Credo Whitepaper

Blockchain Based Spam & Email Access Solution

The Email Market

BitBounce, BitBounce Ads, Credo, & CredoEx

Stewart Dennis
Nishant Jacob
Marty Bauer

Turing Technology, Inc.
November 15, 2018

Abstract

Email is broken. Spam costs the global economy $20 billion per year and still accounts for 70% of all email. Existing regulatory and technological solutions have failed to eliminate the significant monetary cost and negative externalities of unsolicited email and spam. Additionally, email marketing is one of the most effective conversion channels yet advertisers and other email senders have difficulty targeting the right individuals and ensuring their emails are received and opened. Advertisers and other email senders also have no way to directly incentivize consumers to open and read their advertising emails and no way to avoid their emails being automatically routed to folders like “promotions” or “social” in popular email services like Gmail. Consumers have no incentive to open and read advertiser’s emails as they are sent for free. Consumers receive irrelevant email marketing due to the lack of incentives for advertisers to target their marketing emails due to email access being close to free. Consumers are not compensated for their valuable attention when opening and reading marketing emails. These problems with email present significant negative externalities and an inefficient mechanism of exchange for email access and email marketing. The solution is to establish a new market for email access and email marketing in which email senders contacting unknown recipients pay a fee for the email to be sent to the recipient, paid either when it is received or responded to. The fee prices in and compensates recipients for the attention they provide the email, improving senders’ likelihood of obtaining the attention. The solution is implemented in five components: BitBounce, BitBounce Ads, credo, CredoEx, and the Credo Blockchain. BitBounce implements filtering of emails from unknown contacts and the payment mechanisms for email receipt.

BitBounce Ads implements the sending of paid email marketing campaigns from advertisers to BitBounce users. The credo token is the primary unit of exchange that recipients are compensated with. CredoEx is a cryptocurrency exchange through which email users can easily realize the value of their tokens by converting them into other forms of value. CredoEx also serves as the platform through which those wanting to conduct paid email marketing campaigns via BitBounce Ads may purchase more credo.

1. Value Proposition

We propose the credo (pl. credos) as a token of exchange in a market for email access that seamlessly integrates with existing email accounts and infrastructure. The credo plus BitBounce[1] and BitBounce Ads solution provides:

  • Recipients: reduced spam in inbox, restored productivity, compensation for engagement with emails from unknown senders.
  • Senders: more reliable acquisition of recipient attention, improved access to recipients who are currently difficult and valuable to contact, greater ability to target relevant recipients, ability to route emails to user’s primary inbox for services like Gmail that automatically separate emails into “promotions”, and “social” folders, pricing information on the value of a recipient's inbox, (see 3.1 for discussion of the value of email access corresponding to sender-recipient pairings).

CredoEx strengthens this value proposition by allowing recipients to immediately realize the value of their tokens, and enabling senders to easily purchase tokens for paid email campaigns. The Credo Blockchain provides the scalable transaction infrastructure on which the BitBounce, BitBounce Ads, credo, and CredoEx systems operate.

2. State Change

The purpose of credo, BitBounce, BitBounce Ads, CredoEx, and the Credo Blockchain is to establish a global market for email that solves the problems of spam and email access. Given that email usage is fast becoming global with 3.8 billion email users already[2], solving these problems would create tremendous good through positively impacting a large number of people. Once we achieve this, we intend to expand beyond email and solve the problem of compensating people for their attention no matter where they spend it.

2.1 Starting State

The starting state is a world with free email and many negative externalities. We can discretize free email access into three separate classes, and then assess each class in turn:

2.1.1 Email between known contacts

Email between known contacts is generally fine. This case only becomes problematic if a known sender abuses email access to a recipient (e.g. sending an excessively long series of emails until a response is received).

2.1.2 Cold/unsolicited email

Cold emails take up time and cause loss of productivity. Specifically, they cause a number of negative externalities including but not limited to: lost attention and productivity, overload, difficulty finding the right information, lost time spent on archiving and deleting cold emails, and other general negative effects associated with spam and unsolicited email. These negative externalities have been estimated to cost the global economy $20 billion per year[3] and US businesses $712 per employee each year in lost worker productivity[4]. There is an additional societal cost of scam emails, such as the infamous “Nigerian prince” scams and phishing scams through which theft of information and assets can occur.

Cold emails constitute a significant portion of emails, with research finding 66 percent of email reaching user inboxes is spam despite aggressive spam filters[4]. Other recent estimates from experts at Microsoft and Google indicate that 70% of all global email is still spam[3]. Existing regulations, such as the CAN-SPAM Act, and technology solutions such as spam filters have been found to be largely ineffective at solving the problem[5].

Advertisers and email marketers are incentivized to and do send a high volume of cold emails because the cost of sending an email is near-zero and they lack effective targeting and engagement increasing mechanisms.

2.2 Goal State

The goal state is a world in which a market for email access has been established and participation in the market for email access is pervasive and global. With that market established, recipients will be sufficiently compensated for any cold/unsolicited emails they receive. Advertisers and other email senders will have the ability and incentive to target the right recipients and incentivize them to engage with relevant offers.

2.3 Path

2.3.1 Overview

2.3.1.1 Components

There are currently five components to the path between the starting and goal states:

  1. BitBounce is the software that facilitates the email market. It includes user interfaces for managing a whitelist, configuring settings such as the fee amount to reach an inbox, and viewing analytics, as well as a soon to be released mechanism to automatically update a user’s fee to reflect the demand for their inbox, facilitating market transactions. It also includes the background services for conditional email routing, whitelist synchronization, and blockchain transaction handling. This component is closed source and three patents have been filed to cover inventions involved in its implementation.
  2. BitBounce Ads is the software that facilitates paid email marketing campaigns sent from email senders to BitBounce users. It includes user interfaces for companies and organizations to compose and edit emails, target which BitBounce users the email campaigns will be sent to, set the maximum paywall price the email sender is willing to pay, set how much the sender is willing to pay for the campaign, whether it is a one time or daily campaign, and allows the sender to pay for their campaign. This component is closed source and a patent has been filed to cover inventions involved in its implementation.
  3. Credo is the means of exchange, unit of account, and store of value in the email market. It is primarily used to pay for emails to be received or responded to, maintain accounting for email transactions, and stockpile future access to email attention. It also allows entities to speculate on the valuable digital commodity[18] of email attention, creating a market for this commodity. Lastly, it is used to incentivize the adoption and continued use of BitBounce and CredoEx, and drive future investment for these technologies.
  4. CredoEx is a cryptocurrency exchange that facilitates liquidity for credo and the email market. It includes trading pairs primarily between credo and other currencies, tokens, and digital assets; currency pair categories for BTC, ETH, and miscellaneous pairs are also offered. Transactions in the BitBounce email market are immediately performed through or recognized into CredoEx wallets, so that earned credos are available for trading, storage or transfer right away. This component is closed source and a patent has been filed to cover inventions involved in its implementation.
  5. Credo Blockchain is the transaction infrastructure that will support BitBounce, BitBounce Ads, credo, CredoEx, and, in the future, many third party projects and tokens. It is a Proof of Stake blockchain designed to allow for large transaction throughput with minimal energy use, provide greater scalability, and facilitate lower transaction cost than most existing blockchains. This component will be open source.

These components constitute a comprehensive, vertically integrated solution for an email market that rewards attention.

2.3.1.2 Justification

There are two choices that require justification: 1) using a cryptographic token, and 2) creating and using the credo token.

