Introducing COTI’s Global Trust System (GTS)

[COTInetwork]

Introducing COTI’s Global Trust System (GTS), an advanced layer of trust for any blockchain
By Dr. Nir Haloani, COTI’s CTO


COTI CTO, Dr. Nir Haloani

Summary:

• A trustworthy environment is absolutely essential for the widespread adoption of cryptocurrencies.
• COTI has developed a unique Trust Score node in its infrastructure to monitor user behaviour and calculate trust scores as part of its consensus mechanism.
• The Trust Score node is now offered as a service on other chains as part of COTI’s endeavour to introduce more trust and adoption to any blockchain system.
• This Trust Score node is part of COTI’s Global Trust System (GTS), made up of a blacklisting layer to flag fraudulent actors; transaction classification to differentiate high-risk and non-risk activity; and a trust scoring mechanism based on accumulated information and historical performance.
• The COTI GTS connects to all networks and analyzes transaction and behavioral data, updating each entity’s trust score in real time.
• By using the COTI GTS, malicious parties will be actively identified, while reputable behaviour will be tracked and incentivised.

Introduction
Trust is the most important aspect for any effective monetary system. While the distributed architecture of blockchain technology on which cryptocurrencies operate has many advantages, user anonymity on blockchain has provided criminal users with the ability to conceal their identity and illegal activities. In order to distinguish law-abiding users from potential threats in the blockchain ecosystem, COTI is presenting an innovative Global Trust System (GTS) that can analyze historical fraud to profile transactions and classify them into risky and non-risky categories using several machine learning techniques and finally calculate a reputation score for every user.

The lack of regulation in borderless technologies presents the challenge of preventing fraud and market manipulation. This is typically handled by central authorities like governments and central banks, as an essential requirement for money to work is trust. Trust has worked as a pillar for monetary exchanges from early civilization, beginning with barter systems and moving on to broader aspects of society-wide monetary systems. Without trust, the honest exchange of goods or services in return for currency payments would be infeasible, and cryptocurrency is no exception in this regard. A trustworthy environment is absolutely essential for the widespread acceptance of cryptocurrency. Transparency is a great generator of trust, and it has a long history as a tool for anti-corruption and anti-money laundering.

A trust mechanism in the form of a reputation score for all users transacting in any blockchain network could alleviate potential illegal activity which negatively impacts good actors. The COTI Global Trust System will enable any infrastructure users to identify and avoid risky parties when sending transactions. In order to mitigate risk, we have built a proprietary scoring mechanism that interprets the trustworthiness of a user in any cryptocurrency network.

Global (Cross-Chain) Trust Scoring System



Transaction Profiling and Scoring Mechanism
Risk is inherent in any transaction, and the potential for fraud exists between any number of transacting parties. While certain measures can be taken to reduce such risks, each party places trust in the other to fulfill its end of the agreement. In order to mitigate this risk, we are introducing the COTI Global Trust System (GTS), which first creates a blacklist of users that are known to be tied to fraudulent activity. Secondly, we are implementing classification techniques to profile all transactions based on their associated risks. Finally, the scoring mechanism, a byproduct of transaction profiling, is a measure of trustworthiness at the user level.

The Blacklist
Blacklisting is one of the primary techniques that organizations use to safeguard the public from financial scams, malicious web pages and many other forms of Internet fraud. In our approach, blacklists identify entities that good actors should avoid transacting with. Our blacklist is continuously updated with all known fraudulent entities, so that users can fully vet them prior to transacting. Once the fraudulent entity is identified, the scoring mechanism generates a warning to inform users of the entity’s blacklisted status, thus providing the benefit of lookup efficiency.

Transaction Profiling and Classification
Every transaction has a specific pattern and this pattern recognition is the key to differentiating high risk and non-risk transactions. We leverage the information gained from past transactions associated with an address and identify similarities between new transactions and an established prototype. Any such similarity would determine a new transaction’s propensity to be risky. We use a variety of machine learning techniques to successfully perform this classification task. Transactions are analyzed based on a set of quantifiable characteristics and are then classified into specific subclasses through a distance function. Successful profiling largely depends on the degree of classification accuracy.

What is the COTI Universal Trust Score?
User trust scores can be viewed as a combination of contributing bonuses and penalties, such as contributions from successful transactions and penalties from irregular behaviour. It seems natural that each of these contributing factors would decay over time, so that more recent events have the most influence over the current user trust score. It would also be logical for different components of the trust score to decay at different rates depending on their severity. For example, if someone has committed serious fraud, then the penalty will decrease slowly with time. This is in contrast to the penalty for a small misdemeanor, which will decay faster and have a smaller long-term impact.

