1. Hybrid Architecture

There are various different types^[1] of blockchain networks. Including but not limited to public, private and consortium blockchains. Both public and private blockchains have their own benefits and pain points. Dragonchain's hybrid architecture^[2] allows to keep sensitive business logic private, while also having control over what data can immutably be recorded on public blockchains. The Interchain patent allows for interoperability with other blockchains such as Bitcoin and Ethereum. Instead of recording all sensitive information on public blockchains, it only takes the hash of the private transaction and Interchains with both Dragonchain community nodes and blockchains like Bitcoin. In the case of Bitcoin the biggest benefit for this use case is its global hash power, resistance against 51% attacks, the immutability and decentralization. Hybrid blockchains are used by entities that need the benefits of both the public and private approach, using Interchain interoperability solutions between legacy systems and other blockchains, both public, private, consortium and permissioned. Private, public, consortium and permissioned blockchains all have their own setbacks and benefits. Entities that do not want to expose sensitive business data to the internet are limited to private blockchains. And entities looking for no access restrictions at all can leverage the Bitcoin or Ethereum blockchain. The hybrid blockchain ensures sensitive business data stays private on business nodes. While also allowing to validate the hash of the private transactions through consensus algorithms. And even completely decentralized public checkpoints on networks such as Bitcoin and Ethereum. Through Interchain the hash of a private transaction can be placed on the Bitcoin blockchain or any other public blockchain such as Ethereum. This allows to utilize the benefits of blockchains that are focused on specific use cases such as quantum resistant blockchains. This will protect against quantum attacks,^[3][4] although such attack never was successful yet.

1.1. Dragon Net

Dragon Net is Dragonchain's scalable and hybrid approach to achieve consensus. It is using independent verification nodes provided by the Dragonchain community and external partners. Verification nodes serve the purpose of verifying blocks from business nodes that contains the hashes of the businesses private transactions, thus not exposing sensitive business logic. Unlike other blockchain platforms, there is no mainnet. Each application or node is its own blockchain, allowing more flexibility and scalability.

1.2. Consensus

Consensus is achieved through automated verification from a wide range of entities through Dragonchain's so called 5 Level Spectrum of Trust.^[5] Every Dragonchain that is spun up by a user is at each level is its own non-homogenous or heterogeneous blockchain. This means that all the blockchains and nodes do not all contain exactly the same information. This prevents network congestion as seen with Cryptokitties during the cryptocurrency bubble in 2017. This new approach allows for scalability that is limited to the clouds limit, which is theoretically unbounded as the cloud (AWS, Azure, Google Cloud or other) can scale up infinitely by demand.

1.3. Private Business Node

Contains all sensitive data and business logic. This is the enterprises or businesses own private blockchain and the location for placement and integration of "real world" value in the form of transactions and business logic. This information is configured by the business or blockchain user and executed by a blockchain node.

1.4. L2 Nodes: Validates the Blocks, Headers, and Signatures

Level 2 nodes are the first check of validity for blocks and their individual transactions from the private business nodes. Which can be done without exposing the actual data or business logic. Rules such as minimum amount of validity verification through L2 Nodes can be defined by enterprises.

1.5. L3 Nodes: Network Diversity for L2 Validations

Level 3 nodes check the diversity of a transaction's Level 2 verification. This level of consensus will ensure that transactions are validated by a sufficient amount of distributed sources. This also provides control and measurement of network effect. And provides distributed security, as an attacker would be required to attack multiple organizations and data centers in order to tamper with these transactions.

1.6. L4 Nodes: Serves as a Notary Function

A level 4 node provides a notary functionality to the consensus process. Level 4 nodes are hosted by external partners and cryptographically signs any verification record it receives from the Level 3 nodes.

1.7. L5 Nodes: Public Checkpoint

Level 5 nodes are the final gateway between the Dragonchain platform and other blockchains. After a transaction has successfully passed Level 5 verification, it can finally be hosted on a public chain like ETH, ETC, NEO, or BTC using Interchain.