For 1:

  1. The primary justifying reason to use a cryptographic token rather than a conventional currency is that token transactions can be confirmed in seconds or minutes rather than days and are irreversible which is necessary for timely authorization and delivery of emails to untrusted recipients.
  2. Tokens can also facilitate global micropayments at a fraction of the cost of traditional payment networks especially as scaling protocols continue to be developed for the underlying blockchains. Furthermore, tokens allow users who do not want to or cannot place their trust in centralized institutions (due to lack of access, expense, or institutional integrity) to receive decentralized payments for email receipt and the ability to withdraw these payments to their own software, hardware, or paper wallets at any time and avoid any issues with their funds being confiscated, misused, discreetly reinvested, frozen, or stolen while being stored with a centralized entity.
  3. Using a cryptographic token allows us to easily create and trade digital commodities representing access to email attention, allowing us to create digital commodities markets to reflect physical commodities markets, a vital step towards a more comprehensive digital economy.
  4. Aside from their enhanced security characteristics, cryptographic tokens also offer potential privacy enhancements as well and advantages for overcoming financial censorship.

There is a secondary, non-technological reason: the marketing benefit of using cryptographic tokens.

For 2:

  1. The justifying reason for creating the credo token is the need for more control over the dissemination of tokens, which incentivizes user and community engagement and growth. Redistributing Bitcoin or some other token to correspond to use of BitBounce seems infeasible. By creating a new token, we can distribute a much larger portion of the token’s total supply in a way that corresponds to usage of BitBounce (see 3.4).
  2. Another justifying reason to create our own token is that we can raise funds for BitBounce through selling a portion of the tokens.
2.3.1.3 Timing

The idea of using payments to solve spam has been around for a while[7], but it has only recently become feasible through the innovation of faster transaction confirmation times found in cryptographic tokens. That innovation combined with the emergence of blockchain technology to facilitate token creation makes now the right time to finally solve the spam and email access problems using this approach.

2.3.2 BitBounce, Credo, & BitBounce Ads

2.3.2.1 Spam Filter Use Case

The first use case for BitBounce is to act as a more effective spam filter, which solves the spam problem. This works as follows:

  1. A new user signs up and adds an email account.
  2. The user then syncs and/or manually adds contacts to a whitelist.
  3. Incoming emails received from addresses that are not on the whitelist are filtered to an email folder called unpaid, and an auto-response is then sent to the original email sender as illustrated in Figure 1.
  4. The auto-response asks the sender to do one of the following:
    1. Request to be on the whitelist, which puts their email address on the recipient’s whitelist with a button to approve their membership.
    2. Enter a recipient-generated promo code that will allow the email to go through for free.
    3. Pay the user’s fee for the email to go through.
  5. If the sender does nothing, the email remains in the unpaid folder.
Auto-response Email
Figure 1. Auto-response Email
2.3.2.2 Autopilot Use Case

The second use case for BitBounce is to automatically pay in credo for emails to go through to recipients. This reduces payment friction and still ensures the problems are solved because the inbox only contains emails from people you know or those you’ve been paid in credo to receive.

We have developed proof of concept consumer and enterprise versions of BitBounce Autopilot. The enterprise version works by checking the from-address of incoming emails against the company’s domain and then sending a credo to the recipient user when there’s a match.

2.3.2.3 Paid Email Campaign Use Case via BitBounce Ads

The third use case operates via BitBounce Ads and allows marketers and advertisers – such as event organizers, newsletter writers, entrepreneurs, political campaigns and other organizations – to compose and send paid email campaigns. These are emails sent to a large number of recipients with credo incentives attached to each email. These campaigns can be sent to BitBounce active users. We allow campaign senders to release incentives upon email delivery, and plan to allow incentives to be released when an action has been performed by the recipient. This user interface for composing and sending such campaigns is available via BitBounce Ads which was launched in Q3 2018 (see Figure 2).

BitBounce Ads Dashboard
Figure 2. BitBounce Ads Dashboard
2.3.2.4 Existing Email Accounts

One of our primary design goals is to improve the state of email with minimal disruption to users’ existing email experience. Users already have significant data in and habits formed around specific email services, and so we want them to be able to continue using their email setup of choice. This goal is accomplished through seamless integration of BitBounce with existing email accounts. As soon as a user adds an email account, BitBounce can sync their contacts to their whitelist and begin filtering spam (see 3.3 for early usage data). The user can then continue using their existing email client (e.g. Gmail, Outlook, etc.) with BitBounce operating in the background. In fact, we expect that many users will only rarely directly access the BitBounce dashboard (see Figure 3), especially as the plugins mature.

BitBounce Dashboard
Figure 3. BitBounce Dashboard
2.3.2.5 Plugins

In order to further accomplish the goal of improving users email experience with what they are currently using, we have developed plugins for Gmail (see Figure 3 for design) and will do for Outlook that allow for the attaching of credos to an email message (as per 2.3.4). These plugins also facilitate easier adding of addresses to a whitelist via an Add to BitBounce Whitelist button. Plugins for these services have already been developed for Turing Cloud[8], and the experience from developing them has been be applied to BitBounce plugins.

Design: BitBounce plugin for Gmail
Figure 4. Design: BitBounce plugin for Gmail
2.3.2.6 Mobile Apps

iOS[19] and Android[20] apps for BitBounce have been developed. These apps facilitate viewing a wallet balance, managing a whitelist, and configuring BitBounce. Our Android app now has 300,000+ installs with a rating of 4.36 out of 5 from 1000+ reviews. Our iOS app now has 1,000+ downloads with a 4.9 out of 5 rating from 15 reviews.

2.3.2.7 BitBounce Ads

The initial BitBounce products were largely developed for consumers – every day email users who receive too much cold email and would like to get compensated for it. In Q3 2018, we brought to market an enterprise edition of BitBounce that focuses on the Paid Email Marketing Campaign use case.

2.3.2.8 Scaling

There are two main systems to scale: BitBounce email processing and credo transactions.

  1. Scaling BitBounce email processing: much of the initial scaling of BitBounce can be done using experience the team gained from developing Turing Cloud and our other Elixir-based services. At some point, BitBounce can be switched to a new architecture that shards accounts across multiple databases, which would facilitate near infinite scalability.
  2. Scaling Credo transactions: We currently conduct some portion of transactions off the blockchain that will be settled when a wallet owner wants to withdraw credo; this has helped us avoid disproportionately large transaction fees for micropayments on the Ethereum blockchain. We intend to port all our products over to our own Credo Blockchain, which utilizes a Proof of Stake consensus mechanism allowing us to run all our transactions on chain with low fees and high throughput.
2.3.2.9 Success

We will measure the success of our solution to the spam problem by the percentage of all email accounts that have BitBounce active on them. We will consider our solution to the spam problem to be more successful as this percentage increases.

We will measure the success of our solution to the email access problem by the volume of paid emails sent via BitBounce Ads, which will indicate the level of activity within the market for email access that we have established. We will consider our solution to the email access problem to be more successful as the number of paid emails increases and the amount that BitBounce users earn increases.

