Why, despite the emergence of new technologies (both information — data transfer — and financial — blockchain and cryptocurrencies), is the world of modern finance still characterized by isolated networks for creating, storing, transmitting and exchanging values? Why, having entered the era of fast, easy, effective and cheap information exchange (the internet), have we still not entered the era of the Internet of Value? In this article, we will review this problem and show how technologies such as GEO Protocol can contribute to its solution.

Problem: Why there is still no full-fledged Internet of Value?

Over the past two decades, we have witnessed the explosive development of information processing and transmission technologies that have revolutionized many aspects of human life, including the economy, as well as our daily lives. At the same time, however, technology for transferring value remains to a large extent at the level, it was in the middle of the last century. Moreover, a significant part of the world’s population, even in relatively developed countries, still cannot access or do not use financial and banking services. In Africa, people already have more access to mobile communications than to banking and financial services.

This technological and social skewness cannot stay forever. Following the Internet of Information, the Internet of Money must come true, or in a broader sense, the Internet of Value, where the transfer of value will occur as quickly, easily and cheaply as the transfer of information occurs today. In addition, the entire global economy as a whole, and each of its participants, in particular, will be able to feel the results of the network effect in this sphere.

But what still stands in the way of this undoubtedly revolutionary innovation? After all, it would seem that there are no technological limitations to it: a high level of development and penetration of information, network, and mobile technologies; the fact that most of the money supply is already digitized (non-cash money); the globalization of the world’s economy — all of this would automatically lead to the emergence of the Internet of Value. However, we still see only its most timid rudiments.

Of course, these problems are primarily organizational and ideological in nature: financial market players are not in a hurry to overcome inertia, to change established methods of doing business and work patterns and so forth.

However, another compelling reason why the Internet of Value ​​still remains just a concept is that to date there has been no technology that would allow this to be put into practice.

Even the emergence and further development of innovations like blockchain and cryptocurrencies, which were created with the hope of sorting out precisely this issue, have yet to yield the anticipated results in this respect. The reasons why this has not happened are on account of the following: blockchains are just another alternative implementation of a value and/or asset registry, which, like other registries (for instance a bank registry, or of an exchange or payment system) is poorly or not connected at all with other value registries.

Of course, blockchain and cryptocurrencies perfectly solve the problem of trust in a payment system. Thanks to the use of blockchain, payment systems, and other value and asset registries build on this technology can get rid of the necessity to have an intermediary or an arbitrator that other participants have to trust, making such systems trustless. But this does not solve the problem of interaction and integration of these systems with other systems, even with those build on similar tech.

In this sense, blockchain-based ecosystems are not much different from traditional payment ecosystems. Even the most popular blockchains are completely incompatible with each other by default. In addition, most of them have scalability problems, i.e. natural technological limitations on transaction speed and cost. And despite the active development of Layer 2 solutions that are designed to overcome these restrictions, these solutions still do not solve the problem of interoperability even within the cryptocurrency market, not to mention the integration of this market with the world of traditional finance.

Thus, today we have many heterogeneous ecosystems (local networks of value transfer and exchange), which do not (or at least insufficiently) interact with each other. It is almost like if, instead of the global internet (the network of networks), we had only a bunch of unconnected or loosely coupled LANs (local area networks of information transfer and exchange).

Today the existing local networks of value are isolated with little or no interoperability.

A more correct analogy here would be as follows. We have a telegraph network, a postal network, a telephone network, and even several local digital networks but all of them are poorly connected or weakly interact with one another, or are not connected at all. You can use any of them, but you cannot send an email to a user of a traditional mail network, and a telegram will not be able to get to your phone. By the way, this is how it used to be in the sphere of transmission and exchange of information before the advent of the internet.

We now have exactly the same situation in the sphere of finance without the Internet of Value: we have many individual banks, we have payment systems, we have stock exchanges (both traditional and crypto), we have e-wallet providers, etc. We even have several blockchain-based cryptocurrencies and other value registries. In other words, we have a lot of local networks for value transfer. But they are all poorly connected or weakly interact with each other.

In the world of siloed networks, competitive spirit oftentimes outweighs cooperation incentives. However, the success of any given network soon reaches its limit, unless the network learns how to benefit from integration within the global ecosystem.

How people have tried to solve this problem up until now

In general, it has been possible to solve the integration and effective interaction problem of two separate payment systems (or, in a broader sense, value transfer, and exchange systems). But this sort of solution had a number of limitations, namely:

  • Each new participant would have to be integrated separately on an individual basis using custom solutions and, possibly, through lengthy negotiations and interaction between the developers/operators of each of the systems. The disadvantages here are obvious: the process requires a significant amount of resources (financial, organizational, technical), and also takes a large amount of time. And all of this is multiplied by the number of participants involved in this manner of integration.
  • Often this kind of integration is built on trust, which usually implies the presence of a third party that provides integration within some sort of local structure, and/or the validity of transactions.
  • Lack of a standardized integration solution (like the one the traditional internet has), which in turn makes it difficult for new members to join such an association, in particular hampers the creation of a network effect.
  • Given the above-mentioned points, the extreme difficulty/practical impossibility of connecting directly to such a network of small or individual participants (regular users) is evident. They are forced to do this through the mediation of large players, leading to the absence or extreme limitation of the network effect, as well as to excessive centralization, lack of trustlessness, and to the presence of unnecessary intermediaries, etc.

