The blockchain is changing with several new protocols currently being tested and which look to be changing the system as we know it. The latest incarnation is what is being termed as ‘Blockchain 3.0’
A new company called COTI has designed a new block-less and miner-less blockchain which they claim solves the scalability issue of cryptocurrencies and makes bitcoin look slightly backward. Cryptocurrencies were all were introduced to make payments cheaper, faster, secure and easier. Arguably, they’ve done anything but so.
The time and money it takes for miners to confirm transactions mean that Bitcoin transactions can conduct 3-5 TPS (transactions-per-second), and Ethereum marginally better at 15 TPS. It’s a clear problem if we expect millions to use cryptocurrencies for their everyday shopping. Not to mention the nightmare of wallet address, and the energy consumption to code.
COTI has architected a new blockchain based on a DAG (Directed Acyclic Graph) protocol. DAG are block-less blockchains where there are no miners or blocks. Graphs are acyclic in nature and flow in a specific direction, which means that transactions cannot be duplicated and can confirm themselves automatically based on previous transactions. Therefore, there are no miners to spend time and charge fees to code to confirm transactions, allowing for virtually real-time and low-cost crediting of funds to the other party’s wallet.
Plus, no miners means no coding and no energy consumption for computing. What’s more, COTI will store user’s funds in ‘cold’ offline wallets, securing against the recent well documented cyber attacks.
Therefore, unlike Bitcoin’s 3-5 TPS, COTI is able to process 10,000 TPS. It’s bringing what works in the fiat world (i.e. instant payment processes) to the crypto world.
COTI is a real business and has not gone through an ICO but has an operating platform with 80,000 users, 4,000 merchants, worth $15m+ already, and already being used on 250,000 POS terminals in shops across the world.
COTI is run by a team with considerable experience: Greg Kidd (early investor in Twitter, Square, Coinbase, Ripple), Steve Heilbron (CEO of Investec plc) and Dr. Matthew McBrady (CIO of Blackrock), as well as further executives from JPMorgan, Goldman Sachs, HSBC, UBS, KPMG and IBM.
I spoke to Shahaf Bar-Geffen who is the CEO of COTI. As already explained, COTI has architected a new blockchain based on DAG (Directed Acyclic Graph) data structure, called the Trustchain. DAG is block-less blockchains where there are no miners or blocks, allowing for virtually real-time and low-cost confirmation of transactions. Shahaf was also co-founder and CEO of WEB3, a digital media and advertising business.
Could you provide an overview of how COTI works and how this is relevant in the light of Blockchain 3.0?
“At COTI, we are building the world’s first blockchain protocol optimized for decentralized payments, designed for use by merchants, governments, decentralized payment networks, and stable coin issuers. Our DAG-based Trustchain protocol is the next evolution in the blockchain, a truly viable blockchain 3.0 solution that will be particularly fit for specialized use cases”.
Geffen further states that decentralization is the future and that the Trustchain is the next generation blockchain 3.0 solution, which will bring the world one step closer to achieving the mass adoption of cryptocurrencies. ”
“Our vision is to digitize money and to improve the technology behind it. We see a future in which money is completely digitized and unbound with the limitations money has today”.
How does COTI improve security for proof of work?
“We achieve Trustchain protocol security in our network by introducing DSP (double spend prevention) Nodes and applying trust to every participant in the network. With COTI, double spending attacks are not possible at all, so we are much safer than any existing blockchain protocol.
Most known solutions to the double spending problem are inefficient or centralized. Geffen claims that their DSP solution consists of adding a handful of highly trusted Nodes to the network with the primary function of reaching consensus on whether the transaction is legitimate or a double spend. When a transaction has more than one-half of the DSP Node signatures, then consensus is achieved.
We take it a step further with the PoT (Proof of Trust) required to validate transactions. In the rare event where an attacker is capable of making many small transactions, the account’s Trust Score will decrease, causing an increase in the PoT required to create new transactions and by that blocking such an attack very quickly. Another possible way to launch a similar attack is to flood the network with invalid transactions using many user accounts. In COTI, such attempts will be met with little success because all transactions are verified by Full Nodes.
What are the technical aspects of the coin and how are these game-changing in the space?
“We’ve introduced a high-performance cryptocurrency built atop the base layer protocol. This cryptocurrency will be used as a common means of payment, including all fees and staking inside the COTI ecosystem. There can be voucher tokens, stable coins, dedicated tokens for global companies, or scalability tokens to speed up settlements in other blockchains.
Geffen explains that their infrastructure will support a MultiDAG, which is a unique and innovative concept not available on other platforms and which can be used for various purposes and originators. They are also introducing on-chain DAG-based smart contracts, a unique solution that will enable the streamlined deployment of new tokens onto the network. All fees within the COTI ecosystem are paid with the COTI native coin. In this way, all applications and tokens supported on the infrastructure will increase native coin circulation and token value accordingly.
“Our MultiDAG, together with our smart contracts and the possibility of multiple genesis transactions allows for the creation of high-performance stable coins. Most stable coins are essentially ERC-20 tokens, which make them hardly usable for everyday payments. For COTI, the situation is different, as high throughput, quick confirmations, and low fees enable the creation of highly usable stable coins with their own Cluster and confirmation rules”, Geffen added.
Finally, what are the next steps for COTI?
“To date, we have launched the Trustchain AlphaNet protocol, on chain KYC, the trust scoring mechanism and COTI Pay. We also have a lot more exciting developments coming up at COTI in the next few months. At the close of November, we’ll be releasing the COTI-X exchange and first white label solution, followed by the rollout of our Arbitration System during our TestNet release on 30 December, 2018. Smart contracts and POS integration will be implemented on the main net in Q2 2019”, Geffen concluded.
Date: November 27, 2018