2. General Data Protection Regulation

By nature public blockchains are not compliant with EU law on data protection and privacy for all individuals within the European Union, known as GDPR. In many use cases however there is a need to decentralize blockchain transactions without exposing PII or sensitive business logic. Dragonchain's serverless hybrid blockchain architecture is a solution for various pain points both public and private blockchains have by nature. Not only can the entity choose what data can be private or public. They can also choose in which global region they store both public and private information. With multicloud capabilities, not limited to one cloud provider such as AWS, data that is required to be stored and validated in China only remains in China. And data that is required to be stored and validated within the European Union only remains in the European Union. This is in addition to only exposing the hash of transactions in a global decentralized manner, unless explicitly permitted otherwise.

3. Proof of Existence

Hybrid blockchain platforms are able to use public blockchains for proof of existence. Dragonchain refers to this as public checkpoints. Ensuring ultimate, decentralized and immutable proof that certain events have occurred. Which can not be done by using private, permissioned or consortium blockchains without interoperability characteristics. Bitcoin is unmatched in terms of global hash power, making it very expensive and unlikely to perform a 51% attack. Thus using Bitcoin for strong transactional proof for the hash of their private business data transactions give it the immutable aspect, making it impossible to tamper with transactions that already occurred.

4. History

Earliest public documentation of the so-called Disney Private Blockchain Platform dates back to 2014. In June 2016 over 20 use cases^[6] that have been explored inside Disney were shared^[7] with the World Wide Web Consortium, its blockchain community group. In October 2016 the platform is released as open-source software under the Apache 2.0 license and was mentioned as one of Disney's best open source releases.^[8] In January 2017 The Dragonchain Foundation was founded, which is a non-profit organization created to maintain the open source code. Joe Roets is the Founder and CEO and has build the commercial Dragonchain entity on top of the open source code, which is now known as the current blockchain company named Dragonchain. Roets was asked by Disney^[9] through a phone call to develop the architecture from scratch and moved him and his family to Seattle, WA. In 2017 Dragonchain conducted a token sale^[10] that raised as much as $13 million.^[11] On February 23, 2018 the Nasdaq listed enterprise Fluent, formerly known as Cogint,^[12] acquired a minority interest in Dragonchain.^[13]

4.1. Tokenized Micro-License

Dragonchain has their own utility token which is a tokenized micro-license (TML), known as Dragonchain, ticker DRGN or referred to as Dragons. They were distributed to token sale participants. The current circulating supply is 238.421.940 DRGN. While the total supply ever available is 433.494.437 DRGN, which is a prime number. The Tokenized Micro-licenses are used throughout the platform and ecosystem. It is a new form of software licensing that can be applied in different ways. Community holders of the Dragon tokens all have a Dragon Days of Slumber Score (DDSS). DDSS determines the user's access to specific features within the Dragonchain ecosystem. It takes into account both the Dragon balance and length of time each Dragon is held. The number of Dragons held, multiplied by the number of days held is how the Dragon Days of Slumber Score is calculated. It is a new form of a tokenized loyalty system based on blockchain. Some of the features include access to the blockchain platform and smart contract library, permission to run L2, L3 or L4 nodes to validate enterprise blocks or voting rights to startup ideas and projects. L2, L3 and L4 nodes are run by the Dragonchain community and selected partners, who are rewarded proportionally, based on the amount of DDSS they have applied to each specific node. An orders of magnitude increase in traffic can be handled by existing network nodes which will earn directly proportional to the increase.

Charging for software licenses began in the late 1970s and early 1980s. The original software licencing models such as Microsoft Windows 3.1 or Adobe Photoshop 7.0 serve different purposes. They hold a key that gives access to the software. It comes at a one-time fixed price that includes minor updates, bug fixes and ownership. Yet does not allow to stay updated with new versions without buying it. In the 1990s and 2000s the subscription based licensing became more popular. This is where consumers started paying on a time-base for access to the software. Popular models like this in 2019 are Spotify and Netflix. This allows for access to the most updated versions of software and comes with updates in place, lowering maintenance costs for both the consumers and the vendor. One downside is that consumers end up paying even when they are not using it, unless they pause or cancel their subscription. Dragonchain's patented^[14] Tokenized Micro-License was created to allow a new model for software access. It allows local holding of licenses like early models, but also allows decentralized hosting of the service. And standardized many flexible forms of redemption via software access or execution. Some of the key principles are that the tokens license term interact at every use, execution or access with complimentary license terms embedded in to every service. This creates a flexible framing work for software licensing innovation. For vendors it allows flexible updates, including the terms on blockchain, and consumers do not pay for software that is not being used. Meaning the inevitable passing of time does not penalize existing customers.

