Orchid Review of OXT: Blockchain Based VPN Network
Orchid is building the world's first VPN on a blockchain. The project has picked up an immense amount of interest since its OXT Tokens were listed on Coinbase Pro.
The Orchid protocol is trying to do something completely revolutionary with a decentralised Virtual Private Network. The project raised a considerable amount of capital from private investors and its token is now available for users like you and me.
However, is it really worth all the hype surrounding it?
In this Orchid Review, I will attempt to answer that by giving you everything that you need to know. I will also take a look at the long term adoption and price potential of OXT.
What is Orchid?
Most blockchain projects seek to make something more accessible. In the case of Orchid, they believe the internet needs to be more open and accessible to everyone.
And they are attempting to achieve this by offering a decentralized virtual private network (VPN) solution that uses a global pool of bandwidth providers to connect individuals while maintaining privacy. More specifically, according to the their whitepaper:
Orchid is a decentralised market for anonymous communications
Those providing bandwidth are able to stake their Orchid tokens (OXT) and act as a network node, sharing excess bandwidth. Each node is stored in a list in an Ethereum smart contract, and that list of nodes is accessible to any Orchid users. The OXT token is used for bandwidth payments in the network.
That OXT token is an ERC-20 token built on the Ethereum Network. To use Orchid users must have some of these OXT tokens, along with a Web3 crypto wallet and the Orchid app which can be downloaded here.
The Orchid Protocol
The Orchid app was designed to function similarly to OpenVPN, using its own custom VPN protocol. It has been designed for high-performance networking and runs on top of the widely-used web standard WebRTC, which is commonly used to transmit audio and video from within a web browser.
The Orchid protocol allows users to access remote network resources and pay for them with OXT using a new probabilistic nanopayment system, which will allow Orchid to scale its payment throughput.
This nanopayment system underpins the peer-to-peer bandwidth marketplace of Orchid. It allows users to pay node operators with OXT for proxy bandwidth. The Orchid protocol was designed to keep transaction fees low even on small payments by amortizing transaction fees across transactions and even users.
Those running Orchid nodes run a software VPN daemon that speaks the Orchid protocol. Each Orchid node has its registration information saved in a stake registry and provider directory in an Ethereum smart contract.
The stake registry allows the Orchid app to discover random servers in its decentralized environment, and the provider directory allows nodes to register additional metadata, including services offered and geolocation data.
Staking with Orchid
To create a new node a user stakes a certain amount of OXT tokens in an Ethereum smart contract. Any user is able to stake, and clients of the service select new nodes in proportion to the size of the OXT stake. This means a larger stake size also leads to more users, more bandwidth delivered, and more revenue for the node operator.
One thing to keep in mind is that once a node reaches its maximum bandwidth capacity any additional stake is unnecessary since it is effectively wasted.
Tokens which are staked allows for bandwidth provisioning to begin immediately. If the user wishes to unlock and withdraw their stake they must go through an unlocking process. This involves a cooldown period of three months, during which time the finds cannot be used as a stake deposit, nor can they be transferred elsewhere.
How The App helps with Privacy
The goal of Orchid is to give every user complete control and insight regarding the network connections of their devices. Users gain privacy simply by creating an Orchid account and funding it with OXT.
This allows them to connect to the Orchid network and select a node to act as their VPN connection. As long as they remain connected their bandwidth usage is paid for via a continuous stream of OXT nanopayments.
Orchid is set-up as a single-hop circuit configuration, which provides users with:
- Protection from websites seeing a user’s IP address and physical location;
- Protection from an ISP seeing what websites are being visited by the user and when;
- Access to the open internet without ISP level firewalls restricting access.
When you use a single VPN provider there is still a potential risk that the VPN provider knows your IP address and what content you’re accessing, and that they are storing it in logs that they can sell to advertisers or use against you in some other way.
There’s no way to know for sure which VPN providers might be storing log data on their users. The Orchid system allows its users to decide which nodes they trust.
Orchid also provides another solution by allowing users to string together several Orchid nodes into a multi-hop circuit. This advanced feature prevents any single provider from gathering enough information to know who you are and what information you’re accessing.