2.3.3 CredoEx

2.3.3.1 Motivation

There are several factors that motivated the development of CredoEx, including:

  1. Community priorities: Following the credo token sale, our community of owners frequently expressed that exchange support and token liquidity were among their top priorities. Moreover, new BitBounce users would frequently inquire about how to convert their credo tokens into another currency such as dollars or bitcoins.
  2. Significant pain points when dealing with existing exchanges: While endeavoring to meet these community priorities, our team had significant challenges dealing with existing exchanges. One leading US exchange that we’d integrated BitBounce with suddenly cut off our API access without warning, froze our account, was unresponsive to our attempts to resolve the situation, and wouldn’t even accept a meeting with us. Another exchange would only list credo if we agreed to unreasonable, one-sided terms. Other exchanges charged exorbitant listing fees that went into the 6 and 7 figure range, and one exchange never listed our token after receiving a substantial listing fee payment.
  3. Significant deficiencies in existing exchanges: Moreover, we noticed various problems with existing exchanges including technological unreliability and unavailability, bad user experience, poor customer service, usage of questionable practices, weak information security, pandering to speculators rather than focusing on real utility, and sluggish market-leadership that hinders progress.
  4. Improving status quo for customers: Our team believed that we could improve upon the deficiencies of the status quo and provide customers with improved liquidity, product reliability, UX, etc. By doing so, our users and customers will receive more value from our service and our email market solution becomes more effective. We built CredoEx from the ground up using the highly scalable Elixir programming language implemented on the Erlang virtual machine. These technologies are designed for performance and throughput, providing CredoEx with a reliable architecture to optimize for availability and avoid technical downtime.
  5. Opportunity to make Credo a top cryptocurrency: By creating an exchange centered around credo with many trading pairs established between credo and other currencies, we will reinforce the value proposition for the token and help propel it to become a top cryptocurrency within the blockchain ecosystem.
  6. Facilitate large Credo purchases for use on BitBounce Ads: since we rolled out BitBounce Ads, CredoEx has allowed our team and our enterprise partners to facilitate purchases of substantial quantities of credo at market prices rather than relying on buying direct from our company.
  7. Create an efficient marketplace for the digital commodity[18] of email access: CredoEx has allowed buyers and sellers to efficiently trade credo as a digital commodity for email access. Physical commodities have advanced trading market places and infrastructure helping to facilitate the physical economy. For the digital economy to continue to grow, it is essential that we create advanced trading infrastructure to trade digital commodities of which email access is a valuable type that allows organizations and individuals to better leverage a key communication tool to drive growth of their digital products.

Given the above factors, our team decided to take this area into our own hands and build CredoEx.

2.3.3.2 Vision

Our vision for CredoEx is to create the world's premier cryptocurrency exchange that solves the major deficiencies in the product category. Additionally, this exchange provides the primary source of liquidity for consumers using BitBounce and enterprises using BitBounce Ads; consumers are able to easily sell credo they earn by receiving paid emails via BitBounce, and enterprises can easily purchase substantial quantities of credo from the market to fuel their paid email marketing campaigns on BitBounce Ads. Additionally, users can aquire credo to use a store of value or speculate on the future value of the email communication power unlocked by credo.

2.3.3.3 Goals

Our specific goals for CredoEx included the following:

  • Accept new users immediately.
  • Be lightning fast to get setup on.
  • Be extremely easy to use for beginners and experts.
  • Be extremely reliable and ready to scale from day one.
  • Have transparent, low fees and no hidden withdrawal/deposit fees.
  • Have powerful functionality for price analysis and advanced trading features.
  • Have a responsive and easy to use interface.
  • Have nearly no downtime, not lock users out and not prevent new users from signing up.
  • Comply with AML, KYC, GLBA and other applicable regulations.
  • List and provide liquidity for other tokens using a token-project-friendly approach.
2.3.3.4 Current Product

The current version of CredoEx is beautiful, fast, reliable, featuring a great user experience, and currently available at credoex.com. It supports four types of order: market buy, market sell, limit buy, and limit sell. It currently has fifteen trading pairs including credo / ETH, credo / BTC, credo / LTC, and a number of utility tokens serving as a gateway to the crypto-economy with more coming soon.

2.3.3.5 Roadmap

Our roadmap includes fiat support once we’ve confirmed a banking partner, additional trading pairs with many currencies and digital assets, support for stop orders, additional advanced trading features, and native mobile support. We are additionally researching and developing some potential innovations for CredoEx that we’re not ready to disclose at this time.

2.3.4 Credo Blockchain

2.3.4.1 Motivation

There are several factors motivating the development of the Credo Blockchain, including:

  1. Increase scalability and throughput while lowering cost: Current blockchain infrastructure is too slow and expensive resulting in many transactions for BitBounce, BitBounce Ads, and CredoEx needing to occur off-chain. This results in more centralization than is desirable.
  2. Re-democratize and decentralize mining: Current blockchain infrastructure is susceptible to mining centralization due to the use of Proof of Work consensus algorithms that, in order to effectively participate, require ASICs (specialized mining equipment) operated in areas with easy access to cheap electricity. This results in geographic centralization of mining, impacting the decentralized properties of blockchains.
  3. Develop domain-optimized infrastructure: Current blockchain infrastructure is not optimized for the email and advertising use cases.
  4. Expand economy: Creating a Credo Blockchain allows BitBounce to build a larger platform and economy for use cases beyond email and attention, allowing greater value to be built. This can also drive more advertisers on BitBounce Ads and earnings for BitBounce users from third-party token developers looking to grow adoption for their project.
2.3.4.2 Vision

Blockchain and cryptocurrencies have tremendous potential, but industry progress has been slower than many hoped for, primarily, due to limitations in blockchain infrastructure. We intend to develop the Credo Blockchain to fulfill crypto’s potential. Our vision for the Credo Blockchain is to create the world’s premier blockchain that is architected to overcome the scalability, cost, and throughput issues of existing blockchains. The Credo Blockchain will be seamlessly integrated with our other services including BitBounce, BitBounce Ads, CredoEx, and, in time, other third-party projects.

2.3.4.3 Goals

We intend to launch a testnet in 2018 and a mainnet in 2019. After sufficient testing, the mainnet will launch with all ownership positions in the credo ERC20 token ported 1-to-1 in the genesis block of the Credo Blockchain. We will then integrate BitBounce, BitBounce Ad, and CredoEx with the Credo Blockchain. Following the launch of our mainnet, we will work on adding third-party token support as well as smart contracts implemented via one or more Turing Complete programming languages.

2.3.4.4 Development Phases

Phase 1: Create a Bitcoin-like blockchain with a scalable PoS system allowing for greater throughput with lower transaction cost and lower energy use. This phase will be rolled out as a testnet and then a mainnet. This phase will also involve integrating the mainnet blockchain with BitBounce, BitBounce Ads, and CredoEx.

Phase 2: Build out third-party token support allowing other tokens and projects to launch on the platform, greatly increasing transaction volume.

Phase 3: Create full Turing Complete smart contract functionality to facilitate decentralized applications, and decentralized organizations, and various other forms of smart contract to be built on the blockchain.

Phase 4: Implement features such as sharding to further improve scalability.

2.3.4.5 Migration

All ownership positions in the ERC20 credo token will be migrated to the Credo Blockchain in the genesis block based on a snapshot of credo address, balance pairs on the Ethereum blockchain. The snapshot will be taken at a date and time close to the launch of the mainnet; any transactions made with the ERC20 token after the snapshot is taken will not be migrated to the Credo Blockchain.

2.3.4.6 Mining

The Credo Blockchain will operate on a Proof of Stake model, re-democratizing crypto mining, allowing anyone to own and operate a credo mine without having to buy expensive hardware. Miners will participate in validating blocks, not by solving computation puzzles like with Proof of Work systems used in blockchains like Bitcoin (and the current implementation of Ethereum) which requires large amounts of energy and specialized equipment, but instead by ‘staking’ or depositing a certain amount of credo and then voting on which block should be next along with other miners who’ve ‘staked’ or deposited credo to be able to participate in voting. Miners are rewarded for ‘staking’ some of their credo and participating in the voting process to help select the next block in the blockchain, but they are penalized if they abuse this voting power to attack the system, such as by attempting a double-spend attack.

