Well, all I can say is that in COTI we found out that the blockchain system is too rigid, too linear and does not allow higher transaction speed. So we're implementing DAG (directed acyclic graph) technology, which basically runs faster and greater network usage leads to improved network scalability. (Think like file sharing, more seeders = faster download). We're going to be capable of easily reaching 10.000 tps.

Wasn't that just created as a joke coin? True, it did make x4 jumps in the past but I highly doubt it will be very profitable in the long term.

Luno, a Bitcoin exchange and wallet provider, recently explained that transacting in Bitcoin has become painfully slow. It is also much more expensive than it was a few years ago.
A theoretical maximum speed for Bitcoin that has been circulating online is seven transactions per second. However, in reality the Bitcoin network is achieving maximums of 3 to 4 transactions per second, which is archaic and laughable (akin to sending messenger pigeons in this era, or trying to win a F1 race with an old and tired, also very expensive horse).

Then there came Ethereum, the father of all altcoins, with a revolutionary (!) transaction speed of 20 transactions per second.

Also, another, out-of crypto example: PayPal, with an average speed of 193 transactions per second.

Do you think VISA-like, instant confirmation and speed is going to be possible, in the foreseeable future?

Despite increasing regulatory pressures, cryptocurrencies and ICOs are still in relatively good shape. Cryptocurrencies, though in negative territory overall year to date, are still well above their initial 2017 levels. Bitcoin, for example, hasn’t been able to break through its December 2017 highs; nevertheless, it is still trading well above its January 2017 price of $1,000.

ICOs, according to CoinSchedule, have raised almost 3.4 billion USD thus far in 2018, rapidly closing in on 2017’s total of about 3.9 billion USD.

What’s more, there are still some good-sized businesses that accept cryptocurrencies as payments. Overstock still accepts Bitcoin, Ethereum, Litecoin, Dash, and Monero, in accordance with an August 2017 announcement. Expedia also lets users purchase tickets and book hotels using Bitcoin; but once an order has been placed, it can’t be reversed. Subway, Microsoft, and ironically enough, PayPal also accept cryptocurrency payments.

However, this doesn’t mean that everyone’s on board with this concept. One company, COTI–the Currency Of The Internet–is developing a cryptocurrency specifically designed to process transactions. Their goal is to be the digital coin that takes cryptocurrency use mainstream by addressing the major concerns many businesses have with accepting cryptocurrency payments–volatility, (lack of) trust, and speed.

Cryptocurrency Volatility Is Good for Traders but Bad for Business

One of the biggest reasons why businesses are hesitant to accept cryptocurrencies for payments is because of their inherent volatility. In 2017, Bitcoin had a daily volatility of 5 percent, meaning that prices fluctuated around 5 percent per day on average. Last year, volatility worked out very well for traders, but that’s about it. For a majority of businesses, these price swings are too much. Though cryptocurrency networks are supposed to instill “trustless trust”, they usually just instill mistrust.

COTI network

In order to solve these problems, the COTI network will develop an internal derivatives market so that users can enter forwards contracts and options contracts denominated in COTI coins. This will allows business to effectively lock in the price of their coins, keeping purchasing power relatively stable. In other words, merchants who utilize the COTI network won’t have to worry about Bitcoin-like 5 percent daily volatility.

Additionally, the system will implement a proprietary global “Trust Scoring Engine”. The TSE automatically audits each interaction between buyer and seller over time and then assigns each party a unique “Trust Score”. A Trust Score is an externally established objective representation of each member’s value on the COTI network. The Trust Scoring Engine gives merchants and customers a way to streamline decision-making processes and removes the need for a solitary centralized marketplace. Each user’s TSE is used to derive network fees, so well-trusted parties pay less in fees. The COTI network, therefore, incentivizes honest business and transparent transactions.

The Trust Scoring Engine also allows user data to remain private and anonymous. Because transactions are cryptographically secure, there is no way to determine the parties to a given transaction. In addition, there is no need for credit scores or the divulging of any sensitive, personal information. Finally, parties will be able to evaluate each other based on a private, anonymous, yet objective scoring system.

Why Existing Blockchain Networks Just Don’t Cut It

Perhaps most significantly, existing networks are simply too slow to accommodate businesses’ financial needs. The average Bitcoin block is mined in ten minutes, and if confirmation is six blocks, that’s an average of 60 minutes. In extreme cases, it can take up to sixteen hours to confirm a single transaction. Why would any businesses use bitcoin for payments when credit cards can settle 5,000 transactions per second with ease?

To address this glaring concern, COTI is developing a system capable of providing instant confirmation and the ability to process 10,000 transactions per second. It all revolves around “The Cluster”, COTI’s distributed ledger. The ledger’s foundation is a directed acyclic graph (DAG) data structure, which allows transactions to process in a streamlined manner. The implementation of a DAG-based network creates increased network usage without compromising network scalability.

This means that the more users participate, the better the network runs. The DAG system works in conjunction with the TSE so that each transaction–represented by a user’s unique Trust Score–is required to verify two previous transactions with a similar Trust threshold. Transactions are added to “The Cluster” and form “Trust Chains”, which are transactional groupings with similar Trust Score thresholds. The COTI network is, therefore, able to achieve true decentralization without neglecting scalability.

                                                                 
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Written by Anton Suslonov, Data Scientist, specialist in deep learning, neural networks and natural language processing.

This Monday, April 2, 2018, we will host a live AMA with Anton about decentralization in COTI payment network, KYC/AML and Trust Score cases. We will discuss the influence of those issues on the future of online payments. The AMA will take place on COTI’s telegram group from 4:00–5:00 pm (+2 GMT).


Imagine the world 20 years from now. How will people pay for goods and services? The world will not be using coins, cash, cards, and cheques anymore. The world will all be using electronic money also known as digital currencies, which are faster and easier to use, bringing economical freedom to society. In this article, we will be discussing types of networks and their features.


Any type of electronic money or other means of payment are stored in some kind of a network. Each network has a comprehensive set of such networks’ characteristics, affecting efficiency, reliability, safety, the integrity of a payment system. We will be considering three network types (and countless variants and mixed models): centralized network, permissioned network and decentralized network.


Centralized Network

In the centralized network, all network nodes are connected to a central server, directly or indirectly. The network resources are controlled from the main location.

Centralized networks may offer users a high performance, high reliability and extensive set of helpful features depending on the network architecture and quality of its realization. Here we are facing some kind of dilemma: the goals and values of the centralized network authority may differ from uses’. A lot of people prefer not to grant central authority too much control over their data whenever it possible.

One more point is durability to focused attacks. Centralized networks, by their nature, usually have vulnerable points what wrongdoers (or natural disasters) can attack hurting network functionality.

Malicious actions of the network admins or authorities could be a disadvantage.

Centralized networks are usually based on an open source, depriving users of examining the code.

The best example of centralized payment system is VISA. It consists of processing centers, member banks, non-member banks issuers, POS-terminals, ATMs, etc. All participants obey very strict rules dictated by the VISA Inc. This payment system is efficient but very expensive. Such systems are hardly open to innovations. For example, smart cards deployment took decades.


Distributed Permissioned Network

The best example of such type network type is Ripple or IBM Hyperledger

Nodes of such network are operating independently, running the same open-source code, while the central authority still controls some critical functions.

The centralized functions usually include nodes synchronization[1], promotion, and demotion.

Distributed permissioned networks usually demonstrate outstanding performance and stability. However, they are not free from centralized network disadvantages.

Sometimes, distributed permissioned networks may be highly efficient to solve specific tasks such as a ledger for international letters of credit or for interbank payments.


Decentralized Network

Decentralized networks are designed to be free from shortcomings of having a central authority and defined vulnerability points.

It is crucial to understand that the Internet itself was designed as a decentralized network, permissioned in some aspects (IP addresses designation, DNS servers).

Ideally, the decentralized network is free to join for every user, and its nodes operate obeying users’ opinions only. In Fintech applications, a decentralized network should be designed for all nodes to act honestly and responsibly. This goal is achievable by the mechanisms of consensus.

