WHAT IS DETHER?

Dether provides a decentralized peer-to-peer ether network that enables anyone on Earth to buy ether with cash and spend it at physical stores nearby. No bank account is needed, just a mobile phone with internet access. Our belief is that the beauty and power of the Ethereum technology should be easily accessible to all. We’ve decided to put all of our energy and that of the Ethereum community into helping us build the first trustless solution that will allow anyone to be able to interact with the Ethereum blockchain no matter who you are, where you are, and without the need for a middleman.

WHY IS DETHER NEEDED?

The cryptocurrency revolution was sparked by the necessity for decentralized monetary systems and applications. However, these currencies and application come to fruition by investors using centralized entities such as their banks, ATMS, and apps such as Coinbase to invest in various assets. This poses a threat to the sustainable growth of cryptocurrencies as banks could stop transactions, the unreliability of Coinbase during major events, and ATMS charging exorbitant fees. Dether will provide a solution to instantly receive Ethereum at a low rate. Cash transactions will protect crypto investor’s identities and provide a solution to those who don’t have bank accounts in third world countries. Dether can help those in countries experiencing hyperinflation by trading in their fiat for a safer investment: Ethereum. Dether can very possibly lead to the mass adoption of Ethereum by allowing all to purchase it and offering physical stores incentives for exchanging it.

UTILITY STUDIES

Exchange Issues: Time Consuming, Currencies Accepted, Crashes, Fees Banks’ Intervention Average ATM Fees Identification Unbanked Population Combating Hyperinflation

Cryptocurrency Gateways

The process most investors take to begin investing is to open up a Gemini or Coinbase account that is then connected to their financial institution. These exchanges take multiple business days (5-6) to receive your tokens, are unreliable during major events, charge high fees, and are centralized! Investors then take their tokens and bring them to exchange such as Poloniex, Binance, and Bittrex to name a few that don’t offer direct investment from fiat currency due to not being registered under exchange laws and individual state laws. These exchanges have smaller market cap currencies that are usually more volatile. Banks have recently threatened customers wiring money for investing due to their “uncertainty” and skepticism of Bitcoin. These issues pose an imminent and growing conflict of interest for centralized authorities to protect their businesses.

Coinbase & Gemini



Coinbase is responsible for the exchanging of over 50 Billion USD worth of cryptocurrencies since its inception in 2012. Coinbase sells the three major currencies: Bitcoin, Ethereum, and Litecoin and has recently added Bitcoin Cash. It’s the number one choice of users who want a more streamlined experience in purchasing cryptocurrencies. However, as the acquisition of cryptocurrencies grows the flaws of purchasing through these centralized exchanges will be unmasked.

Gemini is the second most popular exchange which was opened for business in 2015 by the (in)famous Winklevoss twins. Gemini supports the purchase of Bitcoin and Ethereum with fiat. Similar to Coinbase it has been susceptible to growing fees, crashes, and claims of corruption.

Besides technical issues these exchanges provide utility only to a margin of investors since they don’t accept all fiat currencies. For example they don’t accept the Venezuelan bolivar or other countries where it makes sense to store value in Ethereum.

RECENT COINBASE & GEMINI CRASHES

November 29th

Bitcoin fell to about $9,000 o after surging earlier to over $11,000. Coinbase said it saw "all-time-high traffic" that contributed to system outages.

December 7th

Coinbase and Gemini experience an outage as bitcoin soared by $3,000 in under three hours on its platform. Coinbase CEO Armstrong,” We wanted to remind customers that access to Coinbase services may become degraded or unavailable during times of significant volatility or volume.”

December 22nd

The price of bitcoin dropped below $12,000, which was around 40% off its recent high, while other cryptocurrencies are falling as much or further.

