You might have noticed that many algorithmic trading platforms that are funded through Ethereum ICOs don’t really need tokens at all, and merely run off centralized databases, recording little if any meaningful information on blockchains. The transaction speed and low computation cost of Stellar means that it is possible to create a truly decentralized copy trading platform. This means that trading and copy trading records achieved on Pinnacle will not be falsifiable, even by us! It will certainly not be possible for users to manipulate them by getting friends to upvote copy trading performance, or any similar method. The accuracy (or otherwise) of trading signals given by traders on Pinnacle will be clear for all to see.
“Pinnacle will be the first multiexchange, decentralised trading and copy trading platform”
A token is necessary in order to play certain computational functions within the platform which require consensus, and between exchanges which requires very high transaction speeds. Pinnacle will be a multi-exchange, decentralised trading and copy trading platform – the first of its kind – and certain information which is necessary to truly verify trading records and copy trading records in an unfalsifiable manner needs to be transmitted on the Stellar blockchain. This will give us a unique advantage over centralised platforms like 1broker, eToro, and Tradingview, and over Ethereum based platforms that contain approximations of certain of our features.
Furthermore, it is necessary to use Stellar rather than Ethereum in order to do this. Ethereum based trading platforms are often not truly decentralised due to practical concerns of computational cost and speed. They could really be done without tokens a lot of the time. But Pinnacle can properly utilise a token, as the transaction cost of Stellar mean that it can be used for the real purposes for which blockchains were designed. Ethereum currently has an issue with computational cost, as well as inherent issues in the solidity language that led to the recent disasters such as Parity.
The way we will achieve this is no different to the way it would be achieved in any Stellar network architecture and doesn’t require elaboration if you are familiar with how Stellar (or blockchains in general for that matter) work and interact with centralised components in systems. The only real novelty is how we achieve consensus for “single instance events” such as trade placement, in order to confirm trading records – this is not obvious but the solution might become clear to blockchain architects with some reflection and thinking outside the box. We cannot expound on this in the whitepaper as we believe our solution is patentable.
The token is also necessary in order to transcend boundaries between areas of differing financial regulation, which is why a project like this has not been possible prior to blockchain, and why what we have called the “problem of exchange separation” in some of the articles on the site, which has existed since the beginnings of trading 6000 years ago in Mesopotamia, was not resolved by the rise of computerised trading that began the Nasdaq era. You need true decentralisation to do this, not just abstract mainframe style computation, and Pinnacle, via Stellar, will make this a reality. (And you need Stellar rather than Ethereum for practical considerations of speed and cost.)
For many “ethereum based” platforms the token is not really necessary, except as a fundraising mechanism to get around SEC legislation, but with Pinnacle it is indispensable and is the very backbone of what we will do. Brilliance is one of the best examples of a true utility token that exists.
So a token certainly is necessary. Brilliance as a modified Stellar based token is set to provide revolutionary and unique trading platform functions that Ethereum tokens cannot achieve for practical reasons. We have intentionally tried to keep the rest of the whitepaper focussed on uses of the platform rather than technical information for now, as this is what most people will get most benefit from reading, and because this is necessary to preserve patentable rights.