Decentralized networks are free from a central authority dictatorship. The primary challenge is to prevent the whole network failure, caused by attacks. Nodes in a decentralized network need to perform some additional work to attend the consensus.


COTI is a decentralized payment network aiming to be efficient, quick and robust. Moreover, COTI is a highly parallel solution. The TrustChain Consensus Algorithm allows Full Nodes to knit their parts of the DAG independently. Nodes are checking each other without wasting time for blocks synchronization. The Double Spending Prevention Nodes are also working in parallel, adding reliability and security to the system without deadlocks and bottlenecks.

The system can run smoothly and efficiently by using Trust Score values, equally distributing new transaction along the DAG edge. For this reason, the reliable and predictable Trust Score algorithm is crucial for COTI payment network. This algorithm should be unbiased, and open to the community as well as decentralized to the maximum possible extent.


KYC/AML requirements in Decentralized Network

KYC/AML or AML/CTF (more common in US law) is a strict and sophisticated set of rules gradually introduced by US lawmakers (see USA Patriot Act) and international FATF organization. As a part of running straight forward global payments business, COTI would like to be KYC/AML compliant.


The above-mentioned regulations are effectively limiting the use of cash money in settlements. According to SEC and CFTC, “market participants should treat payments and other transactions made in cryptocurrency as if cash were being handed from one party to the other.”

From another point of view, competitive cryptocurrency platform should work without any intermediary parties and be decentralized by architectural design. Real payments cryptocurrency has to incorporate KYC/AML procedures into the core network functionality, just as COTI intends to do.

For this reason, we need to define how the provider of KYC/AML procedures can work in a decentralized network.


Initially, the critical point of KYC/AML is identification and proof of residence. It means that a provider has to process and collect real-world documents and offline confirmations.

Additionally, these documents are sensitive. Having a copy of someone’s ID, residence data, the source of funds info, a malicious person may try to steal an identity or even plan to commit a violent crime. These documents also contain personal data what entails additional law requirements in many countries.

Thirdly, the procedures implemented by the provider should be efficient and law compliant. It may require certification of officers or people responsible.


Addedly, the provider should collect and analyze the payment data to check user’s activity . The provider should be online all over the clock.

Currently, COTI network provides KYC/AML procedure service for itself by using KYC/AML servers. These servers are dedicated to supplying the network with the information about KYC/AML procedures.These servers do not store the information about payment transactions and access to wallets.

In COTI network, KYC/AML servers will store user’s data after evaluation in the cold storage. This cold storage will be unavailable for direct access from the network excluding any possibility of a hack.

As an option for the future, Full Nodes can easily turn off KYC/AML feature.


Trust Score in COTI decentralized network

Real world documents containing personal data require to be stored in the protected facility.

The additional challenge is uniformity: payment system participants should not be able to turn the algorithm for their own benefit. Any lack of consistency here can destroy the efficiency of Trust Chain Consensus.


Our decentralized solution to this challenge:

In COTI payment network, the Trust Score Node receives an evaluation data from the KYC/AML server .The node does not have access to users’ personal data. This feature allows Trust Score Nodes to be operated by users. A user running the Trust Score Node will earn money from it.

Thus, the Trust Score Nodes operators will have material liability and incentive for fair play, excluding possibilities of malicious tuning of the Trust Score algorithm. Comparing Trust Scores assigned by different nodes to the same user, the network will be able to detect any fraud attempt.

While the Trust Score Algorithm will be trained and tuned, the Trust Score Nodes will be operated by COTI. We estimate that the Trust Score Nodes may be run by users then the network will be business-ready.


WE REMIND YOU ABOUT LIVE AMA WITH ANTON ON APRIL,THE 2nd on our telegram group. Don’t forget to prepare your questions !The AMA will take place from 4 pm — 5pm ( GMT + 2).

                                                                 
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Cryptocurrencies and ICOs are faced with continued regulatory pressures, but this doesn’t appear to be slowing them down. In fact, cryptocurrencies, are still much higher than their 2017 inception points, even though many are in negative territory thus far in 2018. ICOs are getting close to breaking their 2017 fundraising record of almost 3.9 billion USD, as 2018’s total already stands at a respectable 3.4 billion USD.

99bitcoins.com keeps a rolling list of companies that accept cryptocurrency payments, and the list is still growing. Major companies including Subway, Microsoft, Virgin Galactic, and Bloomberg.com are featured on this list, demonstrating that large, profitable ventures believe in the long-term success of the emerging technology.

Nevertheless, not everyone is a believer in cryptocurrencies and its underlying driver, the blockchain. One blockchain powered startup, COTI is working on a cryptocurrency uniquely designed to process peer-to-peer transactions–much like the original vision of Bitcoin’s creator, Satoshi Nakamoto. Their objective is to create a digital decentralized coin that will address some of the frequently cited concerns of businesses who refuse to take cryptocurrencies as a medium of payment.

On average, it takes about ten minutes to mine a bitcoin block. Data from blockchain.info demonstrates that the average blockchain transaction–across all public chains–isn’t any better. Additionally, it is recommended that users wait about six blocks before considering a transaction as “confirmed”. Simple math shows that on average, a bitcoin transaction takes sixty minutes to process from start to finish. Other times, it can take up to sixteen hours to mine a single block. In these cases, businesses can hardly be blamed for not accepting crypto payments. Right now, cryptocurrency transaction speeds pale in comparison to standard credit cards, which are capable of handling thousands of transactions per second?

In response, COTI is developing a decentralized network that will be able to process 10,000 transactions per second, as well as provide instant confirmation time. Their distributed ledger technology uses what’s called a directed acyclic graph (DAG) data structure to process transactions in an extremely efficient manner. A key feature of this network is its inherent scalability. As more users participate in the network, network speed and efficiency increases. The COTI blockchain attains genuine decentralization without neglecting scalability and security.

Cryptocurrency Volatility Could Be a Good Thing… Just Not for Merchants

Another top concern for merchants is cryptocurrency volatility. For example, bitcoin had a daily volatility of 5 percent in 2017. Businesses want no part in these dramatic price swings, especially retailers whose margins are already thin. In a sort of catch-22, consumers also don’t want to spend their Bitcoins. As the Oracle Times notes, “many investors will agree that Bitcoin and other leading cryptocurrencies have become more of an asset than a currency… Bitcoin’s value is frequently changing, [so] most Bitcoin owners can make profits by selling their coins when prices are high and buying more when prices are low.” Understandably, many Bitcoin buyers are hesitant to spend their digital coins, created a “demand vacuum” for both merchants and customers.



In an attempt to address these issues, the COTI team is creating a COTI-denominated derivatives market that supports options and forwards contracts. Any users, whether merchants or buyers, will be able to hedge their COTI positions and essentially “lock in” coin prices. Purchasing power on the COTI network has the potential to remain relatively stable, giving merchants the peace of mind that newly received coins won’t plummet overnight. Likewise, the hedging factor of the network should help disincentivize wild speculation.

Another unique feature of the network is the global Trust Scoring Engine (TSE). The TSE assigns each network participant–both end user and merchant–a unique Trust Score based on account history, dispute occurence, dispute record (wins vs. losses), and user ratings. The TSE creates an objective user evaluation metric that doesn’t rely on sensitive private data, unlike a traditional credit score.

The TSE is also used to determine COTI transaction fees, establishing a good behavior incentivization program. Merchants and buyers with clean histories will pay less in fees than dishonest and manipulative ones. This feature should help lower the average cost per transaction for both parties, which for mainstream cryptocurrencies like Bitcoin have been sky high in the past.


                                                                 
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Hi!
It is totally normal! Don't worry
This is simply because all your submissions will be automatically verified and allocated after the token sale will end. So every submissions is on pending status till then

Hi there!
The bounty is still open until the end of the token sale.

Blockchain and cryptocurrencies may have caught the financial services industry off guard, but neither is particularly familiar to average consumers. It’s unfortunate that even in their primary use case as a digital currency, many crypto tokens aren’t really being used to facilitate day-to-day transactions and payments. Bitcoin, for instance, hasn’t really flourished as payment method for ecommerce and retail. However, this may soon change.

