What is Tixl?
Introduction
In order to explain what is Tixl, we first have to understand a little better what are the problems that Bitcoin, Ethereum and other crypto coins have. If we don't have the correct understanding of those, Tixl might just not make any sense.
This article is written for people who have some understanding of crypto. People who have traded and transferred cryptos from/to their wallets from/to Exchanges etc.
My first time (and probably yours too)
The first time I bought a crypto, I got really scared. Before anyone ever explained to me why crypto was something interesting, I had my mind set to "this is good for illegal transactions like buying drugs or guns or whatever". So, even after understanding what it really is about, the first time I actually bought some, I still felt like I was going to some kind of dark, obscure place. Then I put my order and it got executed. My money came out of my account and... no bitcoin in my wallet. My first thought: "refresh, refresh". But nothing yet. "I got scammed... they stole my money" are the thoughts that came to mind but I was fighting not to accept that was the case. I checked the transaction and it appeared as "pending". I think "Ok... let's see what happens when this status changes". After about 20 minutes (stressful 20 minutes), I see my bitcoin fraction appeared in my wallet. What a relief.
I had no idea why it took so long for the bitcoin to appear in my wallet. I worked my whole life in technology so I'm kind of used to thinking that things should happen nearly instantly. Having some knowledge in financial markets also lets me understand that things could take longer (much longer) sometimes. But, I'm originally from a country where even bank transactions (especially transfers - the equivalent to wire transfers in the US) take seconds to happen. And bitcoin is supposed to be the modern thing, the thing that will revolutionize Finance. Why the hell would it take so long to get them to appear in my wallet?
My second transaction
A lot of people said it was not good to keep my bitcoin in the Exchange wallet. If the Exchange gets hacked, a hacker could steal my money. Recommendation was to get the crypto transferred to my own private wallet. After some research, I downloaded a wallet on to my cell phone, figured out what that QR code meant (my wallet address) and, got nervous again. The reason? "Make sure you got the correct address. If you miss 1 character or get 1 character incorrect, you will lose your cryptos". Once again, very nervous, I copy/paste the address, to make sure I got it right, I wrote the amount I wanted to transfer and press the "Send" button.
Surprise! I got a message more or less like this: you don't have enough funds for this transaction. Problem was that I wrote the amount I wanted to transfer instead of pressing the "Max" button. At that time, I had no idea of the fees, or their size. So I tried once more. Now I pressed "Max" and noticed that a certain 0.01 BTC (this was not the value - I just want to point out that a certain bitcoin amount was charged as a fee) "disappeared" from my initial holding.
Ok. Now I got back to the point where I got nervous again: bitcoin left my wallet in the Exchange but didn't arrive in my wallet yet. "Yeah... it takes long... I can wait... I just really hope I got the right address". For some reason, this transaction took a few hours to be confirmed. I wanted to save money, so I paid the lowest fee (because I thought that $20 was too much to pay for a simple transfer). I had to wait until the next day... I didn't sleep well that night. But everything worked.
What are the biggest problems that BTC and ETH users feel today?
I had to write about my first 2 transactions because I think that they reflect the problems that are inherent to BTC and ETH blockchains: they are slow (transactions take long to be confirmed) and expensive.
Low performance / Low transaction speed
In the technology sector, we usually think that "if you need more performance, just add more machines". Funny thing with bitcoin and ethereal blockchains is that, the more people start using, mining etc, the slower they get. That's kind of counter-intuitive because we would expect that, the more miners (and these are the guys who confirm the transactions), the faster the transactions will be confirmed.
A quick explanation - and I have no intention on having a perfect technical explanation. Bitcoin and Ethereum blockchains work under an assumption that, in order for a transaction to be confirmed, it has to be confirmed by 50% + 1 of the miners in the network. In the early days, when their networks had, let's say 101 miners, they just needed the confirmation of 51 of those miners. I don't know how many bitcoin miners there are in the world today. But let's just say there are 100,001. Now, we need 50,001 miners to confirm that a transaction happened, in order for it to become accepted. Compare 51 confirmations to 50,001 confirmations. Doesn't it make sense that these blockchains would take much longer today. And what will happen in the future?
