In-Depth Presentation of the Particl Project (part1)

Hey guys,
I’m following a very interesting cryptocurrency that I believe is passing under everybody’s radar. I really think that, as of the time of this publication, it is the most undervalued project of the entire crypto sphere, and it is definitively not getting the attention it warrants. What follows is a complete, in-depth presentation of this coin and its features, as well as various opinions on why I believe it has everything it needs to position itself as a top 10 cryptocurrency within a very short timeframe and solve a lot of real-world problems. This article is going to be quite lengthy, so buckle up.
What is Particl?
To sum it up briefly, Particl is a privacy-focused blockchain/P2P hybrid ecosystem that will host a decentralized and anonymous marketplace as well as an array of Dapps using a native cryptocurrency. The first officially supported Particl Dapp will be a fully decentralized and anonymous marketplace which allows buyers and vendors to securely transact between each other without the need to ever interact with a third-party. It also encompasses a fully anonymous messaging system built similarly to BitMessage. The platform is currency and protocol agnostic (more details on what is means later in the presentation).
Note, however, that these Dapps are not the same kind of Dapps as on Ethereum. They do NOT work using smart contracts but are instead hard-coded into the client. This makes Dapps much more secure and efficient.
What’s Its History?
Particl is the successor of the ShadowProject (https://shadowproject.io/en), a privacy-focused cryptocurrency project started back in August 2014. The team behind this project are known for being innovators in the cryptocurrency scene, being the first to produce many feats such as an HTML5 wallet, a staking mobile wallet with encrypted messaging and transactions, as well as having the first ring signature and HD wallet implementation on BTC codebase. Their Umbra graphical wallet, built using HTML5, is widely known in the “altcoin” community for being absolutely gorgeous and very user-friendly. It was not so long after switching from proof-of-work to proof-of-stake that this very capable team started working on a fully anonymous and decentralized marketplace. This has long been seen has the ultimate value proposition of the Shadowcash blockchain.
Back in late December 2016, word spread around the community that the ShadowProject team had met with major partners in Hong Kong and that big things were coming regarding the way forward. Then, on March 17th, the team announced they were leaving the ShadowProject to start working on a new and more professional project: Particl. This move was encouraged by the fact that the team wanted to have a more professional branding and were looking for funding so that they could work full-time on it and get it going for good. In fact, they had been told by the Hong Kong partners, as well as many legal and PR firms, that the name “Shadowcash” was deemed to shady, most of them even refusing to associate their name with such a sketchy sounding project. The new vision of the project also required a lot of major code changes to be done to the SDC blockchain/client and team structure. It is for all these reasons the SDC team decided to completely sever the link between Shadowcash and Particl and start the new blockchain from scratch, using their final Umbra release as prototype for the new platform.
The Particl Foundation
The Particl Foundation is a soon-to-be (any day now) registered Swiss legal entity. As the Particl team was looking to raise money to fund the project, they needed to have a legal body that could receive the funds and spend on behalf of the project. It is also required for most of the logistics of the project (hiring and paying employees, paying hosting fees for the website, etc) as well as interacting with third-parties (partners, exchanges, gateways, legal & PR firm contracts, etc). There will be much more details to come once the Foundation is officially registered. It is currently awaiting approval by the Swiss government and it is the last step to be up and running.
As a funding strategy, the Particl team offered SDC holders an opportunity to swap their SDCs for PARTs at a 1:1 rate, with the possibility for the holder to add an additional amount of BTC to the swap transaction to get a variable PART bonus added to their stash. This extra BTC is what the team collected as funding as SDCs sent into swap transactions were not and will never be sold into the market.
They have raised 750,000 USD worth of Bitcoin (now worth around 1.4M), and reserved for themselves 513,502 PARTs (6% of total supply) from the total supply. Another 996,000 PARTs are reserved for a second funding round once the MVP of the market is out and released. The funds they raised will be used for salaries, legal expenses for Swiss Foundation creation, initial business consultation expenses, new team members, professional PR, third-party code audits and University grants.