Thanks to the rise in value of many crypto tokens and gradual acceptance among online retailers, businesses are now reaching a point where they can seriously consider accepting cryptocurrencies as payment. Several crypto-based payments services have also entered the space hoping to provide blockchain-based and decentralized alternatives to the established players.

Perhaps what would finally push the wider acceptance of crypto payments are next-generation services like COTI, TokenPay, and TenX that seek to overcome many of the limitations associated with digital currencies and deliver additional functionalities that can make them more competitive over existing digital payments. For this to happen, crypto payments must not only be made easy-to-use and familiar, they must also offer enhancements that address the evolving needs of the space.

Leveraging Security and Trust

Most services simply rely on blockchain’s inherent transparency and immutability to establish security and trust in financial transactions. However, the reality of real-world transactions is that buyers and sellers have to interact with each other before transactions are settled. At times, they may even have disputes that need to be settled. One can’t simply depend on the basic transactional data that can be viewed on the blockchain explorer to figure out the other party’s trustworthiness.

Blockchain platforms now allow applications and services to do more through tokens and smart contracts. As such, crypto payments must be able to provide advanced functionalities that address the friction points of real-world transactions. Fortunately, several services are doing this.

As a payment network, COTI aims to provide a convenient way for buyers and sellers to transact with each other using crypto assets. But perhaps what’s remarkable about COTI’s proposition is that it also seeks to establish trust among users through its ecosystem. Core to COTI is its Trustchain protocol where good behavior on the network is encouraged. Users with a high trust rating are rewarded with cheaper transaction fees while those with low ratings are charged higher. Disputes that arise among users are mediated by the community, and mediators are incentivized with COTI’s native token.

Security is also being leveraged for payments. TokenPay, which its creators claim is the world’s most secure coin, uses advanced cryptographic techniques to ensure that transactions are secure and private. As an added feature, TokenPay features an encrypted chat mechanism which allows transacting parties to privately interact with each other to agree on terms before signing off on transactions.



Solving Speed and Scalability

Another key development area is addressing the speed and scalability issues that nag even top blockchains like Bitcoin and Ethereum. Bitcoin is only capable of handling an average of 2 transaction per second while Ethereum can do about 10. Clearly, having to wait minutes before transactions get confirmed isn’t ideal for retail transactions.

Users on both networks contend with these bottlenecks and are often forced to pay higher fees if they need to have their transactions processed faster. Given the rise in these crypto token’s prices, the fees could amount to a significant value. During the frenzy last December, people were paying the equivalent of $28 on the average just to send Bitcoin.

It’s a good thing that more blockchain platforms are now taking different approaches to feature bigger block sizes and have faster consensus algorithms. Ripple, is capable of handling 1,500 transactions a second. COTI, with its use of a directed acyclic graph (DAG) architecture, is able to handle 10,000 transactions per second. This level of capacity puts it on par with the daily activity on networks like Visa Inc.

The pack is quite stacked. Card companies like Visa and Mastercard Inc still control much of the market. Digital payments processors PayPal and Alipay continue their dominance in their respective markets. The entry of tech giants like Apple and Google through their smartphone wallets are also gaining more users.

With such level of competition, crypto payments must be able to showcase their key strengths and yet offer a similar convenient experience provided by these established players. The arrival of next-generation crypto services that draw strengths from both traditional mechanisms and blockchain may finally make them the more viable solution given today’s commercial landscape.

                                                                 
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Crypto naysayers have been pointing out that calling tokens “currency” is a misnomer. Sadly for crypto advocates, the naysayers do have a point. Cryptocurrencies do lack certain attributes of fiat currencies. They are yet to be generally accepted and their values are far from stable. Even with the emergence of Bitcoin ATMs and Bitcoin-backed debit cards, the cryptocurrencies still have to reach the level of ubiquity that fiat currencies enjoy.

This is partly the reason why crypto payments seem to struggle gaining momentum despite the current frenzy in the payments space. The boom of retail and digital commerce has triggered an arms race that prompted various entities like card companies, payment processors, phone manufacturers, and mobile service providers to make plays in digital payments.

Many of the currently available crypto payments projects focus on making Bitcoin and similar tokens usable. Crytopay and Uquid, for instance, offer wallets and physical cards that make cryptocurrencies spendable in existing checkout systems. Other projects like Ripple focus on grander things like replacing the infrastructure for transactions of banks and financial institutions. These projects have met varying levels of success but there still appears to be space for improvements and fresh takes.

COTI, an upcoming crypto token and payments platform, aims to transform the segment and push crypto payments to the mainstream. Instead of simply enabling the use of crypto assets to pay for purchases, it also plans to establish a healthy payments ecosystem that is based on trust.

Trustchain Protocol

Trust has become a vital factor in payments especially with the rise of peer-to-peer commerce and the gig economy. In such transactions, it can be impractical to use cryptocurrencies for payments. Blockchain payments are irreversible so it is quite risky to use when there are no mechanisms available to ensure that the other party will deliver once payment has been sent. For merchants, supporting even established methods like credit cards also entails risk due to the increasing cases of stolen card use and chargeback fraud. Chargeback fraud is expected to cost businesses $31 billion by 2020.



At COTI’s core is its Trustchain Protocol which aims to incentivize positive user behavior on the platform. The protocol keeps track of each transaction and creates a trust score for each user. Users (whether buyer or seller) who engage in smooth deals and issue-free trade would get positive scores. They are then incentivized with lower fees when using the platform. Those with spotless records will not be charged by the system. With such an incentive system in place, users are encouraged to be trustful and trustworthy when conducting business.

Cost Effective

A key advantage that crypto payments have over conventional mechanisms is cost. Traditional payments typically involve several intermediaries. A simple retail sale would often include a payment processor, a card company, clearinghouse, and a bank. Oftentimes, each of these entities would impose fees such as transaction fees, processing fees, and currency conversion fees – all of which affect pricing and the seller’s margins.

COTI helps users save on fees by linking the transacting parties directly thus eliminating the need for intermediaries. Through the Trustchain protocol, there is also little need to engage an entity to perform escrow services since parties are compelled to honor the agreements. COTI also features exchange integration allowing the platform to support multiple crypto and fiat currencies.

Dispute Resolution

The modern payments experience also demands other mechanisms that provide protection for users in cases where transactions get bumpy. Even with features like Trustchain, disputes can happen. In traditional payments, disputes are often handled by case agents who decide on the matter. Most of the time, the process isn’t transparent leaving users with little choice but to accept whatever verdict is handed. Card companies typically favor the customer in cases of chargebacks or fraud putting merchants at a disadvantage.

COTI decentralizes the dispute resolution process. Disputes are crowdsourced to mediators on the platform. So, rather than having cases be decided upon by some secretive process, disputes are resolved through a real jury of peers aided by the platform’s transparency. As a reward for participating in the processes, mediators get to earn COTI tokens.

DAG Architecture

Other crypto payment platforms rely on other blockchains like Ethereum to work. COTI runs on its own network which isn’t a conventional blockchain. Instead, COTI uses a directed acyclic graph (DAG) architecture that gives the platform speed and scalability. With DAG, transactions confirm each other so the network scales as usage ramps up.

This helps COTI avoid network bottlenecks that are common to conventional blockchains. COTI is expected to be able to handle 10,000 transactions per second. Bitcoin can only do about 2 transactions a second on average. Many crypto transactions also take time to get confirmed depending on the blockchain’s consensus algorithm. This makes most crypto tokens unusable for scenarios where speedy checkout processes are ideal. This wouldn’t be an issue for COTI.

Frictionless Experience

The modern business environment requires a frictionless experience. This is why retail and e-commerce demand dependable and feature-rich payments solutions. Unfortunately for crypto payments, simply providing means for crypto asset holders to spend their coins isn’t enough. Speed and performance also matter. Crypto payment services should perform quickly enough so that the experience isn’t a step back to what is currently available today.