Creating a universal ecosystem for value transfer networks

So how can we solve the problem of creating a global network for value transfer and exchange?

Different value transfer networks need a universal solution that provides a technological opportunity to interoperate, to lower the costs and to accommodate the growing number of transactions with no speed or safety sacrifices. Such a solution should be open-source, support multi-equivalence, be lightweight, have high productivity and throughput, i.e. it should become, in fact, a network transport protocol for the Internet of Value.

This is the solution that the GEO Protocol is on track to deliver by developing an appropriate technology, which has the potential to become for asset transfer an equivalent of what TCP/IP has become for the ordinary internet.

GEO Protocol interconnects various isolated networks of value into the global Internet of Value

GEO is an open-source, easily scalable value transfer protocol for cost-effective (no network fee) and technologically simple value transfer that allows for combining both blockchain ecosystems and traditional finance systems.

GEO Protocol solves the existing problem of siloed networks by creating a universal infrastructural layer for seamless inter-network transactions. Local consensus (see below) and the absence of a common ledger let GEO overcome the throughput, speed and transaction cost limitations that the blockchain industry is currently facing.

The ability to digitize any physical and other non-digital assets in GEO, as well as their logistics, opens up completely new unique opportunities for all network participants.

GEO Protocol provides full atomicity (see below) of value transfer between various ledgers, allowing complex multi-hop transactions to be conducted atomically with several assets, as well as cross-chain transactions. Also, thanks to its architecture the protocol implement post-quantum cryptography for long-term sustainability and protection from existing as well as prospective threats.

Advantages of GEO Protocol over similar solutions

There are virtually no solutions today that are 100% similar to GEO Protocol, however, there are solutions that are similar in spirit, or are trying to solve some of the same problems. In particular, we can name Ripple and its subsidiary technology Interledger in this regard. Therefore, it makes sense to briefly consider some of the advantages of the GEO technology compared to these solutions.

Firstly, in GEO there is real decentralization. In Ripple, the common ledger is stored on a limited number of validators (some of them are even held by the Ripple company itself). This, in addition to centralization, also leads to a limitation of network performance. In GEO, all data on a particular transaction is stored exclusively on nodes directly participating in this particular transaction and nowhere else.

Secondly, in GEO there is distributed computing / local consensus. In Ripple, each transaction must be reflected on all nodes that maintain a common registry (the validators). In GEO, as mentioned above, transactions are displayed only on those nodes that are directly involved in a particular payment. Therefore, the GEO network can withstand virtually unlimited load (one million simultaneous transactions are calculated — not on the same limited number of nodes, but on different ones).

Thirdly, GEO enables the aforementioned atomicity — that is, ensuring the integrity of payment data in multi-hop transactions. The presence of real atomicity in a decentralized network of value transmission allows us to reliably complete transactions between different ledgers (cross-chain transactions) and applications without having to turn to third parties (any kind of intermediaries).

Unlike Interledger, where the cross-chain atomicity is not completely guaranteed, since it is based on the HTLA algorithm (which means that if a payment participant goes offline there may be failures in atomicity), GEO provides atomicity through the use of observing technology (a role played by the Observers), which excludes the negative consequences of such a scenario.

Fourthly, there is universal routing in a distributed network. If in the Ripple Network/Interledger this function is performed by special service nodes — the connectors — then in the GEO network the routing is performed automatically in a decentralized manner. This is performed by a node that initiates a particular payment according to special algorithms — topology collection, payment path building, and maximum flow prediction. [Add links to our articles on these algorithms]

Also, a GEO node is so lightweight that it can be installed on any device, even on some old smartphones. Its optimized technology in terms of consumed computing and network resources, as well as its standardization, provides the possibility to easily connect to the GEO network, not only for large players, for instance, operators of local area value exchange networks, but also for ordinary users should they wish to do so.

All this contributes to the emergence of a network effect when using the Internet of Value based on the GEO Protocol.

Additionally, GEO Protocol is not only a solution for integrating existing value exchange networks into the single Internet of Value — but the technology also enables the creation of full-fledged solutions from scratch based on the GEO Protocol.

The basic GEO algorithms are a kind of constructor kit that allows for building a wide range of different solutions, for example:

  • Payment systems
  • Decentralized cross-chain exchanges (cross-chain DEXs)
  • Automatic clearing systems
  • Billing systems
  • Rating systems
  • Physical and other non-digital asset digitization systems
  • Other dApps, etc.
GEO Protocol uses cases.

Being built on the basis of the GEO Protocol, such solutions will already be integrated into the global Internet of Value straight out of the box.

Conclusion

The emergence of the Internet of Value ​​is an inevitable and objective process. Until now, in addition to the inertia of certain traditional market players, there has been a lack of a universal technology that makes it possible, from a technical and economic perspective, to easily combine different value registries, both traditional and existing, and new and perspective.

GEO Protocol is exactly this kind of technology. Possessing a number of advantages and unique solutions, this open source tech makes it possible not only to create the global Internet of Value ​​by connecting existing local networks of value creation, transfer, and exchange but also to create new solutions from scratch that will be integrated into this universal network from the start.

The ease of integration and uniformity of the solution will allow for connecting to such a network for both large players and individual users, bypassing any intermediaries. This will significantly contribute to the emergence of a network effect that will exponentially increase the value of the system for all participants.