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  • Writer's pictureDavid Coryat

Orchid: A decentralized market for anonymous communications (VPN)

Updated: Dec 16, 2021

Privacy is becoming a scarce privilege and Internet privacy is rarer than ever. Our lack of privacy when it comes to personal data has become an internet meme. It’s widely and generally known that most phone apps and websites are selling user data to the highest bidder. This is usually done without the explicit knowledge or consent of the affected parties. A growing number of people are uncomfortable with this fact. In response to this VPN (Virtual Private Network) services and their respective companies have been surging in popularity. Unfortunately, centralized VPNs have had user data leaks in the past and could be subject to them again. Trusting a centralized VPN requires too much faith in that VPN company's security and morality. In comes Orchid. Using Orchid’s VPN network requires very little trust and adds a tremendous and necessary degree of security and privacy. Using a blockchain based protocol Orchid creates a decentralized market for anonymous communications. As our personal and business lives become more internet based, anonymous communication will become an increasing need. Most businesses are already in an environment in which improper internet security could lead to exponential loss of revenue. Using the internet without a VPN is like having an important and sensitive business meeting in a crowded coffee shop. Anyone could be listening, be it your internet service provider or a malicious actor intent on stealing trade secrets.

The VPN industry is already valued at around $25 billion. People and businesses use VPNs for anything from disguising internet traffic to gaining access to location specific streaming content. VPNs are also used by a large portion of individuals who live under oppressive governmental regimes in order to access otherwise blocked internet content. VPN adoption is becoming so widespread even the newest iPhone iOS has a built-in VPN toggle switch. The problem with classic VPN companies is the trust a user must grant them. Classic VPN companies are centralized and may betray the trust given to them either for monetary gain, by data leakage, or due to threat from governmental forces. Orchid’s decentralized method of providing a VPN negates the need for trust. Orchid can not log activity or sell user data by design. Using the Orchid iOS or MacOS app which is directly linked to the Orchid blockchain protocol is simple, quick, and easy. The user can buy xDAI (a stable coin running on the Ethereum Virtual machine) straight from the app or import previously bought $OXT tokens and activate their VPN service in less than 5 minutes. Orchid utilizes xDAI due to the high gas fees Ethereum is experiencing. These gas fees are expected to lower when Eth1 and Eth2 merge which is expected to happen in 2022. The bottom line is Orchid currently offers the most secure and private Virtual Private Network at a lower price point than the competition.

Who is behind Orchid?

Orchid was founded by an impressive group of individuals. Dr. Stephen Waterhouse, Jay Freeman, Brian J. Fox, and Gustav Simonsson make up the founding team and all have lengthy resumes in open-source software and security tech. Dr. Waterhouse is the CEO of Orchid. Waterhouse is a founding partner of Pantera Capitals blockchain fund and a Venture Partner and CTO at Fabric Ventures. Dr. Waterhouse also holds many degrees including a PhD from the University of Cambridge. To list the further accomplishments of Dr. Waterhouse would take up a majority of this write-up but suffice to say, he is an impressive pick for CEO. Jay Freeman is the CTO of Orchid. Freeman is probably most known for making jailbreaking easy with his app Cydia. Cydia allows users to easily install 3rd party apps on their jailbroken devices. Freeman’s developer name Saurik is held in high esteem among open-source software developers. Brian J. Fox is an internet pioneer and dedicated free-software developer and advocate who’s list of accomplishments rivals Dr. Waterhouse’s in breadth and length. Gustav Simonsson is an engineer and developer who helped launch Ethereum and is currently an advisor at Orchid. Orchid has raised venture capital from the likes of Andreessen Horowitz, Blockchain Capital, and Sequoia Capital just to name a few.

What is behind Orchid?

The Orchid protocol is an open-source overlay network which allows the sale and purchase of bandwidth facilitated by blockchain technology. Users of Orchid can buy bandwidth with xDAI or OXT from a network of bandwidth providers. Both xDAI and OXT are built on the Ethereum blockchain. Orchid uses a payment scheme that functions like a home water meter. User payment is in direct relation to how much of the service they use. The classic VPN payment model is usually a monthly or yearly prepay system. This payment leaves the users account regardless of how much bandwidth they use. Orchid’s payment system is much more flexible and fairer. With Orchid users are given the ability to fund their accounts with as much xDAI or OXT as they wish and set a price limit on what they’re willing to pay for the service. The bandwidth providers then compete for users by providing their service at a reasonable price. The Orchid protocol keeps transaction fees low by using a probabilistic nanopayment system (Orchid’s Introducing Nanopayments). In short, this system payment tickets are sent off-chain and only incur a transaction fee when the receiver of the transaction claims the payment. This cuts down on transaction fees that would otherwise dwarf the small payments made on the blockchain.

Why did we invest?

Orchid fits our investment thesis perfectly. The team is composed of individuals who have more accolades and experience than the entirety of most blockchain projects we’ve looked at. Together they form a beyond impressive executive team. The Market Cap of the OXT token is still about $230 million at the time of publication. Orchid is also backed by smart venture capital. The growth potential of OXT is tremendous and we feel OXT is currently greatly undervalued. Orchid’s project development has been swift and transparent. Orchid seems positioned to grow fast as the need for VPNs and internet security becomes more apparent. Their dedicated development team has been working hard on improvements and bug fixes as is evident in Orchid’s GitHub. The Orchid protocol is open source which means the Orchid team and any developers who find Orchid interesting may further the project's goals. The Orchid’s code has been audited by Certora and Consensys which are both highly respected auditors in the crypto space. Orchid already has customers, and their base is growing. Adoption will continue to rise as the Orchid team improves their VPN applications and more service providers join the Orchid ecosystem. We believe Orchid will become a necessity for individuals and businesses who wish to maintain their security and peace of mind while using the internet. We’re already in a world where massive data leaks are commonplace. Orchid offers a powerful solution to curb data anxiety.

Written by David Coryat, Crypto native and analyst at Istari Capital LP.

This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained in this report constitutes a solicitation, recommendation, endorsement, or offer by Istari or any third party service provider to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. Please be advised that Istari Capital LP is invested in the project discussed in this article or in projects related to this article.

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