Payments solutions must also be able to provide trustworthy mechanisms for parties to transact and resolve issues. COTI ticks all of these requirements by putting trust at the core of the service. Hopefully, the trust-based experience that the project aims to provide could help encourage more users to adopt crypto payments.

                                                                 
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There is growing appeal for many countries to become cashless societies and the expanding reach of mobile computing is helping the cause. Thanks to increasing smartphone adoption, 29 percent of consumers have made in-store mobile payments in 2017 – up by 50 percent from 2016. Digital payments is expected to become a $726 billion industry by 2020.

As such, the payments space has become a hotly contested market. Despite credit and debit cards still being the go-to funding sources for most transactions, traditional players like Visa and Mastercard have been working on efforts to solidify their positions. Competition is coming from all sides. PayPal continues to post strong profits. Digital wallets from Apple, Android, and Samsung are also gaining ground in select markets. Even e-commerce giant Amazon is ramping up its investments to push Amazon Pay.

The emergence of blockchain and cryptocurrencies also brought forth new crypto-based payments services. Interestingly, these crypto payments services are also gaining support. Singapore-based TenX raised more than $80 million in its ICO last year. Open payments system OmiseGo already reached a market capitalization of over $2 billion at its peak. Upcoming projects like COTI also seek to disrupt the space by delivering a payment solution that cater to the demands of modern commerce.

But are blockchain and crypto payments really the ways to move forward?

Strengths and Weaknesses

Technically, as digital currencies, the likes of Bitcoin can be used for payments and e-commerce. Unfortunately, they have not gained wider adoption for these use cases. Several businesses have enabled Bitcoin as a payment method including some high-profile companies like Microsoft and WordPress. However, other merchants avoided offering the option due to Bitcoin’s high volatility and expensive transaction fees.

Established payment methods such as cards and digital wallets hold several advantages over cryptocurrencies. To start, they enjoy wider acceptance especially for brick-and-mortar transactions. Merchants readily support them. The introduction of contactless systems has also made checkouts quicker and more convenient for shoppers.

Depending on the blockchain and token being used, crypto payments can take minutes to complete depending on the block time and network congestion. Bitcoin is only handling around 2 to 3 transactions per second (TPS) while Visa’s network can handle more than 50,000. Transactions via conventional methods are done using fiat currencies. Most consumers still have little access to cryptocurrencies.

These said, crypto services do bring certain advantages to the payments space. Depending on the use case, crypto services can be faster. For remittances, cryptocurrencies are credited to recipients more quickly compared to traditional methods. Traditional remittances often have to be routed through various financial institutions and are often subject to clearing processes. Crypto transactions are often cheaper because of the various fees and unfavorable currency conversion rates of conventional means. OmiseGo seeks to remedy this by partnering with payments solutions and allow them to use its blockchain-based infrastructure. Solutions that use the network can save on costs allowing them to trim fees and provide quicker transactions. The transparency inherent with blockchain also prevents any fraudulent claims between parties.

Enter the Next Wave

Clearly, there is room in the payments space for improvement. This is where new crypto payments services can step in. Next-wave crypto payments services seek to leverage blockchain’s strengths and combine them with the ease of established methods. TenX, for instance, makes virtual currencies readily spendable by linking blockchain assets to payment platforms. It also allows users to withdraw funds in fiat from ATMs worldwide using a physical card.


Payments services also need to feature more functionalities beyond just facilitating the transfer of value. Up-and-coming payments service COTI aims to bridge the gap between crypto payments and the realities of commerce today. With the boom of cross-border transactions, payment methods now have to be speedy, secure, and affordable.

As a payments network, COTI leverages directed acyclic graph (DAG) architecture which differs from conventional blockchain. With DAG, the network becomes more scalable the more it is used. This is a similar approach to what IOTA uses for its Tangle. DAG provides a high throughput that allows more transactions to be processed while minimizing the fees levied upon each transaction.

Perhaps what would make crypto payments truly is the trust that blockchain brings to the space. COTI aims to maximize this by implementing its Trustchain protocol which includes a trust scoring engine and a mediation system. The protocol encourages consumers and merchants to do right by each other. COTI relies on decentralization and transparency of blockchain to promote trust. Trustworthy users are then incentivized by lower fees. In contrast, traditional payment services often act as non-transparent arbiters to disputes.


Best of Both Worlds

So, it seems that blockchain and crypto do offer ways for digital payments to move forward. While cryptocurrencies have limitations for payments use cases, these next-wave crypto payments appear to offer solutions that address the key concerns of the payments space. Of course, established players will continue to fight for relevance but they might now be hard pressed to match crypto’s strengths particularly its inherent mechanisms for trust.

You're more than welcome to read our Business Overview, hope it will answer all your questions.

https://coti.io/files/COTI-overview-document.pdf

It has been a long time coming, but in a sense the US cryptocurrency community is finally receiving clear language from regulatory bodies–and it isn’t good. The Wall Street Journal was the first to break the news that “The Securities and Exchange Commission has issued dozens of subpoenas and information requests to technology companies and advisers involved in the red-hot market for cryptocurrencies, according to people familiar with the matter.”

Interestingly enough, however, is the fact that Mr. Clayton’s ally in the Commodity Futures Trading Commission (CFTC), takes a more genial approach to the new technology. J. Christopher Giancarlo, the current CFTF chair, noted in a Senate Banking Committee hearing, “Virtual currencies mark a paradigm shift in how we think about payments, traditional financial processes, and engaging in economic activity. Ignoring these developments will not make them go away, nor is it a responsible regulatory response.”

The two differing opinions offer some insight into how the crypto community should (re)orient themselves regarding regulation. This is becoming an increasingly important venture, especially as the US has just recently demonstrated that outright bans are not out of the question. The Trump administration’s latest move was to ban the “petro” through executive order, Venezuela’s “official cryptocurrency”. To be sure, the ban involves motives beyond wanting to shut down cryptocurrencies in general. A senior US official commented ““Investing in the petro should be seen as investing in the dictatorship… The petro is a desperate attempt by a corrupt regime to defraud international investors.”

So what are crypto enthusiasts to do, especially as the private sector follows suit? The answer may very well lie in the COTI network, a blockchain initiative that both protects platform users and acts more as a commodity than a security-esque asset. Therein is the key for how blockchain based companies and their ICOs can avoid SEC-inspired shutdowns.

What is the COTI Network and How Does It Protect Investors?

COTI is a decentralized blockchain network with a coin–the COTI coin–specifically designed for peer-to-peer transactions, whether B2B, B2C, or C2C. The network is lightning fast, able to process transactions at a rate of 10,000 transactions per second, making it competitive with other major payment platforms like Visa, MasterCard, and PayPal. What’s more, the network has several key features that protect its users–something the SEC and CFTC will (hopefully) approve of.

The first key feature is an unbiased, objective user scoring mechanism called the “Trust Scoring Engine” (TSE). It assigns every network participant, whether a business or consumer, Trust Score based their transaction history, dispute record, and user ratings. In doing so, the TSE provides each party with a way to evaluate the entity on the other side of the transaction without compromising personal data and security. In addition, the TSE is used to calculate fees, with higher scoring users receiving lower fees. This incentivizes good behavior. The TSE protects COTI network users from malicious and unsavory parties while boosting network operability.

The second key feature is a COTI-denominated derivatives market. Here, users can use options and forwards contracts to hedge the price of COTI. This will give merchants a way to secure profits made from business transactions while also helping coin holders avoid the rampant speculation that is so prevalent in cryptocurrency markets today.

Third, and perhaps most importantly to regulatory bodies, the COTI coin will function as a medium of payment–more like a commodity than a security–not a speculative engine. One of the reasons that Bitcoin is used as a speculative vehicle is because it is slow and expensive. This discourages proper use and encourages reckless trading. In contrast, the COTI network will be able to function as a quick and secure medium of payment, making it more likely that people will use it as intended.

                                                                 
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For businesses, managing cash flow while supporting such a volatile tender could be a quite the challenge.

For all the hype that surrounded Bitcoin, there’s one use case that has eluded it to be truly considered a currency – payments. Bitcoin has been highly volatile so merchants have had difficulty assigning prices to goods and services in the currency.

