Orchid (OXT): The Digital Asset for VPNs
Orchid is seeking to overcome shortcomings that have plagued virtual private networks (VPNs) by focusing on privacy and its OXT token-based payment system.
By Dr. Steven Waterhouse, CEO & Co-Founder, Orchid Labs
Updated April 13, 2022 • 3 min read
The internet is a major part of everyday life, influencing nearly all commerce and trade. As with any system of communication, internet connections have points of weakness that make you vulnerable to malicious and unethical third parties. The security of internet connections is critical in protecting your identity and financial data. Orchid aims to tackle this challenge with its VPN ecosystem and accompanying, blockchain-based payment mechanism.
Connecting to the Internet
Most users connect to the web via unsecured internet connections, which is the standard offering of most internet service providers (ISPs). These connections can allow sensitive data and profile information to be taken without a declared purpose — and without your consent — by private malicious parties as well as government entities. In many regional jurisdictions, governments heavily censor what profile information and content can be accessed online, as well as what content people can post on various platforms. Some governments will even hunt down offending individuals, making the security of their internet connection a matter of life and death.
Secure internet connections can be achieved through a virtual private network (VPN), which is an encrypted connection designed to obfuscate the identity and activity of the user. But even the best VPN providers suffer from their own drawbacks.
Free VPN providers sustain themselves financially by gathering and selling your data, which defeats much of the purpose of using a VPN in the first place. On the other hand, paid VPNs are subscription-based, and therefore, are often not incentivized to provide superior service — though they often come with better security benefits as their revenue model doesn’t depend on selling user data. The most important drawback of VPN providers is that they represent a “single point of failure.” If the service is surreptitiously logging user activity, or if it suffers a data leak, the user is unprotected. In relying on a single VPN, you are placing your privacy entirely in the hands of that service.
Orchid: A Decentralized VPN Marketplace
Orchid overcomes the shortcomings of existing VPN services by leveraging various cryptocurrency and blockchain functionalities to create a powerful and cohesive solution that offers the highest standard of privacy and security.
The Orchid VPN aggregates the services of numerous high-quality VPN providers in a unique, decentralized marketplace powered by OXT tokens. Bandwidth providers register as sellers on the network by staking their own capital up-front in the form of OXT. This staked capital functions like a security deposit, incentivizing VPN bandwidth providers to supply you with high-quality service. Providers who fail to do so are putting their own capital at risk.
Users seeking a secured connection can request VPN service through Orchid, at which point the system links them to one of the VPN providers on the network — known as “nodes.” Orchid’s VPN also has an advanced option whereby users can configure multiple “hops,” securely chaining multiple VPN connections from different providers together before connecting to the internet. This further obscures users’ online activity because not even the VPN providers themselves have the full “picture” of a person’s web activity.
Unlike standard VPN services, Orchid’s portfolio of providers are paid only for the data traffic that passes through them. The Orchid VPN is pay-as-you-go, and you can switch to competing providers’ connections whenever you wish, so there is no need to deal with poor connection speeds.
Orchid's OXT Payment Mechanism
Underpinning Orchid’s decentralized VPN marketplace is the network’s native digital asset, OXT, which can only be utilized on the Orchid platform. OXT is an ERC-20 token built on the well-known and robust Ethereum blockchain, with all the benefits and stability that a blockchain and a community of its size offers. Ethereum-based tokens are popular for their security and fast transaction speeds.
Once purchased, users can transfer OXT tokens to a Web3-enabled crypto wallet to open an Orchid VPN account. This transfer incurs a transaction fee that the user must pay with ether (ETH), which is the fuel that runs the Ethereum network. The wallet is then connected with Orchid, which requires no personal information to set up. After this point, enabling the VPN connection requires a single tap in the Orchid app.
Orchid employs a unique off-chain transaction system, relying on what are known as probabilistic nanopayments. This system reduces Ethereum transaction fees (the cost needed to perform a transaction on the Ethereum network) for sending or receiving OXT. Orchid tracks transactions between users and VPN providers, then resolves total fees on a weekly basis.
Orchid also offers pre-filled accounts, which let people get started with in-app purchases using nothing more than an ordinary credit card. Pre-filled accounts are exactly the same as ordinary accounts, but they function like gift cards loaded with OXT. This is depleted as you use VPN services on Orchid; once your account is out of OXT, you can purchase another pre-filled account.
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Dr. Steven Waterhouse
CEO & Co-Founder, Orchid Labs
Dr. Steven Waterhouse (Seven) is the CEO and co-founder of Orchid Labs. Dr. Waterhouse previously served as a partner at blockchain-focused venture Pantera Capital and worked at Fortress Investment Group, where he founded the Digital Currency Fund with Mike Novogratz and Pete Briger. Dr. Waterhouse was a co-founder and CTO of RPX and served as Director of the Honeycomb product group at Sun Microsystems, one of the first computer and software technology companies to evolve during the dot com era. He holds a PhD in Engineering from the University of Cambridge.
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