2.3.4.7 Consensus System

One of the most critical components of any blockchain is the consensus algorithm. This algorithm dictates how the next block, which contains a set of transactions, in the blockchain is added and which blockchain is the valid chain. Deciding which block is next in the blockchain and which is the valid chain is a very powerful function. If one entity is able to add multiple blocks to the blockchain unilaterally or unilaterally claim which chain is the valid chain, this gives them incredible power as they now could carry out various types of attacks including ‘double spend attacks’ that allow them to trick merchants into accepting payments that they didn’t actually make and perhaps even the ability to rewrite the history of the chain.

Blockchains like Bitcoin and the current implementation of Ethereum use Proof of Work as a consensus system. Miners across the world compete to solve a computationally intensive puzzle which requires brute force random guessing of solutions and the first miner that solves this problem is given the right to add the next block to the blockchain. Since solving the computational puzzle is essentially random, though proportional to a miner’s computational power, the miner who gets to decide the next block in the blockchain is effectively selected randomly (though due to the concentration of mining power in areas with access to cheap electricity, certain miners can solve the computational puzzle more often, leading to potentially centralizing effects), ensuring no one entity has the ability to unilaterally decide which blocks will be included in the blockchain. The other miners are able to easily test if the miner who has claimed to solve the puzzle and thus the right to include the next block has actually solved the puzzle, allowing for system wide consensus on who gets to include the next block. The valid chain is determined by which chain is the “heaviest” or has had the most computations run on it (i.e. the longest chain).

The Proof of Work system described above is extremely energy intensive as it results in many miners trying to solve the same computation puzzles which get increasingly difficult over time. Proof of Stake systems have been developed to offer the same benefits of Proof of Work systems, namely that one entity cannot unilaterally decide which blocks are attached to the blockchain and which chain is the primary chain, but while consuming much less energy. Rather than solving computation puzzles to determine who gets to add the next block, Proof of Stake systems work by having miners lock up a certain amount of the currency in a security deposit which then gives them the ability to vote on a block that is proposed by another miner that was selected randomly and has also locked up a certain amount of their currency in a security deposit. If either the miner proposing the block or the miners voting on the block attempt to attack the chain by carrying out a double spend attack, the attacking miners’ security deposits are slashed as a penalty.

The Credo Blockchain uses a Proof of Stake system that requires miners to set aside some credo as a security deposit by sending a transaction of type ‘security deposit’. The security deposit must be maintained for a certain lockup period. As miners submit their security deposit transactions, all of the nodes keep track of the miners that have done so. If a mining node that has submitted a security deposit goes offline, it will quickly be no longer included in the mining process through use of a participation rate; this participation rate is time-bounded so that a miner can participate again after coming online for a period. If a mining node changes to a new IP address, it can submit an IP update transaction signed by the private key associated with its security deposit address in order to prove to and inform the other miners that they should be communicated with at the new IP address. In order to determine the next block in the blockchain a miner who has contributed a security deposit is selected pseudo-randomly to propose a block; this pseudo-random selection is deposit-weighted, participation-rate-weighted and deterministic so that all nodes will reach the same conclusion about which miner should propose the next block. If a miner does not propose a block before a specified timeout, another miner will be selected to propose it. The other miners then vote on the proposed block by broadcasting “vote” messages to other miners, counting the votes, and check whether a 2/3rds majority is reached for a given block. If a node detects that a miner votes on multiple blocks for a given block height and voting round, then a slashing transaction can be submitted and if it is verified then the miner that proposed the block or voted for the block would have their deposits slashed. If a withdrawal is attempted before the lock up period for the security deposit, the transaction is not processed. The miner that proposes the block earns the transaction fees of all the transactions contained in the block.

2.3.4.8 Transaction Fees and Expected Risk-Adjusted Returns from Mining

As part of the consensus mechanism, the miner that proposes a block that is successfully voted for and including in the blockchain earns all the transaction fees of the transactions contained in the block. Based on our models, miners may be able to earn $1,601.6 a week to $15,815.8 dollars a week depending on their relative stake even when transaction fees are as low as $0.0143 (which is a ten times cheaper than the current average Ethereum transaction fee), network capacity is as low as 0.05%, and the miner loses some amount due to deposit slashing (risk adjustment factor of 0.95X). Our model assumes there are 50 “casual” miners with a constant 5,000 credo stake and a constant participation rate of 50%, and 50 “professional” miners with five times the staked amount at a constant 25,000 credo stake and a constant participation rate of 100%. It also assumes blocks are validated every second, and blocks contain 2,000 transactions each. The “casual” miners stand to earn $1,601.6 a week and the “professional” miners stand to earn “$15,815.8 a week. These earning amounts are estimates based on our models and are not guaranteed or necessarily accurate and they can change based on a number of factors including relative stake size, participation rate, number of miners, transaction volume, transaction fees, network capacity and block size.

To illustrate this, if this a greater difference in stake size between the “casual” and the “professional” miners, let’s say the “casual” miner stakes 5,000 credo with a 50% participation rate while the “professional” miner stakes 50,000 credo (at ten times rather than five times the amount the casual miner staked) at a 100% participation rate, than the “casual” miner stands to earn $800 a week while the professional miner stands to earn $16,416.4 a week. If this disparity increases further to the “casual” miner staking 5,000 credo at a 50% participation rate and the professional miner staking 400,000 credo (the professional miner staking 80 times the casual miner) at a 100% participation rate we would have the “casual” miner earn $200 a week and the “professional” miner earn $17,217 a week. In future releases of the Credo Blockchain we may include a dampening function to decelerate the returns of staking a higher amount after a certain point in order to reduce centralizing effects.

The function used to calculate these earning amounts is based on the algorithm we use to determine the probability of a miner being chosen as the next block proposer (block proposers earn all the transaction fees of the transactions included in the block). This algorithm is a pseudo-random, deterministic, security deposit/stake amount weighted, participation rate weighted function. The probability of a miner being selected to propose the next block is:

2.3.4.9 Applications of the Credo Blockchain

Since the Credo Blockchain was developed to be scalable, have low transaction fees and re- democratize mining, it opens up a host of opportunities for miners, transaction senders, and applications. In fact, even with the network operating at less than 1% of its total capacity and an average transaction fee ten times lower than the Ethereum blockchain, miners can stand to earn hundreds or even thousands of dollars a week, proportional to their stake size, with no need for specialized mining equipment.

The initial version of the Credo Blockchain opens up opportunities for miners to start earning immediately by validating transactions. Transaction volume will initially be driven by BitBounce, BitBounce Ads, and CredoEx, applications with millions of existing users and requirements for a large number of transactions. This will ensure that miners will have a large volume of transaction to validate and earn from straight out of the gate. Over time, aside from transaction volume increasing from the growth of our products, other applications will also start using the Credo Blockchain as part of their transaction infrastructure, further fueling transaction volume for miners to earn from. The Credo Blockchain will also open up opportunities for individuals to send Credo to one another with much lower transaction fees than on the Ethereum blockchain, encouraging more activity in the Credo Economy. Applications are also able to leverage the transaction infrastructure of the Credo Blockchain by posting transactions to the blockchain. These applications can manage payments via the Credo Blockchain rather than relying on the traditional payment processor networks or more expensive and slower blockchains.