For businesses, managing cash flow while supporting such a volatile tender could be a quite the challenge. Bitcoin also suffers from slow confirmation times. In a retail setting, waiting a minimum of 10 minutes for confirmation is just impractical.

These issues, however, haven’t stopped other blockchain and crypto projects from bringing the technology into the payments space. Ventures like TenX offer means for crypto asset holders to spend in currently available physical and online points-of-sale through mobile wallets and physical cards.

Stellar and Ripple’s networks aim to be the transactional backbone for financial institutions, promising the speed and scale that Bitcoin isn’t able to provide.

Still, the key issue surrounding payments today is friction. Stakeholders demand hassle-free ways to transact. As such, modern payments solutions must be able to create a superior customer experience that provides features and mechanisms beyond simply transferring value from one person to another or making cryptocurrencies readily spendable through existing mechanisms.

It is in this regard that new crypto payments venture COTI plans to make a difference. COTI, short for “Currency of the Internet,” is a new digital currency that seeks to solve the payments needs of modern commerce.

The platform bridges the familiarity of traditional methods with the strengths of crypto payments. It promises lower fees and speedy transactions. In addition, core to the service is its Trustchain protocol which rewards participants’ good behavior.

Here are four ways COTI can provide a better frictionless payments experience:

Trust

Aside from featuring a currency token to facilitate transactions, COTI offers various features that enhance the payments experience. A key part of its proposition is how it has placed trust at its center. It features a trust scoring engine that evaluates users’ activities, assigning each one a trust score after every transaction.

Those who consistently engage in smooth and issue-free transactions can gain an ideal trust score. Those who don’t are scored unfavorably. The protocol then uses this trust score to determine how much fees users need to pay for using the system. Those with impeccable records pay zero fees.

In addition, COTI has mediation and arbitration mechanisms that help resolve issues among users. This is done in a decentralized manner, using a pool of peers to help decide on cases. This can provide an equitable way to settle disputes unlike with traditional payment methods that are typically decided upon by the payment company’s agent.

Biases may come into pay too. Merchants, for instance, stand to lose much to card and chargeback fraud since most card companies decide in favor of card owners. Most cryptocurrencies also do not have such dispute resolution mechanisms in place.


Speed

The problem of scalability hampers even established cryptocurrencies like Bitcoin. Slow confirmation times and its network’s limited ability to process more transactions per second make Bitcoin highly inefficient for payments.

Bitcoin only processes an average of slightly above 2 transactions per second (tps). In comparison, card network Visa easily handles 2,000 tps and can accommodate up to more than 50,000 tps at its peak.

To solve this scalability issue, COTI uses a directed acyclic graph (DAG) architecture. DAG networks are essentially designed to be able to handle more transactions the more it is being used. COTI can handle 10,000 tps.

This allows the network to provide quick confirmations. Transactions also don’t have to be routed to various intermediaries and be subject to clearing processes allowing for virtually real-time crediting of funds to the other party’s wallet.

Costs

Traditional payment methods typically involve middlemen such as the point-of-sale processor, the payment network, and the bank. The involvement of each of these intermediaries add to the time it takes for transactions to complete.

Each of them can also charge fees which leads to higher prices just to use the service. Card networks, for instance, earn from both users and merchants through currency conversion fees (especially for cross-border transactions) and processing fees.

Crypto payments are supposedly cheaper since all the processes take place on the blockchain. It takes away the need for intermediaries. However, some cryptocurrencies like Bitcoin require mining fees for transactions to be processed.

Depending on the prevailing rate, these fees could be significant. At its peak, Bitcoin fees even reached over $30 to have a transaction processed. COTI’s use of DAG eliminates the need for miners which allow for cheaper usage. It’s then left to the Trustchain protocol to determine the fees to be levied upon users.


Relevance

Today’s business environment now involves new forms of commerce. Peer-to-peer (P2P) selling has become huge. Thanks to improvements in logistics and low barriers to putting up online shopping carts, cross-border ecommerce is also gaining steam. In China alone, cross-border sales was expected to reach over $100 billion last year. The rise of cryptocurrency prices have also empowered the new “crypto rich” from all over the globe.

These new activities and circumstances have also created several complications for payments. P2P commerce requires secure but affordable payment methods. Cross-border payments also need to be able to support multiple currencies including both fiat and crypto. COTI, through its mechanisms, could readily address these specific commercial use cases.

As a crypto-based service, it can provide the security needed to facilitate payments between peers. The platform also features currency exchange integration as a means to seamlessly support various currencies.

Minimizing friction

COTI essentially bridges the strengths of both traditional methods and crypto payments. It minimizes friction by delivering the convenience that has been made familiar by conventional payments such as speed and liquidity through multi-currency support. However, it further enhances the experience by minimizing costs and eliminating fees even for cross-border transactions.

Perhaps best of all, by putting trust as core to the platform’s own economy, COTI encourages good behavior among participants. This contributes greatly to creating a frictionless experience that many current crypto payment services still struggle to provide.

Interview with Shahaf Bar-Geffen, CEO of COTI, conducted by Investing.com Studios

In today’s digital currency landscape, we see a few clear use cases emerging. For example, Bitcoin is a store-of-value (i.e. ‘digital gold’), Ethereum is a smart contracting platform and Ripple is a digital asset for settlements. However, no existing digital currencies are widely used as a means of payment. We sat down with COTI’s CEO Shahaf Bar-Geffen to understand how they are building a genuine framework for mass digital currency payments.


Investing.com: Disintermediation is an oft-repeated phrase amongst blockchain enthusiasts.  Where does COTI fit in the puzzle of reducing the presence of middlemen and other intermediaries from the payments equation?

Shahaf Bar-Geffen: The COTI network has departed from a chain-based model in favor of a more robust and scalable consensus model that is based on a directed acyclic graph (DAG) structure. There have been growing fears that proof of work (PoW) systems could eventually become a monopoly with the rising rate of mining farms. With COTI’s DAG-based consensus model, however, there is no need for mining.

Each new transaction is required to verify up to two other transactions in order to be added to the ledger, or the ‘Cluster’ as we’ve coined it. To accomplish this, users are encouraged to run their own nodes that work to validate transactions in the Cluster. This effectively puts the responsibility in the hands of users who are incentivized with low-to-zero fees, fast confirmation times and high Trust Scores as a reward for their honest, trustworthy conduct.

We’ve also created an extra safety net to address trust issues between parties that do not know each other and may never transact again. Our Mediation System addresses any disputes that may arise during the transaction process, including billing errors, inadvertent transfers, unauthorized charges and undelivered goods or non-conforming goods and services. COTI’s approach to mediation involves harnessing an independent network of crowdsourced mediators to resolve disputes fairly and efficiently, without causing an increase in transaction costs. These mediators are remunerated for their efforts in COTI when successfully contributing to consensus. To this effect, we believe we’ve found a compelling approach to rerouting costly third party mediation services common in traditional payment systems, P2P commerce and online marketplaces.

Investing.com: Bitcoin and early cryptocurrency entrants promised to revolutionize payments and banking, but have missed the mark until now. How does COTI plan to overcome many of the hurdles, especially relating to scalability and processing power that have faced more legacy systems like bitcoin?

SB-G: In DAG-based systems like COTI, greater network usage leads to improved scalability. As such, there is a positive correlation between the number of network users and the rate at which transactions are confirmed. However, in chain-based networks, greater scale leads to adverse effects on network usability.

As the Bitcoin network has grown, it has faced severe network congestion, giving rise to higher fees and slower settlement times. The network can currently handle approximately 20 transactions per second (TPS) on average, compared to COTI’s throughput of 10,000 TPS.

Moreover, because we’re developing a DAG-based consensus approach, we have done away with the energy intensive shortcomings of PoW blockchain systems and mining operations that have become incredibly costly to operate.

COTI’s Trust Scores and Mediation System add to our commitment to buyer-seller protections and reliability. It’s something users have grown accustomed to with legacy payment systems, but has clearly been missing for major cryptocurrencies to date. 