Bitcoin and Ethereum communities are very aware and worried about their futures and are working avidly to fix this problem. But I keep asking some questions:
Are they doing structural changes to their networks to fix this or are they just putting in some "clutches"?
If they are doing structural changes, what could happen to the existing bitcoins? Would there be some kind of "migration" to this new version of their blockchain?
These communities already had many (hot) discussions in the past. They weren't able to agree on where to go. Parts of their communities wouldn't accept the changes that other parts wanted to implement. Other cryptos like Litecoin, Dash, Cardano, Ripple were born and grew because of this.
Expensive / High transaction cost
Remember my second transaction? I chose to pay less as a transaction fee because I thought it was too much. That just made it take even longer to be confirmed...
I don't know how gas fees (for ETH) or BTC fees are calculated. All I know is that it is a piece of the underlying blockchain coin. So, just for the sake of the example, let's say that the cost for a transaction on the BTC blockchain is 0.001 BTC and the cost on the ETH chain is also 0.001 ETH.
When BTC was valued at $5,000, the cost for a transaction there would be $5, if we assume the 0.001 BTC cost. However, with BTC valued at $50,000, now the cost for this transaction is $50. I won't do the math for ETH buy I think you understand what I'm trying to explain. The reality is even worse because there are situations where you just want to transfer the equivalent to $10 but then you have to pay a $20 fee.
But BTC was born to be a currency
Well, BTC is a currency. It just cannot be used on your daily activities, like you would use money that is in your wallet. Buying BTC (or ETH) became the same as investing on foreign exchange: people buy a foreign currency (or gold, silver...) to protect themselves from inflation or as an investment. But who are the people in the world that do that? Is it the average Joe? Does the average Joe buy foreign currencies or gold? NO. So, does the average Joe invest on bitcoin? Certainly not.
You might argue that, the way BTC price floats, you really don't want to use it as currency. I mean, who would want to buy a coffee for $5 and pay that amount in BTC just to find out that, 2 days later, with that same amount he could buy 3 coffees in the same place? Well, that's why the stable coins were created. USDT, based on ERC20 (the ETH standard) is valued at $1, no matter what. It is backed by US$. Other stable coins do the same. So, instead of paying for your coffee in BTC, you could keep a certain amount of USDT in your wallet and use it. But hey, you still have to pay the fees to convert some BTC fraction into USDT and then pay another fee to transfer the USDT to the coffee store.
My point is, as a currency, BTC doesn't make sense anymore and is only accessible to a small part of the world. Why?
- First, because it is expensive - this could be a no problem, if you consider that people can buy really small fractions of it.
- Second, it is not a bit practical - if you try to use BTC, ETH or USDT to buy a $5 coffee, you will have to wait many minutes until the transaction is confirmed.
- Third, it costs too much in fees - your $5 coffee would cost an extra $10 in fees.
Tixl came to fix these problems
Many other crypto coins were created with the intend to solve the problems that BTC and ETH have. Cardano, Ripple, TRON are some of the examples of Layer 1 networks (i.e. a totally new blockchain) that makes their tokens (ADA, XRP and TRON) be transferred at high speeds and low cost. However, they require people to "leave" BTC and ETH. I mean, if you want to transfer money fast using Ripple, you can, but it has to be XRP. So, you need to exchange your BTC for XRP, then transfer them at high speed and low cost.
I see 2 problems on this approach:
- I'm lazy... I don't like to do an extra swap (BTC to XRP) in order to transfer the money. I would be so much happier if I could just keep my original BTC and transfer them. Maybe you're like me maybe not. But I would bet that most of the people in the world would have a reason not to exchange their BTC for something else.
