What is Orchid? (OXT)

By Kraken Learn team
5 min
19 thg 1, 2022
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The Beginner’s Guide

Orchid is a software that seeks to incentivize a network of computers to operate and maintain a decentralized virtual private network (VPN). 

A widely used tool for routing web traffic, VPNs enable users to alter how the data they generate moves around the internet, obscuring details about their browsing and data transmission. This can have benefits for users, especially those seeking to circumvent hostile local networks. 

You can find more information about the security risks of traditional VPNs here.

However, VPNs can still pose security risks to users. Notably, users have to trust that their VPN provider will not steal, spy or otherwise improperly access, compromise or monetize their data. 

Orchid aims to provide a solution to this trust issue by distributing the operation of its VPN across a network of users on the Ethereum blockchain. More specifically, it is aiming to build an app designed to prevent users from leaving a data trail when they browse apps and websites.

To achieve this, Orchid matches users who need bandwidth with sellers willing to sell it. Orchid’s OXT cryptocurrency is used to facilitate payments between these buyers and sellers.

This peer-to-peer connection is then encrypted and sent through the seller’s internet servers. This means the user’s own internet services are unable to track their activity. The user’s data is further hidden from third parties.

If you wish to keep up with the project, Orchid keeps users updated on the status of its roadmap through its official website and blog.

What is orchid oxt

Who created Orchid?

Orchid is developed by Orchid Labs, a for-profit startup created in 2017 by privacy-focused developers Brian Fox, Gustab Simonsson, Jay Freeman, Stephen Bell and Steven Waterhouse.

As of 2020, Orchid has raised $48 million through at least three token sales granting investors the right to purchase its OXT cryptocurrency at a later date. 

Orchid officially launched its desktop app in July 2020. 

How does Orchid work?

There are two main participants in the Orchid network: 

  • Bandwidth Users – Those running the Orchid app and seeking to be connected to its decentralized VPN.
  • Bandwidth Sellers – Nodes in the network responsible for selling bandwidth for OXT. 

Orchid facilitates the purchase and sale of bandwidth between users and providers by way of its mobile application, enabling buyers to browse the internet privately.

Architecture

There are several ways Orchid leverages the blockchain to keep data more private than it would be with a traditional VPN service. 

First, paying for bandwidth can only be done with Orchid’s cryptocurrency, OXT. The Orchid team argues that by not having to link a bank account, users can better shield their identity.

Further, rather than matching users with a single seller, the Orchid app assembles providers together in a multi-hop configuration using layered encryption. 

If you’re unfamiliar, a hop is a VPN server that encrypts and masks incoming and outgoing internet traffic. A multi-hop architecture adds an additional encryption layer by connecting internet traffic through two or more VPN servers. 

Data is protected at each hop so no single internet provider can make a connection between Orchid’s app and the content being accessed. This makes the data trail much harder to piece together, thus removing points of entry from bad actors. 

Why does OXT have value?

OXT is the currency in which services are priced on the Orchid network, meaning users must exchange it when they enable its services within the app. 

This means that to access Orchid’s services and get internet using a secure connection, users will need to keep OXT in a wallet. The Orchid app will then automatically deduct micropayments as they consume bandwidth. 

OXT is also necessary for those seeking to sell bandwidth on the network. In order to compete for bandwidth bids, users must lock OXT in special contracts, a process called “staking.” 

The Orchid client weights sellers by the amount of OXT they stake. This means that the more OXT a user stakes, the greater the chance they will get selected to provide bandwidth to users and earn OXT. 

Of note, Orchid differs from traditional staking models as users are only compensated for providing bandwidth to users. Users do not gain any additional OXT through staking alone.

Lastly, 1 billion OXT tokens were created at launch, meaning no new tokens will ever be introduced into the software’s economy. This provides a certain scarcity to the cryptocurrency, which may help its value increase over time.
 

Why use OXT?

The Orchid network may be appealing to users wishing to wrest control over their digital data away from third parties wishing to sell it. 

Investors may seek to buy OXT and add it to their portfolio should they believe that the future of the internet will be more decentralized, open and private.

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