EXHIBITS

TROUBLESHOOT SCREENS

EXCHANGES ARE SUSCEPTIBLE TO DDoS ATTACKS

BANK INTERVENTION

Financial institutions since their creation have participated in the trading of risky financial instruments and creation of bubbles. This is what led Satoshi Nakamoto to create Bitcoin in 2009 after the big banks failed. Banks, as of recently, have been flexing their muscles by freezing accounts investing in Bitcoin and other cryptocurrencies. Their hypocritical defense was that Bitcoin and cryptocurrency is a bubble and very speculative. These institutions are bound to protect their own interest and keep money in deposits. These issues highlight the controlling demeanor of banks over their clients’ funds. Banks should not determine how a user spends discretionary cash or operate above the law. I believe this trend of banks suspending accounts and payments will exponentially grow synchronously with the demand for cryptocurrencies.

Cases

“Coinbase will no longer be accepting deposits from Nationwide bank. The move comes due to the bank’s SEPA processing being handled by German bank Commerzbank, who has a new companywide policy of not dealing with money related to Bitcoin.”

“Commerzbank is Germany’s second-largest bank after Bavaria-based BayernLB. Their refusal to deal with Bitcoin is perhaps not surprising given the establishment’s conviction of laundering hundreds of billions of dollars over more than a decade for Iran, Sudan, and Myanmar.”

PNC Bank has recently started taking some identical measures it prevents users from buying Bitcoin through a bank account.

There are reports that TD Bank suspends any cryptocurrency transaction purchased by credit card. However, if you link a checking’s account to Coinbase you will not have any issues. It might be a matter of time until they take a harder approach on this.

If these problems persist and continue to expand across more banks the current solutions we have are limited:

Prepaid gift cards Bitcoin ATMS LocalBitcoin

1.Prepaid gift cards are not a sustainable solution for the mainstream adoption of cryptocurrencies.

2.Bitcoin ATMS have grown at an exorbitant rate due to their accessibility and instant transfer to your wallet. However, ATMs also have been charging an exorbitant fee (7-14%) for buying and selling cryptocurrencies. Most ATMs only allow the purchase of cryptocurrencies and are not programmed to accept sellers.

3.LocalBitcoin is a P2P centralized marketplace that allows buyers to find sellers who are willing to exchange cryptocurrency in their medium of exchange (fiat, Paypal, Venmo, cash in person, cash in mail, etc).

Identification

Dether provides assurance that user’s identities will be secure via the blockchain. We have exchanges such as Coinbase being ordered by the IRS to release the identities of investors from 2013 to 2015. As the returns for cryptocurrency grow with more adoption I believe Coinbase and other exchanges will be forced to compromise the identities of their users.

“California federal court has ordered Coinbase to turn over identifying records for all users who have bought, sold, sent, or received more than $20,000 through their accounts in a single year between 2013 and 2015. Coinbase estimates that 14,355 users meet the government’s requirements. The full order is embedded below.

For each account, the company has been asked to provide the IRS with the user’s name, birth date, address, and taxpayer ID, along with records of all account activity and any associated account statements. The result is both a definitive link to the user’s identity and a comprehensive record of everything they’ve done with their Coinbase account, including other accounts to which they’ve sent money.”

The Unbanked



Why are there over 2 Billion unbanked people?

Unemployment

Distrust of financial institutions 

Bank Fees 

Black listed 

No Savings

Smartphones

“While 2 billion poor adults remain excluded from the financial system, the number of smartphone users is forecast to grow from 2.1 billion in 2016 to around 2.9 billion in 2019.” Smartphone usage has led to a rapid decline over the last five years of under banked and unbanked people. However, this doesn’t solve the issue of a volatile currency. Pairing smartphone technology with cryptocurrency will provide a solution for a user to protect value.

HYPERINFLATION

HIGHEST HYPERINFLATION RATES IN HISTORY



For most investors around the world, Bitcoin and Ethereum are a volatile and highly speculative bet. For Zimbabweans and other countries suffering from hyperinflation, the cryptocurrencies seem to offer rare protection from the onset of hyperinflation and financial implosion.