5. Awards

5.1. Eastside Small Business of The Year 2019

On March 28, 2019 the Bellevue Chamber of Commerce held their 30th annual reception.^[15] Dragonchain was nominated for an award in 2019 and were granted the Eastside Small Business of The Year award for their contributions to blockchain technology applications. The award was brought to life to recognize superior performance of small businesses located in the Eastside in the US with 100 employees or less. Businesses nominated for this award must have an established presence in the Eastside community, commitment to bring excellent work and proven entrepreneurship.^[16] Zara Huang, Global Public Relations Manager at Dragonchain, stated it is an honour to receive this award as a blockchain company in Bellevue, Seattle. And that they are excited to explore future opportunities in blockchain.

6. Patents

6.1. Interchain

On November 20, 2018 they were granted the Interchain^[17] patent. Interchain allows them to post the hash of a transaction from a private blockchain, on to Bitcoin's public blockchain. Keeping sensitive business data private, while also allowing immutable proof of existence. Dragonchain currently has working Interchain with Bitcoin, Ethereum, NEO and Ethereum Classic.

6.2. Tokenized Micro-License (TML)

On November 20, 2018, they were granted the Tokenized Micro-License^[18] patent, which was filed August 11, 2017.

7. Television

7.1. Open Source Money

July 4th 2020, Discovery Science Channel premieres Open Source Money. ^[19][20][21] A 5-episode docuseries around Dragonchain and the CEO Joe Roets, the token sale, and the blockchain and cryptocurrency industry as a whole, including American entrepreneur Brock Pierce. ^[22] Open Source Money is produced by Vision Tree and funded with $1,000,000 in cryptocurrencies.

8. Use Cases

8.1. Decentralized Authentication

A hybrid blockchain solution is often used where multiple parties, trust, data access management and sharing, friction and decentralization is involved. Centricity works with almost 20,000 farms and over 4500 organizations. For their knowledge exchange and privacy management suite in supply chain they work with industry leaders such as IBM Food Trust. In addition to that they are also collaborating with hybrid blockchain Dragonchain^[23][24] on Dragon Factor identity services to provide users with GDPR-compliant decentralized authentication, permitting them to have autonomy over their data and control over who may access it.

8.2. Charity Donation Overview using Blockchain

Dragonchain partnered with a humanitarian group named M2030, to help fight malaria with blockchain.^[25] M2030^[26] is a Singapore-based humanitarian group that was created by the Asia Pacific Leaders Malaria Alliance (APLMA).^[27] Hybrid blockchains can be used for various applications in charity organizations. It allows a transparent overview of donations and (selective) exposure of how the funds are being used.

8.3. Learning Management Systems

Dragonchain built their own tokenized Learning Management System (LMS) on blockchain, known as the Dragonchain Academy. Blockchain development certifications granted to users are stored on the blockchain. All courses come at no cost and token rewards earned for completing courses come from the Dragonchain Foundation. Sieng van Tran is the current President of the Dragonchain Academy, who earlier in his career founded Ilearn.to, the first internet learning company in the United Kingdom that was profitable.

8.4. Other Explored Use Cases

Before open sourcing Dragonchain they explored and tested a variety of use cases in real enterprise environments. Some of them documented include: Systems for identity that involved privacy, security and confidentiality factors. Ticketing, specifically for theme parks. Infrastructure for decentralized processing, computing and storage of files or data. Different systems for voting, applicable in various ways such as governments or entertainment. For legal firms the encoding of legal agreements between parties through smart contracts. The reporting and compliance of audit results. Using blockchain and cryptocurrencies for payment platforms. The organization of internal cryptocurrencies to deal with chargebacks or to model micro-economies within teams for interaction and incentive. Contracts for a variety of services that involves booking, such as traveling, flight reservations, hotel rooms and loyalty programs. Some financial market use case explorations involved futures, credit and interest rate swaps, bonds, stocks, options, pay-for systems via smart contracts and peer-to-peer financial derivatives.