Applications can also rely on the Credo blockchain as an immutable source of truth for any type of transaction by storing the hash of the transaction on the Credo Blockchain, this could include ownership deeds and titles. Future versions of the Credo Blockchain will have smart contract functionality, allowing developers to launch their own tokens and build their own decentralized applications directly on the blockchain. As we build out smart contract functionality, applications built directly on top of the Credo Blockchain will use it for far more than just their transaction infrastructure but also for their storage infrastructure, application logic infrastructure and beyond, further helping to fuel transaction volume. One of future goals is to improve the state and scalability of blockchain storage. Decentralized applications that could be built on the Credo Blockchain in the future could include decentralized marketplaces for jobs, decentralized organizations, decentralized identity management, decentralized prediction markets, decentralized file storage, decentralized computing power markets, decentralized exchanges, decentralized credit score systems, decentralized insurance systems, and decentralized asset management portfolio tools.

2.3.4.10 Implementation details

The Credo Blockchain is built on an efficient p2p communication layer with a websocket and data streaming transport protocol. This means that a socket is maintained between peer nodes and block bodies are streamed in chunks rather than sent all at once. The Credo Blockchain has various mechanisms for managing miners participating in the Proof of Stake consensus process. Any node in the network can become a miner through issuing a security deposit of credos that will be held for a minimum period of time. Once the security deposit is validated and a given number of blocks have passed, that node can begin voting on new blocks and proposing blocks when it is selected to do so. If a mining node goes offline, other mining nodes will quickly discontinue including it in the set of miners that could be chosen to propose a block through decreasing its participation rate; that participation rate will quickly recover when the node comes back online and start voting again. If a mining nodes changes to a new IP address, it can submit an IP update transaction signed by the private key associated with its security deposit address in order to prove to and inform the other miners that it should be communicated with at the new IP address. If a withdrawal is attempted before the security deposits timelock has expired, the transaction is not processed. Miners can also be removed if they are penalized for voting on multiple blocks at the same time, which can happen through another miner submitting a transaction containing a proof that the miner signed votes for multiple blocks for a given block number and voting round. These mechanisms allow for the addition and removal of miners, as well as updating their state so that they can be communicated with and included appropriately.

The Credo Blockchain has a set of mechanisms for proposing and voting on blocks. In order to determine the next block in the blockchain, one miner who has contributed a security deposit is selected pseudo-randomly to propose the next block. This selection is deposit-weighted so that miners with a higher stake will get to propose more blocks, participation-rate-weighted to avoid calling on offline nodes, and deterministic so that all nodes will reach the same conclusion about which miner should propose the next block. If a miner does not propose a block before a specified timeout, another miner will be selected to propose it through updating the pseudo- random selection to be seeded by a retry count. When a miner successfully proposes a block, it is compensated with the sum of transaction fees for all transactions in the proposed block through a special transaction. Once other nodes receive the pending block, they cast and broadcast votes to other miners. When a sufficient number of votes has been received, miners count the votes and check whether a block has received a supermajority of votes weighted by stake size. If a block has a supermajority of votes, miners will broadcast it to all nodes as the confirmed block; if no block has a supermajority of votes, miners will vote again. These mechanisms allow for blocks to be proposed and voted on to achieve network consensus on the valid chain.

The Credo Blockchain will also support a finality threshold after which a node will not accept a new block that has a chain excluding blocks before the finality threshold. New nodes will also receive a hash of the valid chain from seed nodes when bootstrapping to ensure they sync with the correct chain. Future phases of the Credo Blockchain will add third-party token support, Turing Complete smart contract functionality, sharding, and other innovations.

3. Economy

One main goal of the products outlined above - BitBounce, BitBounce Ads, CredoEx and the Credo Blockchain - is to create a robust, synergistic, platform and economy for a number of inter-connected players, including: paywall users, advertisers, other email senders, administrators, credo traders, credo developers, and credo miners. We can explore how each one of these players interacts synergistically with the Credo Economy:

  • Paywall user: These are individuals who have signed up for the BitBounce product and have authorized the BitBounce application with their email account. They have either set their paywall to the default dollar amount of credo or to a custom amount. If they are using BitBounce primarily to avoid spam they are likely to set a high paywall amount and if they are using BitBounce primarily to earn additional income they are likely to set a lower paywall amount that is more likely to be met by an advertiser or other email sender. Paywall users provide the synergistic value add of contributing the supply of email attention, which is the commodity that those sending BitBounce Ads transactions acquire, and by providing the supply of credo, as they liquidate their email earnings, on CredoEx for BitBounce Ads advertisers or Credo Blockchain stakers to purchase.
  • Advertiser: These are individuals or organization that have signed up for the BitBounce Ads product. They use the BitBounce Ads products to compose and send paid email campaigns to BitBounce users using targeting options like geography, engagement, and interest - among others. Advertisers provide the value add of contributing the demand for email attention, transaction volume on the blockchain, demand for credo on CredoEx and other markets for use in paid email campaigns.
  • Core Developers & Administrators: These are individuals that own, or help operate the BitBounce products including BitBounce, BitBounce Ads, CredoEx, and the Credo Blockchain. Administrators provide the synergistic value add of maintaining the economy and building new innovations in it. They also receive 30% of all credo sent from advertisers to BitBounce users and use some portion of this to fund their activities.
  • Credo trader: These are individuals that buy credo from BitBounce users and credo miners who are attempting to liquidate it and sell it to email senders who are looking to buy it. They also help facilitate liquidity across all the credo trading pairs helping to ensure credo is easily accessible to email senders and miners no matter what currency they wish to purchase it with.
  • Credo developer: These are individuals that build applications on top of the Credo Blockchain or CredoEx. They provide the synergistic value add of bringing new use cases and tokens to the economy.
  • Credo miner: These are individuals or organization that stake credo to participate in the Proof of Stake system of voting for the next block in the blockchain subject to penalties if they attack the system. They provide the synergistic value add of maintaining the Credo Blockchain so the other services can function effectively on top of it and the credo coin maintains its immutability, censorship resistance, and decentralization.

4. Distribution

4.1 Psychology Behind Adoption

Here is a look at the economic rationale for each party in using BitBounce and BitBounce Ads:

  • Recipients who sign up to use BitBounce will have to specify or accept a default price at which unknown senders can email them. Given that recipients have specified or accepted such a price, they have determined a value for their attention and a corresponding price at which they are willing to receive or respond to such emails.
  • Senders will be able to see the price at which someone is willing to read or respond to their email. If a sender decides to send an email for a given price, then they have judged the value of the recipient’s attention or response to be worth the cost.

Email senders find great value in being able to send relevant communication to recipients who have opted in to receive this communication and be able to target higher value inboxes for more exclusive offerings. Advertisers also appreciate the ability to have their emails delivered to users’ primary inboxes for services like Gmail where emails are automatically sorted in “social”, “promotional” or “spam” folders and are missed. Advertisers value the ability to incentivize recipients to engage with their emails and to make use of powerful psychological phenomena like reciprocity.

4.2 Viral Marketing Effect

BitBounce has a viral marketing effect via auto-responses, and whitelist notifications. In data from early adoption, this effect has been non-trivial.

A secondary viral effect exists in the creation of backlinks to our bitbounce.com domain, which has increased quickly according to Alexa[17] with 6,630 top sites now linking to our domain including 8 of the top 10 global domains. This effect contributes to our domain authority and organic search traffic. In fact, Alexa now ranks bitbounce.com as the 12,344th most popular domain globally.

4.3 Growth in Fundamentals

We define an active user (DAU) of BitBounce to be a user account that meets the following conditions:

  1. The user has at least one email account.
  2. The BitBounce spam filter is enabled on the user’s email account(s).
  3. Access to the user’s email account has not been revoked.

