Yanislav “Yani’’ Malahov
Yanislav “Yani’’ Malahov

Malahov’s Aeternity blockchain venture puts down roots in Liechtenstein

What does a member of Liechtenstein’s royal family, a U.K.-raised Anarcho-Capitalist and a self-described “Godfather’’ of the world’s second-largest cybercurrency platform, have in common?

Each played a role in establishing Aeternity, a fledgling software company that aims to do no less than recast the foundations of today’s smart contracts.

Yanislav “Yani’’ Malahov
Yanislav “Yani’’ Malahov

The brainchild of Yanislav “Yani’’ Malahov, a 29-year-old computer scientist, Aeternity is moving to increase the speed, reliability and scalability of blockchains, the technology that allows the creation of smart contracts and forms the backbone of cybercurrencies such as Bitcoin.

“Our blockchain gives the people of this planet greater access to financial tools that can be scaled up, don’t crash or slow down,” Malahov said. “Aeternity also allows real-world information to flow into the blockchain, without relying on centralized sources.”

Without going too far into the technology, at the core of Aeternity is Malahov’s belief that blockchains and their related applications can make the global economy fairer and more inclusive for populations underserved by traditional forms of finance and record keeping.
“Most of the people in the world are still not banked,” he said in a phone interview from the town of Triesen, Liechtenstein. The unleashing of blockchain technology “is one of the largest opportunities right now to give them access to a modern financial system.”

Malahov, who plans to sell Aeternity tokens in the first quarter of 2017, isn’t alone in aggressively moving to tap the blockchain’s potential. Aeternity’s competitors include Gnosis, Synereo and Ethereum, the largest cybercurrency platform after Bitcoin, Malahov said.

Development of Aeternity’s blockchain includes an emphasis on a unified consensus mechanism, a state-of-the-art system for smart contract storage and execution, with planned improvements in system governance. The coding is also on Erlang, an industry-proven programming language.

“Malahov’s approach to decentralized processing elegantly addresses issues of scale, by taking the state-channel approach to the nth degree,’’ Trent McConaghy, co-founder and chief technology officer at BigchainDB, said in an interview. “That makes it easier to connect emerging decentralized networks.”

Aeternity “could end up being the TCP/IP of decentralized processing,” McConaghy said, referring to the protocols that govern communication between networks on the Internet.

Malahov established Aeternity in Liechtenstein in November after a chance encounter with the Principality’s Prince Michael at a tax conference in Germany. The prince, who Malahov said expressed an intellectual interest in blockchain technology, suggested that Malahov meet Andreas Kohl, a self-styled Anarcho-Capitalist, or Libertarian, who grew up in Hertfordshire, north of London.

The more Malahov learned from Kohl and local regulators about Liechtenstein’s banking industry, its legal system of trusts, or foundations, and its openness toward technological innovation, the more he embraced establishing Aeternity in the principality.

“There is a level of mutual transparency, accountability, and trust between entrepreneurs and government that you cannot get anywhere else,” said Kohl, who describes Liechtenstein as a Libertarian utopia.

Over the past six years, Malahov has collaborated with leading thinkers on cybercurrencies and blockchains, including Gavin Wood and Vitalik Buterin, co-founders of Switzerland-based Ethereum.

In a 2015 blogpost, Malahov dubbed himself the “Godfather” of Ethereum, The post included a transcript of an instant-messaging conversation with Buterin to prove his crypto-lineage.

“I was kind of involved in Ethereum even before there was a name for it,” Malahov said.

Malahov previously worked on the development of Bitalias, a blockchain naming system, and on other projects with entrepreneurs such as McConaghy.

Born in Bulgaria and educated in Germany, Malahov said he became aware at an early age of economic inequality, hardship and the impact of financial-market turmoil following the collapse of the Eastern Bloc.

“I always thought that something is broken here,” he said. “The financial crisis which we experienced only confirmed the point that blockchain technology is the next big step we need to take as humans.”

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