- Do you think BTC's value changes a lot? Well, many other crypto's value fluctuates much more than bitcoin's. That could be good but it also could be bad. I really don't feel comfortable having to change my BTC to something else (that I, at first, didn't want - I must point this out) and then incur the risk of that other crypto. I was ok with taking the bitcoin risk, not the other crypto's risk. Does that make sense?
This is how Tixl solves the problem: they created a Layer 1 network (yes, just like Cardano, Ripple and others) - the Autobahn Network - and they created their own token - TXL. But you don't have to exchange your BTC or ETH or whatever crypto you have for TXL in order to benefit from the high transfer speed and super low cost that the Autobahn provides. All you have to do is move your BTC, ETH or any ERC20 based cryptocoin into the Autobahn. Your BTC is still BTC. Your ETH is still ETH. But now you can transfer them in seconds (speed) and at a near to zero cost (cheap).
And what is TXL?
TXL is the token that powers the Autobahn. Let's be completely honest: there is no and there will never be a Layer 1 network that charges absolutely no fees. The people / company / community that maintain this solution have people working and they need to get paid. They invest in hardware and software to keep everything running smoothly and they are developing upgrades to it. That's how the technology industry works. So, there will never be a transaction fee free network (only TXL tokens are transferred for free on the Autobahn Network).
The cost for sending a crypto using the Autobahn will be charged in TXL. But it is ok if you don't have TXL. Because the value will be converted to the crypto you are transferring. Later (and this is my speculation), this money will be used to buy TXL to be distributed to TXL stakers and node hosts - but this is a totally different subject. Just keep this in mind: it will be very low. And how do I know that? Because that is an assumption for the creation of TXL and the Autobahn. So, even if TXL becomes very expensive (and fees are charged in TXL), the fee will be adjusted to remain low.
More information about the TXL token
The amount if TXL is limited: 600 M TXL.
In 2019, the Tixl Team went to investors looking for money. Just like any startup company, they had their names and a Powerpoint deck of slides. I assume they went to some Venture Capitalists, a few Family Funds and, mostly what they got was a "this project seems very interesting and we'd like to invest on it, as soon as we see something real, something working and not just a deck of slides". So they made an ICO and raised US$ 1,350,000. Then they sold some more Over the Counter. Some information here I got from their site and the rest is pure speculation, based on my experience with startup companies.
If you go to Tixl's site (Tixl.org), you will see how the total 600M TXL are allocated, if you are curious.
The founders have 7.5% of the total tokens. I don't think that is much. I've seen other projects where the founders have 20% of the total tokens. But this is not the interesting part. In Tixl, the founders can sell at the most 1% of their tokens per month, starting now (jun/jul 2021). That is programmed in the smart contract so there is nothing they can do about that. Even if they decide to "dump" their tokens, it would take them at least 100 months (8 years and 4 months) to sell them all. I see no such rules in other projects. In fact, what I see a lot is: when the founder's vesting period is coming to the end, they start these really crazy hype campaigns and then they sell a huge part of their stake to get really rich while devaluating their own product, in detriment to their investors.
The TXL token is a deflationary token. That means that, as time passes, there will be less and less TXL tokens available in the world. You will find somewhere in Tixl's site that the transaction cost will be charged in the crypto that is being transported. Then this value will be converted to TXL and some amount of TXL will be burnt - will cease to exist. In principle, if the Autobahn is used a lot, a lot of TXL tokens will be burnt, and the remaining ones are worth more.
Why the name Autobahn? The Tixl Team is from Germany, the country where there are no-speed-limit highways. Guess what their name is: Autobahn! Calling Tixl's network Autobahn just seems so appropriate.
And we didn't even touch the Interoperability subject yet
The simplest way to explain what interoperability is would be to say: it is the capability of jumping from one network to another one. How do you do that today? You go to an Exchange. More specifically: a centralized Exchange. That is the only way you can exchange BTC for ETH.