“I have now changed all my reserves to bitcoin because that is the only way I can protect my investment,” said Arnold Manhizwa, who works for an IT and telecoms company in Harare.

The Zimbabwean government adopted the U.S. dollar in 2009 after a bout of hyperinflation rendered the Zimbabwean dollar worthless, wiping out savings in the now defunct national currency. After a period of relative stability, acute shortages of dollar cash have set in, leaving Zimbabweans with electronic units in their bank accounts which are officially called dollars but have a far lower and rapidly decreasing value. In January if they wanted to buy $100 in cash they had to transfer $120 out of their account to a seller on the parallel market. Now the price is $180 in what are nicknamed “zollars”.

Nearly all domestic transactions are made via debit card or transfers using mobile phones. But some economists estimate inflation is more than 50 percent a month in zollar terms, far from the official, dollar-calculated rate of 0.38 percent. Zimbabweans are therefore piling into anything they think might retain value. Prices of cars, real estate and stocks have all soared. For people like Manhizwa, a 34-year-old father of two, bitcoin is almost a safe-haven asset.

“If I have $500 in the bank I won’t get it back and I will be losing value, but when I have my bitcoin it is going up every day,” he told Reuters.

USER PROFILES

European Emigrants sending money to family

Ethereum enables anyone to send ether, so value, from one point to another within seconds. A European emigrant can send ether to her father who’s located in Africa, which takes only seconds, and the only thing they need for their transaction is a smartphone. However, when the father receives ether in his wallet on his smartphone, he cannot transform it into cash to pay rent or buy supplies. Nor can he quickly find stores, shops and other businesses that would trade ether for fiat currency or that would accept ether as a means of payment.

Hassan, the Tunisian developer and human rights activist

Hassan Labid lives in Tunis. Since his childhood, he’s been a fan of video games. He used to spend his days playing video games in the city’s arcade, where he would meet up with his friends. At 18, his mom bought him his first computer. He started playing with computer games and quickly realized that he wanted to become a developer. But as a human rights activist during the Arab Spring, he soon became interested in blockchain technology, and more particularly in Ethereum. He wanted to build a DAO (Decentralized Autonomous Organization), that would allow him and other residents of the country to express themselves freely, without censorship, in a country where any kind of public space is controlled by the police, making it difficult to criticize institutions. He also plans to set up a transparent voting system to allow his community to designate the future elected representatives of the country. Although he’s closely following DAO projects, he cannot interact with the Ethereum blockchain because he doesn’t own ether. His first thought was to mine ether, but he needed a more powerful computer and electricity bills were expensive. Then he thought of buying ether online. He has a bank account, but no online exchange accepts Tunisian dinar. Today, he is looking for a simple and effective solution to acquire ether by relying on the millions of FrancoTunisian going back and forth between France and Tunisia, who are able to play the role of human mobile.

Angel, fighting hyperinflation in Caracas

Angel is an electrician in Caracas, Venezuela. He is the father of two boys and works hard to provide for his family and support their needs. Angel didn’t attend school when he was young, and now he wants his two sons to study at college, so he’s started saving money. Although he has a steady job as there’s always a need for an electrician in Caracas, Angel is having a hard time putting money aside for his two boys’ future because of the hyperinflation that is taking place in his country. Consumer prices rose by 800% which decreases the value of the money he makes every month. His customers always pay him in cash and today, he is looking for a solution, like ether or another cryptocurrency, that will allow him to use the cash he makes and convert it into a safe-haven currency as an investment.