While it may have been tempting to raise more money, the reasoning behind this crowdfund structure is actually quite sane. The total amount raised is what the team estimated were necessary to run the project for one full year. It is true that other ICOs are raising tens and even hundreds of million, but in many cases, the developing teams simply don’t need that much money. It could be argued that as these projects raise tons of money, they lose a certain incentive to work hard on their project as they have already cashed out on their idea. In more traditional VC environments, you would very rarely (if ever) see projects raise hundreds of million with only ideas, vague whitepaper, and no working products. It is also likely that some of these projects will attract the attention of regulatory bodies due to questionable funding methods.
The Particl team has mimicked the VC way of initially going through a seed round before going for a larger round of funding. This crowdfund strategy is what was advised by Swiss legal firms which are used to working with blockchain projects. Also, not only does this structure allows for a fair money-raising method, it also incentivizes the Particl team to work hard on their project and deliver a working product that will impress the community. After all, they will want to raise as much money as possible in the second round, and with a maximum of 996,000 PARTs that can be offered, they have all the reasons in the world to make a good product which would bring more value to the Particl coin. When we think about it, this crowdfunds/ICO was pretty fair and exemplary from a legal standpoint.
Particl Features
Quick video presentation:

In development for about two years, the Particl marketplace strives to be the first decentralized marketplace to successfully nail scalability and full privacy at the same time. The team aspires to achieve this accomplishment by using the OMP market protocol they developed internally.
Open Market Protocol
The Open Market Protocol, or OMP, is a “standardized and open format that can encompass all the economic interactions of an online marketplace” (https://kewde.gitbooks.io/protocol/content/#). The OMP is built with three main components in mind, namely extensibility, privacy, and market data portability. It can be adopted by anyone who wishes to build a decentralized market of some sort.
Its extensibility characteristic makes it much more resilient to new, more efficient technologies to come out. This aspect is explained in details in the Protocol-agnosticism section of this presentation.
Privacy is also an important cornerstone of this protocol. “Recent revelations and academic papers have proven beyond a doubt that there are many active threats to our digital privacy and security. Additionally, decentralized networks, as well as blockchains, are open public books full of sensitive information for passive attackers to abuse. This was of great concern when designing [the OMP] protocol as it could potentially put [its] users at risk”
Portability is the ability to easily move market data such as inventory, images and shipping details (among others) data between different markets. “One of the many frustrations that online merchants and vendors suffer is the lack of portability of the inventory data between the many different online marketplaces. The more markets your products are available on, the greater their exposure and thus the greater their potential revenue streams. Yet importing the inventory data into another application or website remains a cumbersome process, often on purpose to prevent vendors from using competition” By making market data standardized, it becomes very easy for vendors to open a shop on any marketplace using the OMP protocol and realize their full economic potential.
Decentralized & Trust-less Escrow System
There are many challenges in designing a fully anonymous and decentralized marketplace. One of the these is to ensure that neither the vendors nor the buyers get scammed by the other party. How do you make sure the vendor doesn’t simply take the money and doesn’t ship the product? How do you make sure the buyer actually pays for a shipped product? In most cases, typical marketplaces such as Alibaba, eBay or Amazon use what is called an escrow system. The platform acts as a middle-man and receives the payment of a product or service on behalf of the vendor and holds on to it until the buyer confirms he has received the product. Should problems arise, the escrow agent will usually take the role of a mediator and decide what happens to the escrowed funds (it will either be a refund for the buyer or a release of funds to the vendor).
Since the Particl marketplace aims to be entirely trustless, it cannot use escrow agents as that constitutes centralization. An agent could be wrong on a decision, go rogue, collude with a party, and above all, they always charge a fee. No escrow agent will work for free.