Totally Private and Anonymous?
In short – no.
Orchid is nothing more than a tool that can be used to keep some types of information from third-party providers, websites, or ISPs. When you use Orchid you add layers that create separation between you and the content you’re accessing.
For example, if you log in to your Facebook account when Orchid is enabled Facebook will still know it is you and can create a log of your activity on their website. But your ISP will not know you’re visiting Facebook.
Additionally, Facebook will not know your physical location or your real IP address. By using a minimum of three hops you can ensure no provider will know what websites you’re accessing, or your real IP address.
Orchid is VPN software, and there are vulnerabilities in any VPN solution at the software level. The modern web browser that hasn’t been security-hardened will run all kinds of active content that can introduce tracking issues.
That gives these applications the ability to store data and share information with other websites and internet addresses. To remain completely private and anonymous all of these active content technologies must be disabled in the browser while using Orchid.
Also, certain apps or code running on your device could send de-anonymizing data out to the Internet or third parties. No VPN can prevent attacks from software running on your devices, such as malware or a virus.
In addition, there is a security breach known as “traffic fingerprinting” in which an attacker attempts to uncover private information by monitoring an encrypted connection. It is possible, by watching the size and timing of data packets, to determine if a user is downloading a file, watching a video, or surfing the internet.
A deeper analysis could even reveal what websites are being visited based on the sequence of packet data. When other metadata such as the type and size of the browser window, the pointing device type, or other unique metadata is added to the analysis it is possible a user could be de-anonymized. These are attacks that can occur for any VPN user.
Most recently Orchid has been researching a technique called bandwidth burning to help protect users from these advanced types of attacks.
History of Orchid Labs & OXT
The idea for Orchid dates back to 2017. At the launch of the network 1 billion OXT tokens were minted to power the network now and in the future.
The OXT token is used to pay for bandwidth and to incentivize users to act as nodes and provide bandwidth. As time goes by it is expected that both the number of nodes and the user base accessing those nodes will grow.
The Orchid team hopes that their open-source software and a growing community will help create a more robust privacy network. They believe future developers will be able to use their technology to create innovative privacy and security applications.
The project continues to focus on the vision of the founding team, which is to foster innovation through the creation of open source communities that have a strong core of developer involvement. Through this, they believe they will be able to create a more private and accessible internet.
The CEO and co-founder of Orchid is Dr. Seven Waterhouse. Dr. Waterhouse has been a leader in the blockchain and tech industries for several years. From its inception in 2013 until July 2016, Seven was a partner at Pantera Capital, focused on blockchain investments.
He also served on the board of Bitstamp until 2016. Seven was also a co-founder and CTO of RPX (Nasdaq: RPXC), and a director and founder of the Honeycomb product group at Sun Microsystems. Seven received a Ph.D. in Engineering from Cambridge, where he specialized in speech recognition and machine learning.
A second co-founder of the Orchid Project is Jay Freeman, widely known online as "saurik". He is most recognized for having developed Cydia Installer, the alternative to the App Store for jailbroken iPhones, iPads, and the iPod touch, used by tens of millions of users worldwide.
Brian Fox is a computer programmer, an open-source advocate, and a third co-founder of Orchid Labs. Fox was the first employee of the Free Software Foundation, where in 1985 he created the GNU Bash Shell. In 1995, he created the first interactive online banking software for Wells Fargo.
Over the last three decades, Fox has founded multiple technology companies, as well as not-for-profit organizations dedicated to open source voting systems. Fox received a B.S. in Information and Systems Sciences from the University of Stockholm, where he also minored in mathematics.
The fourth and final co-founder of Orchid is Gustav Simonsson who is both a developer and a blockchain expert. Simonsson helped launch the Ethereum network in 2015 as one of the core developers on its security team. He specializes in full-stack development, with experience in complex backend systems, blockchain systems, FinTech, payment processing, and telecom.
Orchid has been able to build a decent-sized community over the past two years, although it can’t be said to be huge. The Twitter followers are just over 25,000 and the Facebook followers are just over 2,300. In addition, there are nearly 3,700 subscribers to the project’s Telegram channel.