Ania, the future rockstar

Since she was a child, Ania has always been a “natural performer,” just like her father loved to call her. Whether Billie Jean is playing on the radio, or she’s giving a private concert in the mirror, she is always the first one to sing on the dance floor … or in the middle of the street. Since she started singing and dancing in a band, she’s been performing in many local bars. Her audience keeps asking for more music. Now, she’s looking for solutions to listen to music on demand, as well as upload her music to gain popularity. She’s heard about Ujo Music, a home for artists that allows them to own and control their creative content and be paid directly for sharing their musical talents with the world. But Ania’s never had the chance to own ether. Cash is king in her hometown. With Dether, she’ll be able to upload her album to Ujo Music to let the whole world know about her talents. Whenever a user listens to one of her songs, she’ll automatically get paid in ether within seconds. Her goal is to earn enough ether on Ujo Music in order to cash it out afterwards and record her brand new album.

Hans, the German student who wanted to buy ether

Hans is a business school student in Berlin. Since his internship at Rocket Internet, he’s been interested in the startup ecosystem and new technology-related topics. He started attending conferences and Meetups about new technologies and successful startups. Eventually, he discovered blockchain technology after attending a conference about the use of smart contracts. He then wanted to invest some of his savings in ether. Observing that the ether price was 90$ on May 18, 2017, he went through an online exchange to transfer his savings from his bank account. But by the time his account was validated due to KYC regulations and the bank carried-out the transfer to the online cryptocurrency exchange, the price had already risen to 120$. Like Hans, tomorrow millions of people will look for a quick and efficient way to get ether without having to go through a middleman or a long and cumbersome process.

DETHER PLATFORM (iOS & Android)

Dether’s alpha which was released Fall 2017 has a very simple, “Uber-like” interface. Users are able to discover ether sellers, called tellers, near them on the Dether map, their ETH/fiat rate, the fees that they take, and chat anonymously with them. Buyers are free to engage a conversation with the seller they want to trade with in order to agree on the trading conditions and the meeting point to exchange ether for cash. Users will also find stores on the map that accept Ethereum as payment.

App Features

Peer-to-peer messaging: Buyers and sellers are able to talk directly to each other to agree on trade conditions and set up a meeting location this will be integrated with Telegram.

Peer-to-peer trading: buyers and sellers are able to trade together directly from one Dether Wallet (DWallet) to another. When they meet up, sellers are able to scan the buyer’s wallet QR Code or copy his/her address to transfer the ether. Buyer’s hand deliver the cash in the exchange.

Keys stored encrypted on device: when creating a Dether account, users’ keys are created and stored encrypted on their local device. Users retain full and exclusive control of their wallet.

Smart contract rating system: buyers and sellers have their own public reputation rating based on the transactions they have successfully achieved and their volume of transactions.

Secured local transactions: Dether never holds a user’s funds. Sellers are free to transfer ether to their D-Wallet. When they do so, buyers are able to see the amount of ether the sellers are willing to sell.

Trade Example

Denis has been interested in crypto for two years and he travels a lot due to his job. Every time he travels to a new country, he always comes back with a lot of souvenirs and gifts for his relatives back in France. Next month, he’s travelling to Algeria for six weeks and he’ll have to exchange Euros for the national currency, the Algerian dinar. As the fees taken by the foreign currency exchanges are rising these past six months, he would like to trade some ether for Algerian dinars. When he lands in Houari Boumédiène Airport in the Algerian capital, Alger, he goes on Dether to trade ether for Algerian dinars.

• Denis creates a Dether Wallet (D-Wallet) within seconds and transfers 2.5 ethers to it

• He discovers ether buyers near him on the Dether map. He quickly sees that Nadia is also currently located at the airport, and that she would like to trade the sufficient amount of dinars that Denis needs for ether. None of them have access to each other’s personal data. Pseudonyms and avatars are being shown on the Dether app.

• Denis and Nadia chat anonymously together in order the agree on a price and a safe meeting point at the airport. They decide to trade 2.5 ethers for Algerian dinars with a 3% profit rate that goes to Denis.

• As Denis has saved 2.5 ethers in his D-Wallet, Nadia can verify that he has it before he meets up with Nadia in front the coffee shop at Gate 3.

• When they meet, Denis scans Nadia’s wallet QR Code to transfer the 2.5 ethers to her wallet, and Nadia gives the cash to Denis.