The Particl team developed what they call the MAD escrow system. This trust-less and free service is based on the Mutually Assisted Destruction game theory. As defined on Wikipedia, Mutual assured destruction (or mutual assisted destruction) “is a doctrine of military strategy and national security policy in which a full-scale use of nuclear weapons by two or more opposing sides would cause the complete annihilation of both the attacker and the defender. It is based on the theory of deterrence, which holds that the threat of using strong weapons against the enemy prevents the enemy’s use of those same weapons. The strategy is a form of Nash equilibrium in which, once armed, neither side has any incentive to initiate a conflict or to disarm”.
In the context of an escrow system, it simply means that the escrow is designed in such a way that it financially punishes both parties if one of them behaves badly. The MAD escrow works by requiring the buyer to deposit twice the amount of the desired product in a 2-of-2 multisig escrow address, while the vendor has to deposit the full value of the item he is selling as insurance. Both parties need to sign the release of the funds before a set time for the deal to conclude, otherwise, the escrow busts and funds are sent over to the stakers.
For example, if you were selling a 500$ TV to a user, you would have to fund the MAD escrow with 500$ and your buyer would need to fund it with 1,000$ (500$ item value + 100% insurance deposit of 500$). The document section of the shadowproject.io website explains in an understandable fashion how the psychology behind MAD escrow works:
From ShadowProject’s documentation page: “If the buyer receives the item and decides not to finalize the transaction then the address becomes unspendable after the expiration date and neither party gets their insurance deposit back. The buyer will have effectively paid twice the price but the vendor loses his insurance deposit and the item. [If] the vendor does not to ship the item, [it] leaves the buyer with the option to finalize the transaction or not: finalizing the transaction causes him to minimalize his losses to one time the price of the item and the vendor makes a profit of one time the item price. If the buyer decides not to finalize the transaction he loses twice the amount of the item price but also causes the vendor to lose his insurance deposit. The buyer is to some extent at a disadvantage and motivated to finalize the transaction to minimize his losses in case of a vendor scam. Both the buyer and the vendor will be motivated to extend the escrow transaction and work towards a refund agreement that both parties are willing to sign.”
Of course, this MAD escrow system is flexible. If a problem arises during a transaction, both parties can agree to either extend the escrow deadline time or proceed with partial refunds. It is also entirely up to the users to decide what insurance deposit percentage they want to use. A vendor and a buyer could agree for a 25% insurance deposit, meaning that for a 500$ TV purchase, a vendor would need to deposit 125$ into the escrow while the buyer would need to deposit 625$ (500$ + 25% insurance deposit of 125$).
Self-Governance
Another of the big challenges in designing a decentralized and anonymous market is trying to reduce the irresponsible and criminal use of the platform as much as possible. Since it is censorship-resistant, no central authority can delete its content and so it could easily be abused by criminals, spammers, and trolls. This would end up making the platform look much less appealing to the regular honest user and enable undesirable activities.
Particl’s solution to this problem is a self-governance system where users can flag undesirable content. At this moment, it is not confirmed whether a listing considered undesirable is completely taken out of the market or if it puts it in an NSFW kind of state where users can decide whether they want that type of content to be displayed or not (similar to how OpenBazaar does it). The method of governance is also not confirmed, but if we are to speculate, it could possibly be tied to staking like Particl’s voting system works (will be explained later in this document).
Private Listings
As mentioned just above, there is a self-governance in place preventing the platform from essentially becoming a decentralized version of the infamous Silkroad marketplace. There is, however, a form of listing which cannot be flagged by the community: private listings. These listings do not appear on the public marketplace and are hidden even from the blockchain itself as they are fully encrypted. Only a vendor and a user possessing a specific link to the listing can have access to its content, making it a very interesting use-case for alternative markets as anyone could simply run a website making external references to these private listings, fundamentally creating the perfect semblance of a 100% anonymous and censorship-proof (even from Particl’s self-governance system) marketplace that cannot get hacked, be busted or exit scam their users.
Fighting Spam
As mentioned above, spammers are another major concern on popular blockchain platforms. In the crypto world, there are many reasons why one would want to mount a spam attack on a chain. It could be because that entity wants to short the coin on trading markets, or because he has invested in a competing platform that is seeking to destroy the reputation of Particl.