As of November 1st 2018, we can disclose that BitBounce currently has a user base of 749,008 daily active users that is growing at a rate of 18% MoM. At current growth rates, it is not uncommon for BitBounce to add 10,000 or more new users to the economy within a 24-hour period. The metric we place highest priority on is active user growth because we expect this growth in fundamentals to be the primary cause of increased transaction volume and the success of our solution in bringing about the goal state.

Chart and Metrics are as of November 1st, 2018
Figure 5. Chart and Metrics are as of November 1st, 2018

4.4 Transaction Volume

Paid marketing emails sent via BitBounce Ads to BitBounce users has seen growing transaction volume. As of the time of writing, over two-million paid emails have been sent to BitBounce users using BitBounce Ads, this has resulted in BitBounce users earning millions of credo. These early indicators suggest that the BitBounce Ads could drive large amounts of credo transaction volume on the Credo Blockchain.

4.5 Reward Mechanisms

BitBounce stakeholders (contributors and shareholders in Turing Technology, Inc) were issued an allocation of credos in proportion to their contribution and/or ownership of the parent company. Participants in the token pre-sale and sale were rewarded with credos in exchange for financial contributions in ether (ETH).

4.6 A New Email Standard

Ultimately, we aim to distribute credo by establishing the token as a new standard in email. We will work to establish this new standard technologically through developing extensions to existing email protocols such as SMTP and IMAP. Our non-technological standardization efforts will focus on developing global recognition and trust in credo through transparency, accountability, and continued innovation leadership.

4.7 A New Tradition-Based Norm

Gift giving is an ancient, cross-cultural tradition to demonstrate respect for an elder or superior. This custom has been lost with digital relationships, but now credo is the modern revival of the honorable custom. We aim to establish a new norm grounded in ancient tradition in which you send credo to respect and honor your recipient’s time.

We will seek to establish this new norm through a marketing campaign that brands credo as the Token of Respect™ and encourages people to Send the Token of Respect™[11].

Send the Token of Respect campaign
Figure 6. Marketing graphic for the Send the Token of Respect™ campaign

Token Dynamics

5.1 Blockchain Implementation

Credo is currently implemented as an Ethereum-based token[12] on the Ethereum blockchain. Credo complies with the ERC20 token standard[13]. In 2019, all ownership positions in the credo ERC20 token will be ported 1-to-1 in the genesis block of the Credo Blockchain.

5.2 Total Supply

The total supply of credos was determined during the credo pre-sale. 1.37 billion credos were created in total. To be precise, 1374729257.2286 credos exist.

Credo account totals are stored on the blockchain to 18 decimal places, so the smallest unit of account for credo is 0.000000000000000001 CREDO.

5.3 Non-inflation

There will be no inflation in credos. The credo smart contract does not permit any new tokens to be created. Additionally, the Credo Blockchain will operate with a zero-issuance model in which miners are paid only the accumulation of transaction fees in a mined block.

5.4 Division of Tokens

The project maintains the following pools of tokens:

  • A user growth pool of approximately 30% of tokens that is intended for bootstrapping the BitBounce network.
  • A general company expense pool of approximately 14.5% of the tokens that will be used to fund general company operations.
  • Pools of unsold and re-purchased tokens that will be sold at a later date.

5.5 Pricing

The market will set the price based on the price traded on cryptocurrency exchanges. We may contribute to market making activities in accordance with internal protocols we are developing. We may also set the price of token offerings through an analysis that includes comparable token valuations, the current secondary market prices, future prospects for the token, and other factors.

5.6 Team

We now have a strong team of 14 full-time and 1 part-time team members. Here are the full time team members and investors:

  • Stewart Dennis is the co-founder and CEO. Stewart is an entrepreneur, inventor, and engineer. He holds British and U.S. citizenship and is the co-founder and CEO of BitBounce, where he has lead the invention and development of a product portfolio that includes the BitBounce email paywall, BitBounce Ads advertising service, Credo token, CredoEx cryptocurrency exchange, Turing email services, and, now, the Credo blockchain. He holds a degree in Computer Science from Stanford University and has substantial career experience in entrepreneurial and engineering management, software development, and technical innovation. Stewart has domain expertise primarily in blockchain, advertising, email, distributed system, crypto-economic, and exchange technologies. He has family roots in Edinburgh and the Bay Area, and lives in Redwood City with his wife, daughter, and Old English Sheepdog.
  • Alexis Dennis is the co-founder and Chief Design Officer for BitBounce.
  • Tim Draper is an investor in BitBounce and originator of the concept. He is the founding partner of Draper Associates and DFJ.
  • Oleg is the Chief Technology Officer.
  • Nishant Jacob is the Senior Product Manager. He has a degree in Science, Technology, and Society with concentrations in Human Computer Interaction and Product Design from Stanford University and works on product, compliance, and strategy for BitBounce and CredoEx. He has previously worked in the big data industry as one of two lead PMs on a product with over $100 million a year in revenue and is currently pursuing a certification as an Ethereum and Bitcoin professional.
  • Nick is the Lead Front-End Engineer.
  • Ivan is the Senior Back-End Engineer.
  • Sergey is the Senior Full-Stack Engineer.
  • Marty Bauer is the Director of Business Development.
  • Zaid is the Customer Success & Compliance Lead.
  • Divya is the Quality Assurance Lead.
  • Ramin is the In-House Counsel.
  • Ninad is the Data Engineer.
  • Sergey S is a Back-End Engineer.
  • Mark is the Test Engineer.
  • Devin is a Strategic & Content Marketer.

5.7 Community

A strong community has grown around credo, with community members interested in providing feedback and evangelizing usage of the token and product.

We currently maintain the following community groups/channels:

5.8 Compliance

The team behind credo has hired a full-time in-house counsel to ensure full compliance. However, the emerging cryptographic token space is sparsely regulated right now. Our goal is to be as compliant as possible within such a regulatory environment, and some have raised the possibility that US securities regulations could apply. For the question of whether they apply, the appropriate framework is the Howey Test established in SEC v. Howey[14]. Our understanding and interpretation of this test is based on an outside and independent legal review conducted by a top US based law firm at the time of the initial credo token offering, as well as subsequent analysis performed by our in-house counsel. That review concluded that credos do not pass the Howey Test because 1) ownership of credo does not provide any ownership or related rights in a company, 2) credos are deployed in production and have real utility via BitBounce services, and 3) credos serve a distinct function more akin to application credits than a financial instrument. That said, the contents of this document do not constitute legal advice and we encourage prospective purchasers with concerns to consult with an attorney. We expect the regulatory environment to evolve as the cryptocurrency space matures and we will take appropriate and reasonable measures to maintain compliance.

5.9 Risks

As with any cryptographic token, significant risks exist. These risks include potential failures in the still new Ethereum and credo platforms and with BitBounce technology. Prospective token purchasers ought to thoroughly assess the involved risks and know that possibilities involving a catastrophic failure in underlying technology that wipe out token value could happen. These risks will be further covered in the terms and conditions for the sale.

We will endeavor to mitigate risks relating to BitBounce and credo technologies through rigorous testing and through using credo bounties for identification of security vulnerabilities.

Operating CredoEx introduces a number of additional risks to the project. The most significant of such risks is the possibility of a hacker stealing digital assets held on behalf of users. We will mitigate the risk of digital asset theft through securely storing the vast majority off funds away from our production servers. A second significant risk area relates to being exposed to further regulation and associated obligations; we have hired a compliance officer and will build out a team dedicated to maintaining full compliance.