To compute the Trust Score of any entity, two basic components are required: feature variables and labels. The feature variables include every possible attribute that we should measure for a user at a specific point in time (e.g., prior data, actions on the network, etc.), while the labels assign a value to each of these cases. We generally think of the feature variables as determinants of data point positioning in a high dimensional space, and the labels as deciding how to illustrate it.



In the COTI GTS, we define general purpose features that are then used for the ongoing TrustScore (TS) calculation (in the past k transactions / in the past t timespan). Some of the features include:

• Number of successful transactions
• Number of disputed transactions (disputes lost)
• Number of transactions attempted or made that do not adhere to the network’s rules (with no obvious fraudulent intentions)
• Number of possible attempts to double spend/defraud. Actions like this must be critically dealt with to prevent a participant from perpetually building up a high trust score only to attempt defrauding other participants. There should either be a permanent and significant reduction in the participant’s Trust Score, or an extremely slow increase in the Trust Score.
• Frequency of network use. We cannot expect ordinary users to use the network with the same frequency as merchants, so the user type is taken into account.
• User type — the wide range of possible users impacts the trust score awarded to each user type and classification.
• Network centrality

COTI Universal TrustScore Ranking Mechanism



The TrustScore of every entity within the network is appointed in three steps. The first step is the creation of a profile and blacklist analysis based on historical interactions, fraud and blacklisting, as well as analyzing real time behavior of all entity interactions. The blacklist provides good actors with a list of potentially fraudulent entities that they should avoid transacting with. The second step involves a classification module to differentiate good actors from malicious ones. Based on the classification, a metric in the form of a risk score indicates a user’s degree of involvement in malicious transactions. The risk score metric serves as a basis for reputation scoring.

With a successful classification algorithm, a scoring mechanism will designate various user categories. Users with a reputation score below a certain threshold are identified as bad actors. A continuously updated blacklist works as an operating manual for secured transacting across any blockchain network.

The COTI GTS aggregates and connects to all networks to analyze transaction and behavioral data and update each entity’s trust score in real time. By connecting directly with any infrastructure, the COTI reputational management system will be able to collect and analyze all the transactions and specific events related to each platform and ecosystem and adjust the TrustScore feature accordingly.



How it works:

Reputation scoring is widely used in many domains to measure the trustworthiness of a target (e.g., a user or service) based on accumulated information and historical performance. Users observe events that immediately follow a target’s behavior, which determines how they perceive the experience. Events depend on a context and can be, for instance, voiced opinions, transactions, or signed documents. As such, a target’s reputation is a collective measure of trustworthiness accumulated from user experiences. In reputation systems, users can rate the behavior of other users by expressing their direct judgements. The COTI GTS layer aims to calculate the resulting reputation score by collecting, distributing and aggregating the pieces of evidence (events) concerning a target’s behavior in any blockchain network. As a result, before transacting with a target (whether internal or external), the user can consider the target’s reputation and only transact if it is deemed trustworthy.

The COTI GTS framework uses several models to aggregate trust information and compute scores, namely flow-based reputation models and subjective logic. Flow-based reputation models provide an automated way to aggregate all available trust information.



In the first phase, The COTI GTS will be integrated into top infrastructures and aggregate TrustScore information from all of them:

• The COTI Reputation Database and classification will be set per infrastructure.
• Each infrastructure or dApp build atop an infrastructure can connect directly with the COTI GTS through REST API.
• The COTI GTS will also be available publicly on the COTI domain for tracking and searching specific address-related insights and reputational information
• Any transaction on any network can use the API to receive the address TrustScore and base flow, consensus and approval.
• The TrustScore can be easily integrated into any application, smart contract, or oracle use case.

What is next?

In the upcoming weeks we will:

• Announce our first infrastructure partners who will be integrating the COTI Global Trust System
• Release the first version that will support two top infrastructure scoring layers
• Partner with oracle and third party data providers to enhance events and aggregations supported by the platform framework.

Summary
By fully migrating our TrustScore and Ranking mechanism and applying it to any infrastructure, we will empower any network to address the issue of trust between unknown parties. COTI has developed a ranking mechanism to track the behavioral data of network entities, which is crucial for any service running on any platform, infrastructure or chain. In the framework of COTI’s reputational scoring system, malicious parties are actively identified and addressed, while reputable behaviour is tracked and incentivised. Moreover, the engine is customized per each use case, as each industry faces varying levels of risk. By using the reputational scoring system, any infrastructure and chain will be able to leverage efficient behavioural tracking, a data layer that is chiefly missing in the crypto world, in order to maintain trust scores and risk indicators for all consumers and merchants.

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For other COTI news, you can stay up to date on our Telegram channel.