Fighting spam attacks will always remain an ongoing battle as spammers will always try to find new ways to make themselves an annoyance, and the Particl team plans on keeping the platform spam-free a priority. On market release, the platform will already be armed with two spam-fighting features other than the self-governance flagging system.
The first one of these measures is to make listings stay up for a maximum of 48 hours. That means a spammer has to constantly keep the attack up otherwise it will not have any long-term damage to the platform. This also helps the market be much more scalable as it only requires to have two days worth of listings. The second measure is the implementation of a very small listing fee (initially 0.01 PART, can be adjusted and ultimately made dynamic) making a sustained attack quite costly for an attacker. While the fees are quite small, mounting a considerably effective spam attack would require large amounts of funds to be paid to the market every two days.
As will be explained further down this presentation, market fees actually go to the stakers (people who run nodes that secure the network), which brings an interesting dynamic…Any spammer that wants to heavily spam the Particl marketplace inevitably ends up sending his money to the very community he is trying to bring down!
Going Mainstream
The project doesn’t hide the fact that it wishes to become the first decentralized marketplace to become used in the multi-billion “mainstream” world of commerce. This is why user-friendliness and usability are at the core of the team’s strategy. The ultimate goal is to make the cryptocurrency side of things all in the background so that even your grandmother could intuitively use it.
Another mainstream-appealing feature the team is working on is the integration of many in-client fiat gateways from which one could fund his Particl wallet. Some solutions being explored at the moment would allow users to use bank transfers, credit cards, and Localbitcoin-style services. Note, however, that neither the Particl developing team nor the Particl Foundation are licensed financial organizations, therefore this implementation most certainly would be the result of partnerships with other services (i.e. Changelly, Tether, etc). It would be very surprising if fiat gateways were part of the initial release of the wallet.
Low Fees
One great thing about the Particl marketplace is its relatively low prices compared to centralized competitors. In fact, selling on websites such as Amazon or Alibaba is great because they bring vendors a lot of users, but they also charge a huge premium just so their user base can be leveraged. After all, it is generally Amazon/Alibaba/eBay that brings a company new customers, not the other way around, so that premium fee is the price to pay to get new customers from these big e-commerce platforms.
Let’s take Alibaba, for example. It is one of the most valued e-commerce websites on the internet and has a huge user base of both buyers, merchants, service providers and suppliers. If you wanted to start selling products on it, you would probably want to get a gold membership so you don’t get absolutely buried in the thousands of listing and so that you at least have a minimum set of features you could use. Their gold membership is subscription based and according to Harry Peterson, a professional in China sourcing and B2B (business-to-business) marketing, businesses located in mainland China need to pay almost up to 5,000$ USD a year just to get their membership. Businesses outside China mainland have variable subscription fees based on which jurisdiction they are doing business from, but it is estimated that an average subscription amounts to around 2,999$ USD a year (https://www.quora.com/How-much-does-it-cost-to-sell-on-Alibaba). On the Alibaba website itself, subscription fees seem to be even higher, now priced at 5,999$ USD a year for the full package (http://seller.alibaba.com/memberships/index.html).
Of course, there are various packages and these fees are somewhat flexible, but that gives you an idea what a gold membership costs like if you want to use Alibaba as a platform and get the whole set of features that will allow you to leverage the full capacity of what the platform has to offer. Don’t forget that on top of these memberships, Alibaba charges a whopping 5% fee on any transactions done through its escrow system, as it is centralized and requires staff to manage. All these fees, end up being costly for both buyers and sellers. Remember that Particl’s MAD (mutually assisted destruction) escrow system is absolutely free of charge as it is entirely decentralized and managed by both the buyer and the vendor.
Amazon, on the other hand, chooses a different fee schedule to make its money by applying two types of fees. The first one is a generic “per-item” selling fee. You can choose two plans: the individual plan, which charges 0.99$ USD per items sold, or a professional plan, which is a subscription of 39,99$ USD per month (https://services.amazon.com/selling/pricing.htm).