5.10 Smart Contract

The smart contract for credo is available on GitHub[15]. In order to ensure security, the token is based on the ERC20 standard with minimal deviations coupled with inspiration from other ERC20 tokens such as the Ethereum token tutorial, the FirstBlood token, and the BAT[16].

5.11 Token Sales

The credo pre-sale took place from June 2nd to June 12th 2017 and over 26 million credos were sold for 260.79 ETH. The credo token sale took place from July 26th 2017 until September 1st 2017 and over 118,545,571.228 credos were sold for 31,595.3015 ETH. Our team may conduct additional minor or significant sales of credo from our reserves in order to meet future capital requirements or to grow the Credo Economy. Such sales may occur through private sales, public sales and routine market making.

The second credo token sale is slated to occur in 2019 to help fund development of the Credo Blockchain as well as accelerate the development and global expansion of the Credo Economy. The token sale would allow people to acquire credo outside the limited amounts available on exchanges for use in ‘staking’ as part of the Proof of Stake mining process on the Credo Blockchain, for use in sending emails on the BitBounce Ads platform, and for future utility products developed on the Credo Blockchain. The target proceeds size is $100 million.

5.12 Use of Proceeds

The token sale proceeds have enabled us to operate with an expanded budget, and thereby grow our team and marketing budget. Specifically, we have pursued several primary goals in our use of proceeds, including:

  • Improving the BitBounce service through product improvements, recruiting VIPs for email access, customer support, partnerships, etc.
  • Acquiring market share through additional viral growth mechanisms, paid marketing, advertising, PR, etc.
  • Defending against threats via security enhancements, use of encryption, proactive defense against any advanced persistent threats, protecting our trademarks and the IP of our inventions, etc.
  • Research and development via testing new ideas and potential innovations that we can bring to market.
  • Creating CredoEx by building and scaling a world class exchange incorporating Bitcoin support and integration 15 trading pairs.
  • Creating BitBounce Ads by building and scaling a world class self-service enterprise advertising product that can manage campaigns with tens of thousands of dollars in budget.
  • Scoping out the Credo Blockchain project by researching our approach to infrastructure and consensus, and implement a working version.

We will also use the proceeds for miscellaneous operating expenses and to establish the project and related entities on a firm financial footing going forward.

6 Credonomics

A new market for email access has been established via the credo-BitBounce-BitBounce Ads-CredoEx solution. This market has various atypical dynamics and properties that derive from its structure. Providing participants with an informed understanding of the market will help them operate successfully within it. This section presents a step towards that end: a clear description of this new market and the benefits of early participation in it.

6.1 Market

We operate within a social economy in which many participants make exchanges via markets. Communication between participants in this economy is needed in order to conduct exchanges. Entities that develop products need a reliable way to reach out to consumers to purchase these products. Advertising is key to the growth of the economy and the ability for producers and consumers to interact. Prior to BitBounce and BitBounce Ads, initiation of such communication between advertisers and consumers often occurred through unsolicited communications. With BitBounce Ads and BitBounce, such communication can be initiated between market participants in a more efficient manner via financial exchanges in the form of credos. Before BitBounce and BitBounce Ads, unsolicited and spam communications also had close to zero cost, allowing for large market externalities.

6.2 Exchange

The abstract concept of this market is instantiated via an exchange built on top of the existing email infrastructure. This exchange blockades communication access between unknown parties and then trades access to the inbox for credos when a payment is made.

6.3 Participants

The participants in this market are email senders and email recipients. Email senders are the buyers because they buy access to recipients’ inboxes. Email recipients are the sellers because they sell access to their inbox. Email senders may buy access to many inboxes and recipients may sell access to their inbox to many sellers.

6.4 Tradable item

The tradable item in this market is email access, which is the ability to send an email to a recipient’s inbox. Ownership of email access is defined on a per-email-account basis with an owner being an entity that is able to legitimately authenticate and control the email account.

6.5 Value of Email Access

6.5.1 Goal-directed interpretation of value

Economic behavior can be viewed as goal-directed even when these goals are implicit, chaotic, or intended to not be goal-directed. With this view, value can be seen as a measure of the degree to which a particular economic behavior or action contributes towards a goal. For example, a recruiter may have a goal of recruiting candidates for a new position; email access to strong prospects for that position has value because it helps the recruiter accomplish the goal.

6.5.2 Value relativity

The value of email access is relative to sender-recipients pairings for a given email. This can be illustrated by a straightforward example. Let’s say an email recipient is an executive within a niche industry. When that email recipient is paired with an email sender who is a salesperson for a niche product targeted exclusively at that industry, email access is of high value. However, when that email recipient is paired with an email sender who is a random person selected from the general population such as a surgeon based in a different geographic region, email access is of low value. That said, the overall market value for a recipients’ email access can be viewed as the average — or another aggregate measure — across prospective senders.

6.5.3 Value fluctuating based on changing economic context

The value of email access will fluctuate depending on changes in economic circumstance for the sender and recipient. Let’s illustrate this observation with an example:

  • Let an advertiser for a cryptocurrency exchange be the email sender and a relevant consumer trader prospect be the email recipient.
  • If a new exchange or features on the exchange opens up that the advertisers wants to communicate to the prospective consumer trader, the value of email access to that email recipient increases.
  • If an advertisers reaches their required growth goals then then the value of the email access decreases.

Therefore, the value of email access for a given sender-recipient pairing is continually fluctuating depending on changes to the current state of economic reality.

6.6 Pricing of Email Access

Prior to BitBounce, this value was not priced into email exchanges. BitBounce implements a price for this value.

5.6.1 Credo-denominated

Prices for email access are denominated in credo. An equivalent fiat figure may be provided to buyers until such time as they have become accustomed to credo-denominated prices.

6.6.2 Threshold price

Sellers set or accept a threshold price at which they agree to sell email access. Payments below this threshold price will not result in email access being purchased.

6.6.3 Prioritizing price

Amounts paid beyond the threshold price can be viewed as a prioritization price to further increase the priority of an email for the recipient. This could be useful if an email sender would like to initiate communication with a recipient about an urgent matter and would like the recipient to receive and respond to the communication more quickly.

6.6.4 Price-value differential problem

One economic problem within this market is to ensure that the price of email access for a recipient corresponds to the value. In other words, the problem is to minimize the difference between the price and value of email access across the market.

6.6.5 Price-value differential solution

One solution to this problem is to implement an optional mode for BitBounce in which the threshold price is automatically adjusted based on the demand for that recipient. For instance, if a recipient receives a large number of paid emails with prices above the threshold then the threshold could be automatically increased; and if the user receives a dearth of paid emails then the payment threshold could be automatically decreased. This algorithm could incorporate user preferences coupled with well-tested default behavior.

6.6.6 Pareto distribution for price threshold hypothesis

One hypothesis is that algorithm-adjusted payment thresholds across the market will fall along a Pareto distribution in which some recipients have a very high price for contacting them, and many will likely have a sub-cent threshold price.

6.7 Medium of Exchange, Unit of Account, and Store of Value

6.7.1 Credo

The medium of exchange within this market is credo, which is a cryptographic token hosted on the Ethereum blockchain. Credos are primarily used to pay for emails to be received or responded to, maintain accounting for email transactions, and stockpile future access to email attention. Credos have a price denominated in other currencies based on exchange trading activity.

6.7.2 Credo ownership

Credo ownership is defined as secure storage and management of private keys associated with addresses that have credos. According to Etherscan there are 90,062 Ethereum addresses holding credo today. There are also hundreds of thousands of CredoEx wallets that have Credo. These are numbers that stand out above many other top tokens with credo ownership distribution being potentially significantly higher than BAT, REP, ZRX and others at the time of this writing. The introduction of the Credo Blockchain will only increase this distribution as more people join the credo community in order to participate in staking.