We also found a subreddit for the Orchid Project, however, it is set to private and you must be invited to join. Given that we were unable to determine how many followers there are, but with an invite required it’s likely the number is fairly small.
Finally, if you want to keep up to date with the latest to come out of the project then you can always follow their official blog. They tend to keep this quite current and they go into some of their posts in-depth with helpful explanations.
Orchid Token (OXT)
The primary reason for the existence of the OXT token is to track who is using computing services, who is providing those services, and ensure the average service provider is being properly compensated by the average user.
In doing this the OXT token provides value to the Orchid network in several ways:
- Bandwidth Providers – Anyone can take on the role of a bandwidth provider and node operator for the Orchid network, but they must stake OXT tokens to do so. And the larger the number of OXT tokens staked the greater the chance of being rewarded for providing the network with bandwidth.
- Bandwidth Users – The Orchid network makes it possible for internet users to pay for a secure and private connection on the fly for the first time ever. Users simply need to download the Orchid VPN app, add OXT to their wallet, and they can then choose the path they wish to use for a secure connection anywhere in the world, and they only pay for the bandwidth they consume.
Bandwidth is provided in a completely decentralized peer-to-peer marketplace. There are no third-parties required for the Orchid network to provide its services.
Orchid Labs SAFT Sale
Orchid first sold the rights to its token at the formation of Orchid Labs in 2017. This was a private placement and was fully subscribed by several top tier firms, including Andreessen Horowitz, Sequoia Capital, and Threshold. Rights to roughly 163 million tokens were sold for a total of $4.9 million.
In the second quarter of 2018, another private placement sale was held to fully capitalize the project and provide the necessary resources to see the project to completion. Those needs included a world-class marketing team for Orchid and top-tier technical developers. That sale was for roughly 85 million tokens and raised $43 million.
These sales were through something called a "SAFT Agreement". For those of you who do not know, a SAFT is a Soft Agreement for Future Tokens that is offered to accredited investors. So, these are financial securities that confer a right to the owner for the future tokens.
Trading & Storing OXT
So far Coinbase Pro is the only exchange to announce support for the OXT token. They began accepting inbound transfers of OXT on December 13, 2019 at 11:00 am PST. They had a sufficient supply deposited to begin trading OXT tokens on December 16, 2019 at 7:00 am PST.
The opening price for the token was $0.40. Early adopters seem to be heavy sellers in the first days of trading and late on December 17, the price hit $0.30 for a loss of 25% after a day and a half of trading. However, on the 4th day of trading OXT hit an all time high of $0.60.
Given the amount of volumes that are taking place for the token one can only assume that some retail demand is coming back in as traders FOMO on OXT. Currently, markets still remain incredibly volatile so you should exercise caution when buying / selling OXT.
When it comes to storage, OXT is an ERC20 token. This means that it has quite extensive support amoung a range of wallets. Any wallet that supports Ethereum will also support OXT. Of course, if you are going to be using the Orchid network then you may as well use their mobile app which can store your OXT as well.
Even though the Orchid project began in 2017 it is a new commodity now with the recent launch of the public network, and the start of OXT token sales. The first days have been incredibly volatile for the OXT token. This is no doubt as a result of the market feeling the token out.
However, as more traders start to get into the market and more exchanges list the token the price discovery is likely to take hold. As prices start stablising users are more likely to start using it in the manner that it was intended within the VPN ecosystem.
The VPN services being provided by Orchid are certainly a valuable commodity. Privacy and security while online are becoming increasingly important in our modern world. Once the network grows large enough it will be interesting to see how inexpensive it is to use Orchid.
There are still a lot of questions remaining unanswered though. For one, will the network ever become large enough to support all the potential users? Without a large enough base of nodes service could slow to a crawl. And what about security? Sure the software and encryption protocol will be secure, but there’s no way to know how secure each individual node will be.
Using blockchain for VPN services is new and virtually untested, making Orchid a pioneer in the space. Whether they flourish or wither remains to be seen.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.