On top of that, it also charges what is called a “referral fee” which is a percentage of your item’s value that Amazon keeps for itself. This fee ranges from 6% to an almost insulting 25% depending on the item’s category. Some Amazon-branded items can even go up to 45%. Please visit this detailed article to know the exact fee schedule Amazon uses: http://www.cpcstrategy.com/blog/2014/06/sell-on-amazon-pricing/. There is also another type of fee which Amazon can charge, but that only applies if you want Amazon to fulfill your order (meaning you send your inventory to Amazon and they do the processing, storage, and shipping for you). These fees are all indicated in the CPC strategy article I linked just above.
What about eBay? While listing an item isn’t really that expensive, your first 50 listings of each month being free and the subsequent being 0.30$ USD, the website still charges you a non-negligible 10% “final value fee” (the final value is calculated AFTER shipping fees are applied) with a maximum of 750$ USD per transaction. You can visit this link which details all the listings (plus some advanced feature fees I will not go into): http://pages.ebay.com/help/sell/fees.html
Etsy? Well, it is admittedly much cheaper, but still considerably more expensive than Particl. They charge 0.20$ USD per listing posted and then apply a “transaction fee” of 3.5% (which isn’t applied to shipping cost as well if you are selling either from the USA or Canada but is applied otherwise). There are also various other fees if you wish to use more advanced features such as Etsy’s “Direct Checkout”. For their fee schedule, please visit this link here: https://www.etsy.com/legal/fees/.
As it is probably obvious by now, these platforms charge their users HUGE premiums, which is kind of understandable since they are critical to the success of a good number of these vendors. Particl is going to be a much, much cheaper option for vendors, regardless if they are big or small. It will also greatly benefit buyers by basically charging them no fees at all except low cryptocurrency transaction fees (listing fees are paid for by vendors). Vendors will only need to pay 0.01 PART per listing renewed every two days. This fee is likely to be made dynamic so that it goes down when PART’s price goes up and vice versa.
Target Users
Going for the mainstream world of e-commerce certainly is a huge ambition. It is true that a decentralized system is likely to be less efficient than its centralized counterparts, but it does also offer services that giants like eBay, Amazon or Alibaba simply cannot provide to their customers: privacy and censorship-resistance. So who, exactly, would end up using a potentially less efficient but more private platform than well-established e-commerce Goliaths?
During the time of the initial funding round, I’ve written a lengthy article going over exactly this question. Here’s a tl;dr list of potential early users:

• Controversial & potentially illegal goods & services
• Perceived gray area businesses
• Unfairly blocked businesses
• People looking for better protection of personal/corporate data & documents
• Taxation resistance & revolts
• People from the unbanked world where banks and e-commerce websites are not present
• Much lower fees than centralized counterparts
• Any crypto user looking to shop with his favorite coin
  This article only lists what I could think of at the time, but the potential of a decentralized marketplace and escrow system is huge and there are some use-cases one could not think of until someone actually comes out with it. One of these use case not featured in my previous article and that became apparent to me since is the use of Particl marketplace’s escrow system for OTC exchange of unreleased ICO coin accounts (trading coins before their chain is released). This seems to be an increasingly popular practice among the crypto world, with most vendors/buyers doing these trades on Slack/Reddit.
  Currency-Agnosticism
  By definition, “an agnostic person is one who believes it is impossible to know anything about God or about the creation of the universe and refrains from commitment to any religious doctrine”. In our context, the platform is considered “agnostic” because its developing team does not believe its native coin should be created with a “one coin to rule them all” mentality and thus should have a platform that can work with as many cryptocurrencies as possible. As we do not know what coins will be the most used in 5 years, let alone in a month, it is safe and forward-thinking to make the platform be ready to work with them at any time.