While technology is crucial to facilitate payments, regulation is just as important. COTI's network participants are required to go through a Know Your Client (KYC) process to meet global compliance standards. COTI has also applied for a licence in Gibraltar as part of a global licencing procedure.

http://www.youtube.com/v/ZfQZLJbXZ80

Click the video above to learn more about COTI’s ‘TrustChain Consensus’

Investing.com: Why is COTI a better solution relative to existing cryptocurrencies and how does the idea displace other cryptocurrency endeavors that make similar promises?

SB-G:COTI sets itself apart from other cryptocurrencies in a number of ways:

— COTI’s ledger, the Cluster, is inherently scalable due to its DAG-based consensus algorithm. Transactions can be confirmed much quicker as network participants grow, which will support everyday payment use cases.

— Instantaneous remittance as compared to slow Bitcoin transactions that can take anywhere from 30 minutes to 16 hours on average.

— Users of the COTI network pay variable fees depending on their risk profiles, with highly-trusted users paying low-to-zero fees and users with higher risk profiles paying higher fees..

— A global Trust Scoring Engine, which automatically assesses the interactions between buyers and sellers over time, assigning each network participant a unique Trust Score. Trust Scores collectively form Trust Chains, which are used as part of COTI’s consensus algorithm.

— A Mediation System that resolves disputes between transacting parties and maintains the integrity of the network.

— COTI is developing a currency exchange that provides network participants with continuous access to liquid markets in a range of digital and fiat currency pairs.

— The COTI payments network will be easy to use for consumers and merchants alike through user-friendly applications. This takes away the complicated learning curve of many digital currencies.

— COTI is working in accordance to regulatory frameworks and global licencing standards.

— We will be providing merchants with hedging services that will help them to reduce or eliminate their exposure to near-term currency fluctuations.

Investing.com: From an architecture standpoint, what gives COTI a demonstrable edge in the payments space?

SB-G: COTI’s DAG-based consensus model, Trust Scoring Engine, Mediation System, currency exchange and decentralised governance are all hallmarks to the functioning of the COTI network. We’re charting new territories in the payment space, and it’s a place that no other digital currency or payment system has gone before.


Investing.com: blockchain preaches trustless transactability.  What will the role of trust be in relation to transacting in the COTI ecosystem?

SB-G: COTI takes a novel approach to building trust between transacting parties through its Trust Score mechanism. The Trust Score servers analyse user data, user behaviour and network payment statistics to calculate a Trust Score for each COTI network participant. The Trust Score as a metric helps to rate participants according to their trustworthiness and contribution to the COTI network.

COTI’s DAG-based consensus algorithm also makes use of Trust Scores, which collectively form Trust Chains, in order to efficiently reach transaction consensus and validation. Trust Scores incentivise users to contribute to the quality of the ecosystem and serve as a proxy for how reliable a participant will be in fulfilling transactions according to the agreed upon terms. They also serve as a key driver of transaction fees: high scores are associated with low-to-zero fees, while low scores are associated with comparatively high fees.

Investing.com: One of the keys towards unlocking a sustainable self-contained blockchain ecosystem is the velocity of coins. How do you intend to ensure that coins are spent on the platform’s utility instead of being used as a tool for speculation?

SB-G: At COTI we’ve not only built a digital currency, but an entire digital payment ecosystem. Our payments network was designed to take over where traditional payment systems left off, namely with instantaneous transfers, low-to-zero fees and cost effective mediation services. This is a major advantage for consumers and merchants alike as compared to traditional banking, credit cards and P2P platforms.

What’s more, merchants will be able to deter the occurrence of chargebacks, fraudulent purchases and cart abandonment, while consumers will be able to transact freely in cross-border commerce with high approval rates. The idea is for COTI to lead the mass adoption of digital currency payments in the mobile era, and we believe we’re on the right path to achieving this milestone.

Investing.com: Public blockchains are about empowering communities, something COTI has already focused on.  What steps are you taking to cultivate a strong community and incorporate their sentiments into the network and decision-making process?

SB-G: COTI is developing a decentralised governance model that will provide voting rights for executing changes in COTI’s base protocol and deciding future use cases of the COTI coin. Futarchy governance is one such methodology that utilises a team of experts who work to define metrics for implementing new developments. COTI coin holders can then collectively vote for the best possible outcome to reach a decision based on the wisdom of the crowd.

Investing.com: What do you think is needed for more consumers and businesses to embrace and adopt this newer payment solution?

SB-G: Ideally, there should be a bridge between traditional payment solutions and digital currencies. This is why COTI developed a scalable payment solution, in addition to a unique Trust Scoring Engine, Mediation System and currency exchange. We’re also  pursuing licensing authorisations to cover merchant processing solutions in fiat currency, as well as exchange and wallet functionality. Know Your Customer (KYC), anti-money laundering and Treating Customers Fairly (TCF) standards will also make up the regulatory environment at COTI.

Because the relative complexity of digital currencies has inhibited their widespread adoption in payment use cases thus far, a primary focus of COTI’s application design efforts has been on making digital currencies as easy to acquire and use as their fiat equivalents.

Moreover, it will be crucial to maintain instantaneous transactions, low-to-zero fees and buyer-seller protections, in addition to multi-currency support and network security. Over time, all these factors will incentivise more buyers and sellers to utilise COTI’s processing tools to further enrich their cross-border e-commerce experience.

Investing.com: What’s the benefit of using digital currencies compared to credit cards?

SB-G: Digital currencies take out the need for third party financial intermediaries, which drives down transaction costs by eliminating fees. Because digital currencies are guaranteed by cryptographic proof, this curtails common issues experienced in cross-border ecommerce, such as chargebacks, false positives and low approval rates by credit card companies. What’s more, the use of a single, unifying digital currency serves to open up international exchange, particularly when local payment methods are not available.

Investing.com: What’s the selling point of digital currencies to individuals who still prefer cash and cheque payments?

SB-G: With digital currencies like COTI, you pay low-to-zero fees for transactions. Transfers are instantaneous, which means you don’t have to wait for cheques to clear. Digital currencies will also make online shopping and international trade much simpler with higher approval rates, bypassing the need for locally available payment methods.

Investing.com: Where are you now with COTI? What's your roadmap?

SB-G: We are due to release our exchange in the next quarter and will be following up with the COTI wallet shortly after. These are important milestones for us as they are key elements in our ecosystem.

We have also signed a partnership with Processing.com, which will grant us access to thousands of merchants around the world. We’re also expecting to have a test-net ready for them by the end of the year. Last but not least, our ICO is well on its way, and we have already raised substantial funds from high net worth individuals and funds. Our public sale is due to start soon. The demand has been high, so we’re predicting that it will be a relatively quick sale.

Investing.com: Many blockchain startups are managed by first-time entrepreneurs. How do you differentiate COTI's team from others?

SB-G: COTI's team includes the best of the best in terms of management and R&D talent, veterans of the financial industry and blockchain experts. Our team of advisors and backers includes Greg Kidd (early investor in Twitter, Square, Coinbase and Ripple), Steven Heilbron (former CEO of Investec Bank UK), Dr. Matthew McBrady (former CIO of Blackrock), the founders of Processing.com and many other reputable individuals.

Investing.com: As your base protocol has many use cases beyond payments, why did you choose to start with the payments industry?

SB-G: Our first use case for the Cluster, our base layer protocol, is to disrupt the payments industry. It’s a massive two trillion dollar market, but it’s currently monopolised by Visa and MasterCard. The payments sphere is definitely ripe for disruption as it hasn’t been innovated upon for the past 40 years. Nevertheless, we don’t plan to stop there. We can use the same protocol to revolutionise the insurance industry and high frequency trading amongst other key markets in the future.

Click here to learn more about COTI

-- continued from part I, an interview with the CEO of COTI, Shahaf Bar-Geffen

Nodes

How much do you estimate the total node compensation cost to be as a percentage of transaction volume?

We don’t have precise figures as of yet, but this information will be released in future iterations of the network.

Who can run initial Nodes in the network?

Independent network users that have submitted a necessary questionnaire and KYC documents will be able to run Nodes.