COTI Resources
Website: https://coti.io
Telegram group: https://t.me/COTInetwork
Github: https://github.com/coti-io
Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf

[COTInetwork]

COTI’s action-packed technological roadmap for the second half of 2019
We’re well into Q3/2019 and have a few more months of tech developments to tick off our list until we commence 2020 with fresh new goals



Our mission at COTI is to make cryptocurrencies fit for real world use and mass adoption. Our technological progression to date has moved mountains towards these aims and with the recent introduction of our interoperability solution, which enables communication between different payment systems, it’s becoming even more realistic.

Our technological innovations for Q3/Q4 2019 are focused on two main targets encompassing our MainNet and Universal Payment System, each with their own set of milestones.

Now, let’s dive into our technological roadmap for Q3/Q4 2019.

MainNet
We launched the COTI MainNet on 4 June, 2019, which was the first official release of the COTI network proper. Some of the key technological innovations from the public MainNet launch included an initial version of the arbitration system to safeguard buyers and sellers from errors, fraud and counterparty abuse, as well as an enhanced privacy layer to protect transactions in a way which has not yet been possible for blockchains. Our DSP consensus innovation added an extra layer of security, solving the fundamental problem of double spending for all high performance distributed ledgers.

Other MainNet advancements included one-click payment requests, which enable any merchant to easily integrate PayPal-like payment buttons on their website for instant checkouts. Moreover, we introduced Trust scores to resolve the lack of trust faced by most blockchains and released the node manager, which provides an automated way of discovering neighboring nodes.

We’re forging ahead with even more MainNet developments through to the end of 2019. These are some of our upcoming milestones:



TestNet Node Manager and History Nodes — Q3 2019

The Node Manager is a mechanism that promotes network discovery and connectivity, enabling anyone to join the network as a node operator and run any type of node. We’ve already released the initial version and have moved on to creating an Automatic Network Discovery Algorithm (ANDA). This will offer an automated way to discover neighboring nodes and uphold network decentralization for added security.

As for History Nodes, they are crucial because successful payment systems typically process one billion transactions per year. With a transaction size of approximately 5KB, this means that one year will produce several terabytes worth of transaction data. That is a lot of storage space, and it will not be resourceful for a single node manager to store all transaction records. This is where History Nodes come in, providing the necessary service to store complete transaction history.

We have commenced work on the first implementation of our TestNet Node Manager and History Nodes.


History Nodes Architecture

MainNet node operator and staking model — Q4 2019

COTI provides a decentralized solution designed to enable secure and trustworthy payments. This solution relies on the distribution of Trustchain responsibility to several types of nodes that are run by users. Nodes are needed to verify transactions and to ensure that the COTI network remains safeguarded against potential fraud and cyber manipulation.

Network participants are required to stake COTI coins in order to run nodes. Critical nodes in our system, like the DSP Node and Trust Score Node, require higher trust scores and more coin staking to run their respective nodes. We have released the first version, which validates an operator’s eligibility to run network nodes and are working towards an official release to support node staking.

Ability to issue new tokens — MultiDAG, ClusterStamp — Q4 2019

With the ClusterStamp, older transactions are sent to the history nodes every set of intervals, and only the latest transactions are maintained by the whole network. This prevents the Cluster from growing to an unmanageable size. The ClusterStamp also provides a useful reference point for performing a system-wide audit to ensure that there are no inconsistencies or possible fraud.

As for the MultiDAG, it means that COTI won’t be bound to one instance of a DAG. The COTI MultiDAG is similar to Ethereum, as a common decentralized infrastructure is the basis for a multitude of different tokens and smart contracts and one main coin for paying fees. Moreover, the MultiDAG will enable merchants and enterprises to issue their own token.

Our R&D team has already begun working on the full specification for the ClusterStamp and MultiDAG in preparation for the Q4 2019 timeline.


MultiDAG

Global Trust System (GTS) — Q4 2019

To mitigate risk and ensure a trust-based system, we are introducing the COTI Global Trust System (GTS), which blacklists users tied to fraudulent activity. We are also implementing classification techniques to categorize transactions based on their associated risks. Finally, our proprietary scoring mechanism, a byproduct of transaction classification, measures the trustworthiness of a user in any cryptocurrency network.

The COTI GTS empowers any infrastructure or chain to leverage efficient behavioural tracking — a data layer that is chiefly missing in the crypto world — to calculate trust scores and risk indicators for consumers and merchants. All components of COTI’s GTS can be integrated seamlessly into any blockchain network and do not require any further technological implementations from existing platforms.

COTI’s Universal Payment System
Our second major target for Q3/Q4 2019, besides the new MainNet developments, is to further advance our Universal Payment System. This provides merchants with a holistic digital payment solution that enables them to enjoy the best of cryptocurrencies and credit card processing. Some of the advantages are instant settlements, no FX costs, fraud protection, buyer-seller protection and more.