• When the trade is done, a pop-up displays on both of their phones that allows them to evaluate the transaction.

• As it went well for both of them, they both get a better personal rating on their profile on the Dether map that will help them for their next trade.

Moderation & Arbitration

Users and stores will be able to report non-compliance and bad behavior. Due to blockchain solution not yet developed to handle arbitration Dether will have to be the arbitrator. Later it will have a decentralized arbitration service in the Ethereum ecosystem handle this such as (kleros.io). There will be an escrow required for large transactions to prevent profitable robberies from occurring. Secondly, there will be an internal KYC that prevents bad actors. Lastly, the reputation system will allow users to find the best possible trading partners. Dether will provide a list of successful trading areas and tips for each region.

The Dether Token Purpose (DTH)

Prevent Network Congestion 

Provide Market Safety 

Prevent Network Takeovers

By allowing any party to easily register and vend on the Dether network, it would be reasonable to expect significant counts of low-quality or fraudulent listings. To prevent this, a staking mechanism requires that participants have “skin in the game” by locking in a minimum amount of DTH prior to transacting. Those with larger transaction volumes and therefore more potential to negatively impact the network through fraud or scams are required to have larger safety deposits. The amount staked is subject to arbitration that penalizes bad behavior, as the most straightforward way to punish bad actors in cryptosystems is to take away their money. With a token, the stake amount is automatically correlated to network valuation, and therefore protection for market participants will rise or fall depending on the total value of the network. If replaced with a cryptocurrency or fiat currency, these scaling staking amounts would require far more intensive price discovery and accompanying politics to effectively protect market participants as the network shrinks or grows. It is also unclear that those tasked with setting the new amounts would do a better job than the market for the token itself.

Network attackers may raise capital and attempt a network takeover by staking large amounts to create many fraudulent accounts, increasing network congestion and undermining the overall legitimacy of the network. With the DTH token, any attempts to aggressively purchase en masse will be met with sharp price increases, which would make the attack far more expensive and likely unprofitable. Consider the use of ETH instead of DTH for staking in this situation. In the early stages of the Dether project, its entire network valuation may be but a tiny fraction of of the $120 billion ETH market cap as of Q1 2018. As a result, the price movement of the staking currency would be unresponsive and unable to effectively counteract the aggressive amassing of resources for a network takeover.

Loyalty Points

Loyalty Points will have a different purpose from the Dether token. Loyalty points will be distributed to top contributors on the site based on their trade volume. Using loyalty points vs the actual Dether token will prevent big traders of having a monopoly over premium features. The points will be used by users to purchase trading zones, keywords (similar to Google), and visibility on the map. However, a user can lose his accrued loyalty points if he unstakes his Dether tokens this encourages long term traders.

Example

For the ether seller: Bob wanted to become a seller in Paris, so he had to stake 50 ÐTH* to be listed and to be able to operate. He can now trade 5 ETH/month. If he wants to be able to trade for more, he’ll need to add more ÐTH to his safety deposit: for each additional 10 ETH he wants to trade, he’ll need to add 50 ÐTH* /month. Bob can now stake his loyalty point, in order to be able to have premium zone services.

For shops: Bob wants to list his restaurant as accepting ether on the Dether map. He will have to stake ÐTH tokens for 50 ÐTH*. If he wants to generate loyalty point, the shop has to stake additional tokens based on the volume of sales generated. Shop owners can stake their loyalty point to either own a zone, or own keywords for the search engine

The longer a user stakes ÐTH, the faster they will earn loyalty point. In addition, the more trades a user makes, the faster they earn loyalty point.

Dether project shall implement a smart contract interface for dApp developers to utilize Dether’s zone and loyalty point systems. It will provide facilities such as interfacing with user accounts, managing zone auctions, accessing transaction histories, and methods for collecting fees. The Dether project fully believes that it alone cannot conceive of all the add-on features to address needs across hundred of different and unique localities, so it chooses to open this aspect up to its own market.