What incentive do they have to do so?

Nodes earn fees for providing their services to the COTI network.

Full Nodes:

Can Full Nodes be run by merchants?

It is possible for a merchant to run their Full Node along with a customized wallet if they think it will provide a better experience for customers.

The whitepaper mentions PoW to deter spamming, will this increase the cost of the network?

COTI’s PoW model is unlike any other digital currency like Bitcoin. Low-to-zero fees will always be a cornerstone of the functioning of the COTI network.

DSP Nodes:

How will you safeguard the COTI network from Sybil attacks and collusion?

All DSP Nodes are responsible for identifying any potential double spends from Sybil attacks. Another possible attack can occur when a malicious party with a highly trusted account attempts to confirm transactions from another self-created account. The attacker may try to attach high trust transactions to the anonymous transactions to reach the confirmation threshold.

This attack, however, is impossible as anonymous accounts have low Trust Scores. Such transactions cannot be confirmed, as an account with a high Trust Score cannot confirm a transaction from a low trust account.


Fees

You mention in the whitepaper that fees will be set to zero and that Nodes can set a fee based on the quality of their service. What will be deemed quality service?

All COTI network participants are incentivized for their honest and trustworthy conduct within the system. Quality service is deemed to be timely, accurate and equitable.

Why include a cap on fees?

It’s crucial that the COTI network remain accessible to all participants, with speed, scalability and low-to-zero costs always at the forefront.


Mediators

Who are mediators, and how are they trained?

Mediators are an independent group of users from all around the world. Individuals who wish to register as mediators must satisfy specific requirements before being admitted to the mediator platform. Among other requirements, mediators must demonstrate relevant language proficiency and undergo an online assessment to determine they have the aptitude to perform the mediation tasks to a high standard. COTI endeavors to make mediation open to a broad group of people and will make available online training programs that can assist candidates in acquiring the requisite knowledge for contributing to the dispute resolution process effectively.

How much capital are they required to stake?

We don’t have precise figures as of yet, but this information will be released in future iterations of the network.

Because capital is needed for PoS, how will you protect against rich pools of users influencing disputes or contributing to collusion?

They have no incentive to do so as mediators are picked randomly and assigned to cases that they don’t pick nor do they know the participants in. More so, not just the size of the stake determines the winning participants.


Regulation

This is a utility token, which the SEC is against. What risks do you face?

According to the legal opinions received, COTI does not classify as a security, and the sale of COTI coins to members of the public does not constitute a breach of any relevant regulations. COTI coins will be made available only to American subscribers who meet the “accredited investor” status. A thorough assessment will be undertaken by an external reputable US-based service provider for such applicants to meet compliance standards.

Can this be deemed money transmission as per the FICEN? What licenses are required for COTI to operate?

We are in the process of obtaining licenses for the following:

• Payments and money services. Such licenses enable COTI-powered merchants to accept payments in digital and fiat currencies.
• Exchange and e-wallet services. Such licenses enable COTI to provide consumers and merchants with the ability to hold, exchange and transact in digital currencies.

We are also working in accordance to distributed ledger technology (DLT) regulations set forth by the Gibraltar Financial Services Commission (GFSC), as well as know your customer (KYC) and anti-money laundering (AML) guidelines.


BP execution

What is your go-to-market strategy?

We’re building an entire ecosystem consisting of the COTI coin, wallet, exchange and debit card. We have also signed a partnership with Processing.com, which will grant us access to thousands of merchants around the world by offering genuine value. Our merchant acquiring strategy is predicated upon providing the best possible solutions for merchants that need us the most across industries that face processing issues like travel, pharma, global e-commerce and more.

How will you scale?

Our Trustchain^TM base protocol is inherently scalable as it’s based on a DAG data structure. The higher the network participants, the faster the confirmation times.

How will you solve the typical chicken and egg problem of onboarding merchants in the beginning?

We currently have a partnership in place with Processing.com that will grant us access to over 10,000 international merchants.


Governance

How will decentralized governance work?

Our decentralized governance model will provide voting rights for executing changes in COTI’s base protocol and deciding future use cases of the COTI coin. Futarchy governance is one such methodology that utilizes a team of experts who work to define metrics for implementing new developments. COTI coin holders can then collectively vote for the best possible outcome to reach a decision based on the wisdom of the crowd.


Personal Reflection

What have your proudest moments been since you launched COTI?

Probably two moments:

• Being recognized by a CTO of a very famous DAG project as a very smart protocol
• Being recognized by a very famous banker as a good investible story

What have your biggest mistakes been?

Building an offshore R&D team.

What experiences can you share about doing an ICO?

You are going to need a lot of advisors. Pay the higher price and pick the best ones. A-players attract other A-players. B-players attract C-players.

COTI is a fascinating and ambitious project, what worries you the most?

So many things… I would hate for it not to achieve its full potential due to reasons we can’t control like market sentiments.


Payment systems

Why has VISA/Mastercard not yet been disrupted?

VISA/Mastercard is a traditional payments system that has been around for the past 40 years. It had regulatory backing, buyer-seller protections and trusted third party intermediaries that have enabled it to thrive more than ever over the past few decades. These sort of pillars have their own inertia. Consumers and merchants alike are taken over by the force of habit.

Nevertheless, third-party financial intermediaries have only driven up transaction costs due to rising transaction fees. Such payment methods also cause common issues experienced in cross-border e-commerce, such as chargebacks, false positives and low approval rates by credit card companies. Rolling reserve requirements for merchants are also a point of friction and drive down profits for global businesses. Some digital currencies like Bitcoin and others have tried to solve these shortcomings, but have missed the mark in terms of providing a use case for everyday payments. That’s where COTI comes in with its low-to-zero costs, instantaneity and buyer-seller protections, as well as regulatory and licensing frameworks.

How will VISA/Mastercard react once COTI gains traction? Can they tokenize themselves?

Credit cards won’t be disappearing anytime soon, but major providers will need to keep pace with the value proposition of many digital currencies.

How do you think merchants will react to this?

We believe the reaction will be a positive one. We have a lot to offer to merchants – from low-to-zero fees and low rolling reserve requirements to buyer-seller protections and hedging services.


CryptoMarket

Is your outlook bullish or bearish for 2018?

I would say bullish. Blockchain is here to stay.

COTI’s base layer protocol and API for merchants are both in progress. COTI has also been working on developing its exchange infrastructure and consumer wallet offering and on defining the mechanics of its Trust Scoring Mechanism and Mediation System. The exchange and the consumer wallet are approaching completion and will be put to work this year.

What are some of your favorite tech projects?

Small niched ones like Cognito Protocol and super sophisticated ones like GHOST.

Are you worried about the scaling issues in the cryptomarket?

We have our grounds covered concerning scalability within the COTI network, so that will not create hiccups for us down the road. Many other digital currencies that operate on proof of work (PoW) systems are inherently non-scalable and will be faced with increased network congestion in the near term.

Closing

What is your vision for COTI in 2023?

By 2023 we envision that we’ll become the next generation digital payments network, as well as a processing solution for many other industries that are need of our base protocol.

Where will the cryptomarket be in the next five years?

We think it will be booming, particularly for digital currencies that provide the best value proposition for their users. Scalability, instantaneity, low-to-zero fees and ease of use all within a regulatory framework will be crucial for a thriving cryptocurrency market.

Interview with Shahaf Bar-Geffen, CEO of COTI, conducted by Jason Manolopoulos

COTI offers an innovative new network for decentralized and scalable payments that aim to make global commerce on a B2C and C2C level more efficient and economic.

We had the privilege of sitting down with the CEO of COTI, Mr. Shahaf Bar-Geffen at the Crypto Investor Show in London for a comprehensive interview on how COTI came to be, what it is and what the future holds for them.


About Shahaf Bar-Geffen

Can you tell us a bit about yourself, your background and what you were doing before COTI?