  This feature will mostly be used for the Particl marketplace Dapp, as it will allow people to shop online using their favorite cryptocurrency without ever leaving the wallet or having to manually trade their coins prior to purchasing a product. While it may seem like that would reduce Particl’s potential valuation as that would generate less demand for its native coin, it actually does not. Because the market’s decentralized escrow is a 2 of 2 multi-sig CT PART address, it requires any non-PART purchases to be traded (automatically done by the wallet) for PART to operate. Vendors do not even need to state what coins they want to accept, as they all get paid in PART. They are then free to Shapeshift back to any coin they want, again without ever leaving the wallet.
  This currency-agnosticism actually brings a lot of value to the platform’s native coin. For one, any order made on the market, whether it is paid using PART, BTC, ETH or any compatible currency, ends up being a buy order for PART. This feature also brings a non-speculative use case for all compatible currencies, as the holders of those coins can now shop online with them and not simply hold them for speculative reasons. This has the potential to end up putting a lot of buy pressure on the PART coin.
  Shapeshift Integration
  This ability to seamlessly shop with any coin is powered by Shapeshift. That means that any coin available on their platform can be used to shop on Particl. Some of the use cases I personally find interesting is the use of the DGX token (gold-backed cryptocurrency, not yet available on Shapeshift though…) and USDt (fiat USD-backed cryptocurrency) to seamlessly shop with coins that are backed by real assets. Gold bugs will immediately understand why this is a big deal, but let’s pause for a moment and appreciate what opportunity it presents. When was the last time people could just go out and shop using actual gold coins? The way it is designed, the vendor does not even have to “accept” the currency on his store, and you can send tiny fractions of that gold coin (which is obviously impossible with physical bullion). This could become a really big use case for Particl if the world economy ends up crashing and people abandon fiat for value-based assets such as gold. This could even initiate a paradigm shift in how people conduct commerce around the world.
  Note, however, that this Shapeshift integration is a temporary solution as the team plans on designing its own fully decentralized and trust-less currency exchange system. This is due for much later though, and I believe that for the time being Shapeshift will be more than satisfying as an option.
  Protcol-Agnosticism
  In this context, being protocol agnostic refers to the fact that the Particl platform does not limit itself to one decentralized data storage protocol, but rather make it extensible and easy to integrate various different protocols at the same time, and let the user choose which one he prefers using. As Kewde, a Particl developer, elegantly puts it on his Open Market Protocol GitBook: “Technology moves at an exponential rate, and the very few protocols that survive the test of time are all designed with extensibility in mind. A protocol looking to be relevant on a long enough timeline should be both robust and flexible enough that it easily allows any developer to securely expand it. The development of decentralized storage networks (DHTs, BitTorrent, IPFS) and blockchain solutions is still young, there aren’t any clear “winners” that meet all criteria nor may there ever be, thus the protocol must accommodate for it”.
  To illustrate why this is a good concept, let’s say Particl only uses its native SMSG protocol to run its marketplace on. That would work fine, until the marketplace gets very popular and cannot scale anymore because there are too many people using it. On a protocol-agnostic platform, it would be very easy to simply add a new, more scalable protocol to support the flock of new users, but if it wasn’t designed with extensibility in mind, it would be stuck with a technology that cannot support its own popularity. In most cases, the platform would either be abandoned by its users, require some kind of fork (which is risky), or the developing team would abandon the project and start a new one with better technology.
  In other words, Particl is designed in such a way that it embraces new protocols instead of being rendered obsolete by them, and it does so without ever requiring a fork of some kind.
  Decentralized Network Storage
  Decentralized storage networks, or DSNs, are decentralized extensions “plugged” into the Particl protocol to help it store data in a decentralized and off-chain fashion. They are what I referred to as “new protocols” in the last section. The use of DSNs is essential as the Particl platform does not store its marketplace data on the blockchain itself as that would quickly bloat it and make everything much more inefficient. Here is an excerpt from Particl’s whitepaper draft:

“The Data Storage Network (DSN) is tasked with storing market listings as well as messages between sender and receiver and all other accompanying data (such as but not limited to images and videos). Sensu stricto the market listing references, stored in the blockchain, are also protocol-agnostic, simply meaning it can handle different DSN protocols such as BitMessage, IPFS, HTTPS…”