Computer scientist, Yanislav Malahov and self-styled anarcho-capitalist, Andreas Kohl aim at recasting the foundations of today’s smart contracts.

With this aim in mind, they have created a software company called Aeternity. According to Malahov, it aims at increasing the speed, reliability and scalability of Blockchains by processing smart contracts in state channels, similar to side-chains. In most existing systems, all computations are performed on the main chain.

“Our Blockchain can give the people of this planet greater access to financial tools that can be scaled up, don’t crash or slow down,” Malahov says. “Aeternity also will allow real-world information to flow into the Blockchain, without relying on centralized sources.”

Libertarian paradise

Malahov established Aeternity in Liechtenstein in November after a chance encounter with the Principality’s Prince Michael at a tax conference in Germany. The prince, who Malahov said expressed an intellectual interest in Blockchain technology, suggested Malahov meet Andreas Kohl, a self-styled anarcho-capitalist and libertarian.

Malahov learned from Kohl and local regulators about the Liechtenstein’s banking industry and decided to establish Aeternity in the principality.

“There is a level of mutual transparency, accountability, and trust between entrepreneurs and government that you cannot get anywhere else,” said Kohl, who describes Liechtenstein as a libertarian utopia.

Godfather of Ethereum claims

Over the past six years, Malahov has collaborated with leading thinkers on cryptocurrencies and Blockchains, including Gavin Wood and Vitalik Buterin, co-founders of Switzerland-based Ethereum.

In a 2015 blog post, Malahov dubbed himself the “Godfather” of Ethereum. The post included a transcript of an instant-messaging conversation with Buterin to prove his crypto-lineage.

“I was kind of involved in Ethereum even before there was a name for it,” Malahov claims.

Malahov previously worked on the development of Bitalias, a Blockchain naming system, and on other projects with entrepreneurs such as McConaghy.

Born in Bulgaria and educated in Germany, Malahov said he became aware at an early age of economic inequality, hardship and the impact of financial market turmoil following the collapse of the Eastern Bloc.

“I always thought that something is broken here,” he said. “The financial crisis which we experienced only confirmed the point that Blockchain technology is the next big step we need to take as humans.”

Malahov believes that Blockchains and their related applications can make the global economy fairer and more inclusive for people underserved by traditional forms of finance and record keeping.

Noting that most of the people in the world are still not banked, Malahov says that the unleashing of Blockchain technology is one of the largest opportunities right now to give them access to a modern financial system.

Competitive industry

According to Malahov, Aeternity’s competitors include Gnosis, Synereo and Ethereum, the largest cryptocurrency platform after Bitcoin.

Aeternity tokens are planned to sell in the first quarter of 2017.

Development of Aeternity’s Blockchain includes an emphasis on a unified consensus mechanism, a system for smart contract storage and execution, with planned improvements in system governance. The coding is also on Erlang, an industry-proven programming language.

“Malahov's approach to decentralized processing elegantly addresses issues of scale, by taking the state channel approach to the nth degree,’’ Trent McConaghy, co-founder and chief technology officer at BigchainDB, said in an interview. “That makes it easier to connect emerging decentralized networks.”

Aeternity “could end up being the TCP/IP of decentralized processing," McConaghy said, referring to the protocols that govern communication between networks on the Internet.