In the past 15 years, I have been an entrepreneur and have co-founded five companies—one of which was WEB3, a leading digital marketing company. Since my tenure there as of 2006, it grew from a two-person start-up to a multinational business that operates in 15 countries around the world. In my previous career, I was also an officer ranked Air Force Major, something that lent me an unparalleled managerial skill set. I decided to make the jump to COTI when I was approached to take the helm as CEO after I had been serving as an advisory board member for some time.

What was the inspiration behind launching COTI?

COTI’s vision is to build a decentralized and scalable payments network to facilitate efficient global commerce in B2C and C2C settings. This will set the standard for a next-generation payment solution that is trust-driven, easy to use, instant and cost-effective. Although this will be the first use case forour Trustchain^TM base protocol, we’d like to branch out to other industries that are facing trust issues,  transactions and need for mediation processes.

When and how did it come about?

COTI was founded in early 2017 by a group of professionals with extensive experience in the payments, cryptography and financial services domains. The problem that merchants face these days is that they pay fees to many intermediaries and lose revenue opportunities to low approval rates, this was known to our founders and needed a decentralized solution that will bridge the better of traditional systems with, the better of blockchain.


COTI – Basic Overview

What is COTI all about?

At COTI, we’ve developed a base protocol called Trustchain^TM that aims to solve the numerous shortcomings faced by cryptocurrencies and traditional payment methods. Our distributed ledger, the Cluster – based on a directed acyclic graph (DAG) data structure – works alongside a robust trust scoring algorithm and decentralized mediation system to provide the fastest and most scalable digital payments network around. Together these components provide a simple, secure and frictionless payment experience with low-to-zero fees.

What issue does it solve?

The payments industry has been monopolized by Mastercard and Visa for the past 40 years. Such traditional payment systems, however, face many shortcomings. Each transaction goes through a number of mediators who collect their respective fees. They are the primary cause for declined transactions, which drives down revenue and profits for merchants while turning away well-meaning customers. There is also little accountability for the underbanked population, which amounts to two billion people around the world without access to financial services and banks.

On the other end of the spectrum, digital currencies like Bitcoin and others have faced severe network congestion, giving rise to scalability issues, higher fees and slower settlement times. These issues are compounded by complicated user experience, lack of buyer-seller protections and volatile prices, which deem cryptocurrencies unfit for everyday payment use cases.

How does it work?

The COTI network’s Trustchain^TM  base protocol requires each new transaction to be verified by up to two other transactions to be added to the ledger, or the Cluster as we’ve coined it. To accomplish this, users are encouraged to run their own nodes that work to validate transactions in the Cluster. In DAG-based systems like COTI, greater network usage leads to improved scalability. As such, there is a definite correlation between the number of network users and the rate at which transactions are confirmed.

COTI’s base protocol also makes use of Trust Scores, which collectively form Trustchain^TM, to efficiently reach transaction consensus and validation. Trust Scores incentivize users to contribute to the quality of the ecosystem and serve as a proxy for how reliable a participant will be in fulfilling transactions according to the agreed upon terms. They also serve as a key driver of transaction fees: high scores are associated with low-to-zero fees, while low scores are associated with comparatively high fees.

The Mediation System adds an extra layer of support by providing buyer-seller protections in the event of transaction disputes. These can be related to billing errors, inadvertent transfers, unauthorized charges and undelivered goods or non-conforming goods and services. COTI’s approach to mediation involves harnessing an independent network of crowdsourced mediators to resolve disputes fairly and efficiently, without causing an increase in transaction costs. These mediators are rewarded for their efforts in COTI when successfully contributing to consensus.

What will COTI’s initial use cases be?

COTI’s initial use will be for the payments industry. Over time we envision that the COTI network will encompass other domains, such as insurance, money transmission, and high-frequency trading.

What are the business model and monetization plan?

Nodes in our network collect coins as transaction fees and for dispute resolution. COTI, alongside its network partners, operates such nodes. We’ll also be operating our own exchange, collecting fees for the trading of crypto assets.

Why does this need to be decentralized?

Keeping COTI’s services decentralized works to maintain low costs and high transaction confirmation speeds for the entire network. Because there are no third-party financial intermediaries, there will be higher acceptance rates and low cart abandonment rates in B2C settings. It will also help to account for the underbanked population, which amounts to two billion people around the world without access to financial services and banks.


DAGs (Directed Acyclic Graphs)

IOTA/NANO(Railblocks)/DigitByte are also trying to achieve frictionless payments.

There are a number of other DAG-based networks that have come to the fore, but what sets us apart is our Trustchain^TM base protocol, Trust Scoring Engine, Mediation System, currency exchange and decentralized governance. While the payment space is our first use case, the Trustchain^TM can be used for countless other applications that face processing shortcomings.

How does your tech differ specifically?

Our Trustchain^TM base protocol is based on a DAG data structure, but we take our consensus method a few steps further with the use of a Trust Scoring Engine, Mediation System, currency exchange, and decentralized governance.

How does your business strategy differ?

We’ve secured some strategic partnerships with companies from the financial industry, such as Processing.com, which will streamline our go-to-market strategy. Beyond this, our Trustchain^TM base protocol can be used across a range of business domains, such as insurance and remittance.

Who do you consider to be competitors from the crypto space?

While other DAG-based digital currencies like IOTA, Byteball, and Nano can be considered competitors, we don’t explicitly see them as such. COTI has departed from both traditional payment systems and digital currencies to provide a one of a kind technological infrastructure and product offering.


COTI – Network/Token Economics

How do the token economics work?

The total supply of COTI tokens during the formative stages of the network will be limited to 2,000,000,000 COTI. These tokens will be allocated according to the chart below.


Proceeds from the sale of COTI tokens will be used to fund the development and expansion of the COTI network.


The maximum token price will be USD 0.1 per COTI. Discounts will be provided in line with each stage of the token sale.

• Private sale: $0.079 per COTI
• Public pre-sale: $0.083 per COTI
• Public sale: $0.08 -0.100 per COTI divided across four tranches

How do you balance the diverging needs of the initial funders of the network versus future users?

COTI is based on decentralized governance, which will provide voting rights for executing changes in COTI’s base protocol and deciding future use cases of the COTI coin. Futarchy governance is one such methodology that utilizes a team of experts who work to define metrics for implementing new developments. COTI coin holders can then collectively vote for the best possible outcome to reach a decision based on the wisdom of the crowd.

What happens if the token price rises too high, thus dissuading usage?

We have built merchant hedging services and hedging marketplace to balance that.

What will remain in the initial equity of COTI?

10% of all COTI tokens will be allocated to the founders, team, early backers and advisors.


Trust Chain

How does it work?

The Trust Score Servers analyze user data, user behavior, and network payment statistics to calculate a Trust Score for each COTI network participant. The Trust Score as a metric helps to rate participants according to their trustworthiness and contribution to the COTI network.

Each new transaction attaches to two previous transactions in our directed acyclic graph (DAG) ledger, which we’ve coined the Cluster. However, they are not attached randomly but are added in accordance with their respective Trust Scores. This means that a transaction with Trust Score 60 will most likely attach to a transaction with a Trust Score within a similar range. This is how we create a chain of transactions with similar Trust Scores or a Trust Chain. A transaction can be confirmed once the accumulated Trust Score of each transaction reaches the predetermined threshold.

How are Trust Scores calculated for new users when there are no public databases for reference?

A participant’s Trust Score is initially determined by a general questionnaire and document verification. Trust Scores update automatically according to a user’s payment history and Big Data collected by the network.

--to be continued on part II--

                                                                    
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Sure we have a bounty program already opened. Check out our bitcointalk post about it on this link:https://bitcointalk.org/index.php?topic=3154112.msg32607919#msg32607919
About the airdrop, we will have something even bigger than that and unique to COTI so stay tuned and make sure you subscribe to our newsletter on the website coti.io

We are having a lot of contest and fun stuff going on on our Telegram group in which you can earn also free COTI tokens.
Join our Telegram group: https://t.me/COTInetwork

Greg Kidd has joined COTI’s advisory board

We are proud to announce that Greg Kidd is now part of the COTI family. He is one of COTI’s early contributors and a valued member of the COTI community. Please join us in warmly welcoming Greg on board!