Interoperability is much more than that but I just found this the easiest way to explain it. And it might help you understand when I explain what a DEX is.
Decentralized Exchange (DEX)
We are all used to Centralized Exchanges, where we open an account, send our money/crypto there and trade. I mentioned, in the beginning of this article, though, that they are kind of unsafe... If they get hacked, all your money could be stolen. Additionally, you need to go thru "know your customer" processes or some kind of identification process. If you're looking for privacy, Centralized Exchanges are not where you want to go.
A Decentralized Exchange is almost like a virtual flea market: as long as you have the money and someone is willing to pay what you are asking (or vice-versa), you will do the deal. And you don't have to identify yourself. What you do here is: you connect your wallet to the DEX (Uniswap is probably the greatest example of DEX) and find the pair you want to trade. Any Exchange (centralized or decentralized) is kind of a market maker too. That means that they incentivize people to make their tokens available to be exchanged in return for some interest or prize. This tokens that are available are put in a pool (a liquidity pool) and that is what makes it possible for transactions to happen. Prices are adjusted according to the size of the pools. The bigger/deeper the pool, the less fluctuation on price of that currency. Once you are connected to the DEX, you indicate what you want go buy/sell and do it. Once the transaction is done, you disconnect your wallet and walk away. You don't have to identify yourself, you didn't transfer your money to some other place.
There is a catch though... DEXes don't do trades from/to different Layer 1 networks. Why? Because they were developed on top of a specific Layer 1 network. Uniswap was built on top of ETH network. So it only does trades between coins that are based on ETH: the ERC20 coins. You are not able to swap ETH for BTC on Uniswap. Or BTC for ADA, or USDT for BTC. You can only do this kind of trade on a Centralized Exchange.
I think that, if the communities built integrations between these L1 networks, they would be able to get this interoperability. However, a new problem presents itself, and it is a complex one to manage.
In a universe with just 5 cryptos, if you developed integrations between all of the exiting cryptos, you would have to develop 10 integrations. That seems ok right? But our universe has 6,000 different cryptos. If we consider that 5,000 are pure garbage, we still have 1,000 to integrate. But let's just work with 100. If you wanted to integrate 100 cryptos, you would have to develop (n x (n-1))/2 or 100 x 99 / 2 = 4,950 integrations. Is that even possible? How much will it cost to develop and maintain all these integrations. It doesn't seem feasible.
My next figure shows how I think Tixl solves this issue.
Given this scenario, can you imagine a DEX that is integrated to the Autobahn Network? This DEX would be able to exchange BTC for ETH or USDT or USDC or whatever. If the crypto is connected to the Autobahn, it should be able to be traded in the DEX. That is huge!
Conclusion
The reason why I started writing this article is because I noticed that a lot of people don't know what Tixl is. And for me that appears when they ask "what is the team doing to make Tixl price go up?"
I think my answer to that question is: nothing because they did all this already. I don't think the Tixl Team has a final goal to make the TXL token price go up. I think they see that as a consequence. And I think a lot of our fellow investors will be disappointed with the Marketing Message and campaigns. We're used to see Youtubers saying: the price of crypto XXX will go up because of A, B and C... And I think the message here will be more like "do you want to transfer you BTC in seconds at no cost? Bring them to the Autobahn".
I think it will take some time until people notice that whoever owns TXL tokens owns the Autobahn and, if it is used a lot, they will be paid for that use, like charging a toll for the use of the highway. Then they might notice how valuable this token should be. Marketing is super important, and it needs money. I'm really curious to see how it will be done. If it brings lots of cryptos into the Autobahn, I'll be happy.
I hope this helped. Once again, these are my thoughts. I could be right or wrong. I've read white papers, I talk to people and I get to my own conclusions. I hope this helps you get to your own which could be similar to mine or not.
- Telegram: https://t.me/diegoquast
- Twitter: @DiegoQuast
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