offering special if all distributed ledgers can be represented by W3C PROV?
Professor Moreau: WRTProv is the combination of a digital currency with the provenance that…
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