Some of our milestones for Q3 and Q4 2019 include:


Universal Payment System

Crypto Gateway — Q3 2019

COTI’s crypto processing solution will enable merchants to receive crypto payments through their website with instant settlements in their currency of choice. This includes the ability to embed a simple ‘pay with crypto’ button on the merchant payment page for quick checkout.

We’re in the process of implementing the entire platform specifications. Once it’s ready, we will embed the solution with select partners.

Credit card processing — Q3 2019

This network iteration enables fiat and credit card transactions to be accepted by merchants with instant settlements, which will assist COTI with increasing adoption. Instant settlements in latter stages will enable any credit issuer like a bank or e-commerce company to issue its own token in the COTI network with immediate access to COTI network volume and users.

COTI Pay white label — Q4 2019

White-labeling the COTI Pay platform will enable merchants and enterprises to build their own payment platform and accept payments from consumers. We’ve already released the first version of the COTI Pay white label platform. We are now on the road towards implementing customization options and building a bridge to enable existing infrastructures to embed a COTI Pay-like solution.

Universal Payment System — Q4 2019

This system iteration enables cryptocurrencies and credit card transactions to be accepted by merchants in one universal payment system with instant settlements, which will assist COTI with increasing adoption. By using the Universal Payment System, merchants will have access to better financing, which will provide them with an instant line of credit or the ability to earn interest when deferring their settlement period.


COTI Pay — Universal payment system

By completing our technological roadmap through to 2020, we believe that COTI will be that much closer to revolutionizing crypto adoption and becoming the infrastructure upon which future payment services are built.

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COTI is deploying its Global Trust System (GTS) on Chainlink



Trust is foremost
A trustworthy environment is essential for the widespread adoption of cryptocurrencies. To further this cause, COTI has developed a unique Trust Score node as part of its Global Trust System (GTS) to monitor user behavior and calculate trust scores as part of its consensus mechanism. This Trust Score node is now offered as a service on other chains as part of COTI’s mission to introduce more trust and adoption to any blockchain system.

COTI’s GTS is made up of a blacklisting layer to flag fraudulent actors, transaction classification to differentiate high-risk and non-risk activity, and a trust scoring mechanism based on accumulated information and historical performance. The COTI GTS connects to all networks and analyzes transaction and behavioral data, updating each entity’s trust score in real-time. By using the COTI GTS, malicious parties can be actively identified, while reputable behavior is tracked and incentivized.

COTI and Chainlink
COTI has initiated the process of integrating its GTS mechanism into Chainlink’s oracle and smart contract framework. This will add support for trust-based events in smart contracts, enabling user incentivization in line with a predetermined trust score threshold. For example, a user will be eligible to receive tokens if his/her Trust Score is above a given threshold for one year or, alternatively, users could receive a bonus for transacting in a trustworthy manner.



By fully migrating our TrustScore and ranking mechanism and applying it to any infrastructure, more and more blockchain networks will be able to address the issue of trust between unknown parties.

“Behavioral tracking and trust-based incentivization are chiefly missing in the crypto world. By deploying a reputational scoring system like the GTS, more enterprises can maintain trust between transacting parties. We’re excited to break ground on this endeavour with Chainlink, a leader in oracle network solutions, and advance how blockchains connect with third party data sources”, said COTI CEO Shahaf Bar-Geffen.

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For more information on COTI, you can visit coti.io and follow us on Telegram.

About COTI
COTI is an enterprise-grade fintech platform that enables cross-chain interoperability and is built on its own DAG-based chain. It supports extreme scalability and low transaction costs and is supplemented with payment-specific requirements.

COTI has developed COTI Pay, a holistic digital payment solution, which empowers enterprises to build their own payment networks and stable coins. This enables businesses to regain control over their money and data and enjoy the best of cryptocurrencies and credit card processing. COTI Pay further supplies the world’s first buyer-seller protection system that provides crypto dispute resolution, refunds, and chargebacks.

About Chainlink
Chainlink is a decentralized oracle network that enables smart contracts to securely access off-chain data feeds, web APIs, and traditional bank payments. Chainlink is consistently selected as one of the top blockchain technologies by leading independent research firms such as Gartner. It is well known for providing highly secure and reliable oracles to large enterprises (Google, Oracle, and SWIFT) and leading smart contract development teams. Learn more by visiting the Chainlink website, Twitter or Telegram. If you’re a developer, visit the developer documentation or join the technical discussion on Discord.

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COTI Resources
Website: https://coti.io
Telegram group: https://t.me/COTInetwork
Github: https://github.com/coti-io
Technical whitepaper: https://coti.io/files/COTI-technical-whitepaper.pdf