A year after Poramin’s return to Thailand, banks such as SCB and Kasikorn Bank began publicly talking about blockchain. “Around 2016, I thought it was the right time to leave the army and focus on Zcoin. People wanted to know about it.”
Zcoin, based on the Zerocoin Protocol, involves greater privacy and security than Bitcoin, which has pseudonymous transactions. Zcoins can be burned, disappearing on use and replaced by a serial number redeemable for new Zcoin with no transaction history. Poramin explained the difference in privacy.
“If I send you some Bitcoin, everyone is going to see that on the public ledger. Maybe they don't know who the address belongs to, but once they know, they are going to be able to map that and follow the trail from the beginning. With Zcoin, they will see that you are getting some Zcoin, but they won't be able to see that it's from me.”
Open-source software is one way that public trust can be established. “People can verify it and know that we don't track anything at all. Even the founder can't track anything. It's completely decentralized.”
While there is some worry that the privacy might help foster criminality, Sebastian Bausch, who works as a China liaison for the altcoin, played down such associations. “The idea of Zcoin is basically to recreate the privacy associated with cash and normal banking, where if I know your bank account number I can't see how much is in your account. That's just a basic privacy right.”
Zcoin is poised to lead the cryptocurrency field not only in privacy but also in ASIC resistance. ASIC (application-specific integrated circuit) resistance may be a great help in decentralizing mining. At first, Bitcoin could be mined by a simple home computer, then a graphics processing unit (GPU) was necessary, in turn now replaced by machines with an ASIC chip that specializes in calculations for mining. The chip production is dominated by a Chinese company. Now there are large farms that mine Bitcoin, many in China, which are energy intensive and jeopardizing the decentralized nature of Bitcoin.
“The miners are also the ones confirming the transactions,” Poramin explained. “The more users you have verifying the transactions, the more anti-fragile the platform.
“ASIC resistance means you won't need a specialized chip to mine Zcoin. So this network is going to be decentralized. The difference between an ordinary laptop and GPU is about 1,000 times, and the difference between GPU and ASIC is another thousand times. So in Bitcoin a laptop cannot compete against ASIC. Through ASIC resistance we want to minimize the gap, so not 1,000 times but 10 times or less than that. One problem with this, though, is that a guy can hijack computers and turn them into botnets [to further his own mining], so we want to make sure there's no advantage in doing that.”
The new algorithm to minimize ASIC took effect on December 10 last year, an update that impacted every Zcoin user. Early signs are promising. Although the early investor, Roger Ver, is also controversially involved with some of the mining companies involved in ASIC consolidation of other coins, Zcoin hopes to transcend the conflict with the new algorithm.
Experiments using Zcoin blockchain technology for practical purposes in elections and health care have already been made. The Democrat Party used Zcoin's blockchain in its recent re-election of Abhisit Vejjajiva as party leader.
“We send a Zcoin to the various wallets of party members,” Poramin explained, “and once they have it they can use it to vote for their preferred candidate. The candidates themselves can't track who voted for them, only the number of votes. That was the original idea. In this election, they wanted to be able to track the voting in order to be able to investigate later if there's cheating, or if there's hacking in the system, so they wanted to keep a public record. We helped the party representative decrypt this data. This needs the agreement of five keys, so without agreement from all no one can decrypt the data.”
In the case of health care, blockchain can be used as a decentralized database tied to national ID number that would remain immutable and could connect to other systems. Privacy would be maintained, Poramin explained, “because to access that data you need the permission of the owner of that data”.
In general in the e-commerce world, an initial variety of options usually reduces to a handful. A plethora of online markets have been reduced to one giant, Amazon. Social media options funnelled through Facebook, Twitter and a handful of others. China and a few other countries might have their own preferred versions, but the trend towards consolidation is usually the same. This same principle seems likely to happen with cryptocurrencies, and many will fall by the wayside as a handful become entrenched through usage and trust. In the planning or testing stages are several ways to ensure that Zcoin will remain one of the coins that survives in the main exchange platforms.
“That's one of the reasons I created Satang,” Poramin said. “It can make Zcoin more practical. It will help people use it in actual daily life. So when there's consolidation, Zcoin will already have a large user base. If it's for general use, Bitcoin will have a lot users. If privacy is an aspect, people will use Zcoin.
“The Satang app is basically an e-wallet that will be rolled out in May, pending approval from the Bank of Thailand. It will make Zcoin compatible and convertible with baht, so it can be used with the TrueMoney wallet and PromptPay. So the user can pay with Zcoin, for example, and the other party can receive Thai baht.”
Similar to Bitcoin, Zcoin has an upper limit of around 21.4 million mineable coins. So far, only 6.2 million or so have been mined, and Poramin estimates it will take 20 or 30 years to unlock the rest. Transaction speed, or blocktime, is currently around twice as fast as with Bitcoin, five minutes versus 10. This could be further accelerated, potentially to 2.5 minutes or faster, but it is first necessary to ensure security would not be compromised.
A token layer on top of Zcoin is also being developed. This will be a separate cryptocurrency tied to Thai baht, similar to Tether, a token tied to the US dollar. A security share offering by Satang, represented by a token, is also in the works. These tie-ins will help ensure Zcoin remains viable and one of the preferred means of exchange in a crowded field.
Satang is one of three digital asset exchanges that have been granted a licence in Thailand. Western regulators still have few laws for cryptocurrencies and the Thai Securities and Exchange Commission (SEC) is preparing the market for ICOs and STOs, or initial coin offerings and security token offerings. The market is separated between cryptocurrencies and digital tokens, and licences are different for exchanges, brokers and dealers, which meant it was necessary to have Zcoin and Satang as separate entities. Reuben Yap oversees daily operations of Zcoin as COO.
“There's talk about changing the law in Thailand to support digital currency forms, but it's going to take some time. The Stock Exchange of Thailand put in their roadmap that they want to explore this new market for digital assets. Cryptocurrency will come after digital tokens for existing companies, because the law currently allows that. The situation in Thailand is not far behind in terms of regulation for ICOs.”
One hope is that those efforts could dramatically boost Thailand's relevance in global finance. Not bad for a former hacker from Amnat Charoen.