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Future Development

Minimum Staking Amount Variation

It’s more expensive to open a new shop in the busy city of Paris than in the calmer commune of La Havre, and the same should hold true for vendors on the Dether network in more competitive or less competitive areas. One way to achieve this is to allow the of minimum stake amount to scale depending on local volumes. The calculation might be based on the global volume traded against the local volume in specific areas, along with consideration to a floating ÐTH/ETH price variation to avoid discouraging newcomers. Any scheme should favor early adopters.

Staking for Buyers

Sellers may wish to also require buyers to stake ÐTH prior to transactions. Credit cards have a clearing period of several weeks, while ETH may be confirmed in several minutes. This may cause sellers to only accept cash, which would reduce the possible amount honest transactions. To mitigate this, the Dether project may enable staking for buyers and allow sellers to express their buyer requirements.

Gaming of loyalty points through transactions among conspirators

To combat conspiring users who trade among themselves to game the loyalty point system while providing no useful activity to the network, the Dether protocol could reward only KYC-passing user accounts with loyalty points. Additionally, overly-frequent trades between the same account pair may generate fewer loyalty points.

New Users Without Loyalty Points

Transactions are necessary to generate loyalty points, yet loyalty points spent for premium services are very helpful in increasing transaction volumes. How is a new user without any loyalty points to compete? The Dether project may consider a combination of both loyalty points and ÐTH as an appropriate bid for premium services, with loyalty points holding more weight. Alternatively or additionally, a secondary market for loyalty points may be created with fractions of the loyalty points burned per transfer to discourage frequent trading, but allowing demands to be to better fulfilled. Loyalty points cannot simply be freely traded because they are an important account specific mechanism to ensure good behavior.

LOCALBITCOINS MARKET SIZE

As mentioned earlier, LocalBitcoins is a centralized, P2P, “craigslist”, marketplace for the purchase of cryptocurrencies using cash, PayPal, check, and almost every form of payment based on the seller’s requirements. The issue with LocalBitcoins is that this data is centralized allowing manipulation of user’s ratings, scams, and long payment settlement. Even though using LocalBitcoins is very risky people opt to use it because it’s cheaper, they don’t have banked accounts, and they want their identity to be secure.

In terms of the volume of bitcoins bought on Localbitcoins over the past year, we can see that China is far ahead, with $14.7 million traded in just one week in late May 2017. China is the only country where the level of $10 million traded per week was crossed over the same period, reflecting the country’s importance in the world of blockchain and cryptocurrency (DevCon2 and International Blockchain Week took place in Shanghai in September 2016). Russia, the United States and the United Kingdom hit $10 million traded in a week in May 2017, representing a total of nearly $30 million for the three zones. Australia, Europe, and Venezuela are above the million dollar mark a week during the same period. India and Colombia hit the million-dollar mark in a week. • Analysis by country according to the evolution of purchases and sales of bitcoin on Localbitcoins from November 2016 to May 2017 (6 months)

Among the five countries with the fastest growth in demand for bitcoin in six months are:

China: + 4431% 

Venezuela: + 1632% 

Colombia: + 1016% 

Hungary: + 1016% 

Tanzania: + 976%

ROADMAP

2016 Blockchain & Remittance

Hamid and Mehdi started working together on Blockchain Proof-of-Concepts for companies of the CAC 40 and helped iExec RLC as contractors. Both French and Algerian citizens, Mehdi and Hamid have previously worked on Blockchain based international remittance solutions before realizing that a solution like Dether is missing.

First Prize at Merkle Week Hackathon

Participation of Dether’s founders in the Merkle Week Hackathon in Paris. First Dether smart contract development and wireframes design. Proof-of-concept development that enables users to register as a seller on a map, chat with buyers and trade. Live demo and pitch in front of the jury. First prize winner. Link to presentation below.