6.7.3 Credo supply

The total supply of credo is fixed at 1,374,729,257.2286 tokens. However, subsets of the total supply are of more practical relevance. There is a smaller for-sale supply compromised of the portion of the total supply that owners are willing to sell; this is probably a strict subset of the total supply given that some portion of owners will likely choose to hold their tokens. Furthermore, there is a for-sale supply at a given price, which is the quantity of tokens that owners are willing to sell at a given price point.

6.7.4 Credo demand

The demand for credo is the amount of interest in purchasing credo at specific prices. There are various factors that may increase demand for credo. One significant factor is the acquisition of additional senders to the market who require credo in order for their emails to go through. Another significant source of demand for credo has been introduction of the BitBounce Ads product with companies and organizations purchasing credo in bulk in order to be used in mass, paid email marketing campaigns that enable higher user engagement and open rates. Demand can also be increased through buying back tokens from the market. Some portion of credo tokens will be used as a store of value and some for speculation on the future value of the communication power enabled by credo leading to increased demand as well. Certain portions of credo may also be used as a means of exchange and a unit of account within the email domain and outside of it as well as a broader currency. Trading activity could also increase demand. Since, BitBounce will charge a credo transaction fee for each transaction in the email marketplace and CredoEx will charge a credo transaction free for transactions on the exchange, credos will leave the circulation pool reducing the available supply of remaining credo.

6.7.5 Credo pricing

The combination of the supply and demand will result in an exchange-determined, decentralized market price for credo. This price could be influenced by owners who play the role of market maker, yet even they would be bought out at a given price if there is sufficient buy pressure (hence supply and demand principles still hold).

6.7.6 Credo liquidity

Credo’s liquidity is determined by a number of factors including which exchanges credo is listed on, the buying and selling activity of owners, and the activity of market makers. credo’s liquidity can be expected to improve over time as it gains wider adoption and support from additional exchanges. We also intend to gradually increase the liquidity of credo markets offered on CredoEx.

6.7.7 Credo necessity

As adoption of BitBounce grows, credo will increasingly become a necessity for economic actors to initiate communication. This can happen because the portion of potential unknown recipients that senders can contact without paying credos will gradually decrease to the point at which it may become infeasible for senders to accomplish their economic goals without credo; in this case, credo ownership and usage would become a necessity.

6.7.8 Credo as a digital commodity[18]

Our economy is run on commodities like wheat, steel, and oil. It is essential that these commodities are financialized so that they can be traded allowing prices for these commodities to remain stable and capital to be provided for investment into manufacturing these commodities. Currently, essential digital commodities like distributed cloud storage, access to email inboxes, or distributed computing aren’t efficiently financialized. Utility tokens like credo allow for the financialization of critical commodities for the digital economy like attention, access to email inboxes, and future digital communication power. Credo provides a way to trade these digital commodities in a marketplace in a decentralized manner to help build the digital economy more efficiently.

6.8 Early Adoption and Market participation

With most new markets and products, early adoption only yields unfortunately worthless bragging rights. With the email access market, early participation confers significant advantages. Specifically, the analysis in 7.3 and 7.4 indicates that growing participation in the market should create more demand for credo and may increase the price. This means that early adopters will be able to purchase credos as a discounted rate from the potential future price. Therefore, once the market has gained more widespread participation, early adopters will have far greater buying power for email access and will be able to communicate much more effectively in this economy. So, the size of conferred future advantage may be inversely proportional to the stage of market adoption at which a participant enters it (assuming that the participant purchases credos on entry and does not liquidate them prior to use in the market). This effect has already occurred in the case of some larger quantity email senders on the BitBounce Ads platform. In at least one instance, a BitBounce Ads email sender purchased credo for use in an advertising campaign which was delayed. In that time period the value of the credo purchased increased substantially allowing them to send twice the number of ads that they had initially purchased. Because of their early purchase, this company realized a significant increase in their buying power on BitBounce Ads.

As a disclaimer, this is only mentioned as an example of the increasing benefits and buying power of participating in the Credo Economy early. The BitBounce team makes no guarantee of the price of credo increasing, though the team is working hard to constantly increase the utility of credo and the BitBounce platforms.

6.9 Ensuring effective participation in the market

Given this is a new market, efforts will need to be made to ensure effective participation. These can be partly technological in nature, such as BitBounce mechanisms that prohibit delivery of an email to the inbox without payment, algorithms that automatically adjust the threshold price to receive email based on the demand for that recipient, and simplification of the payment experience. Efforts can additionally be sociological, such as through education and training of market participants; this could include development and dissemination of a set of best practices for participants, such as recommending the purchase and maintenance of a reserve of credos for expected future use in the market.

References

  1. BitBounce service. URL: https://bitbounce.com
  2. Email Statistics Report, 2017-2021, The Radicati Group, Inc. URL: http://www.radicati.com/wp/wp-content/uploads/2017/01/Email-Statistics-Report-2017-2021-Executive-Summary.pdf
  3. What Is The Real Impact Of Spam On Business? URL: https://www.topsec.com/it-security-news-and-info/what-is-the-real-impact-of-spam-on-business
  4. "Spam Costing US Businesses $712 Per Employee Each Year." Nucleus Research, n.d. URL: https://nucleusresearch.com/press/nucleus-research-spam-costing-us-businesses-712-per-employee-each-year/
  5. "2nd Annual Spam Report." Nucleus Research, n.d. URL: https://nucleusresearch.com/press/2nd-annual-spam-report-cost-of-spam-more-than-doubled-in-past-year-to-1934-annually-per-employee/
  6. Emerson, R M (1976). "Social Exchange Theory". Annual Review of Sociology. 2: 335–362. URL: http://www.annualreviews.org/doi/10.1146/annurev.so.02.080176.002003
  7. Future Imperfect, Slicing Spam. David D. Friedman. URL: https://www.amazon.com/dp/B001GCUCLS/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1
  8. Turing Cloud is a complete SaaS suite that you can run your business on. It includes numerous email-related products such as an email client, an email marketing system, sales email tracking functionality, and email analytics. URL: https://www.turing-cloud.com
  9. Cyrus Khajvandi, a cryptocurrency expert who consulted on the development of credo, coined the Proof of Usage term.
  10. Rep on the block: A next generation reputation system based on the Blockchain. URL: http://www.the-blockchain.com/docs/A%20next%20generation%20reputation%20system%20based%20on%20the%20blockchain.pdf
  11. Token of Respect™ and Send the Token of Respect™ are trademarks of BitBounce via Turing Technology, Inc. with all rights reserved.
  12. Create Your Own Crypto-currency With Ethereum. URL: https://www.ethereum.org/token
  13. What is the ERC20 Ethereum Token Standard? URL: https://themerkle.com/what-is-the-erc20-ethereum-token-standard/
  14. SEC v. Howey Co. 328 U.S. 293 (1946). URL: https://supreme.justia.com/cases/federal/us/328/293/case.html
  15. Credo Token Crowdsale GitHub Repository. URL: https://github.com/turinginc/credo-token-crowdsale
  16. GitHub repository for BAT Smart Contract code. URL: https://github.com/brave-intl/basic-attention-token-crowdsale/tree/master/contracts
  17. Alexa sites linking in to bitbounce.com. URL: https://www.alexa.com/linksin/bitbounce.com
  18. The concept of a token as digital commodity was taken from Chris Burniske’s work.