With buying things online becoming such a big part of our lives since 1994, the retail sector is expected to reach $27 trillion dollars a year in 2020. Shopping online is great when it works, but what if it doesn’t? Yelling on the phone to customer support, screaming for a refund, calling your bank or credit card company, lawsuits or perhaps just biting the bullet and taking the loss isn’t a pleasant experience. This is where third party escrow services come into play.

For those of you who haven’t dealt with them before (are you living under a rock?), escrow services like AliPay (or PayPal if you’re from the western world) holds the funds used to pay for the goods until it is delivered to the purchaser. If the buyer is happy with the goods obtained, the seller is then able to access the funds, otherwise a dispute is raised and an agreement is come to.

Themis attempts to become the AliPay of the cryptocurrency world.

So what’s wrong with the current solutions out there?

They do not accept cryptocurrency.

Probably the most obvious of all. Adding support will take time, even as crypto continues its amazing growth.

They are centralised.

This means you have to trust them to not just take your money, go bankrupt, collude with the other party, withhold your funds or just freeze your account on a whim (any experienced sellers on eBay will know what I’m talking about).

It’s not anonymous.

Do you really want financial institutions to know about your dirty little habits? Themis ensures that your little secrets are not known by the mediators unless you get into a dispute.

You’re paying for the dispute service even without using it.

In order to standardise the fees and subsidise claims, all users are currently being charged extra even without a dispute similar to insurance policies. Themis will charge for the transaction, and only the dispute if you require it.

How does Themis solve this?

The Themis blockchain uses a token named Global Escrow Token (GET) to reward people that help in the escrow process and also those who help settle disputes. This reward is paid by users of the service as a fee.

Rather than use the current DPoS system, they created a new algorithm called DPoSR (Deposit based Proof of Stake and Reputation). If you wish to participate and mediate for rewards, you must pay a deposit in advance as collateral. The probability of you being able to participate depends on your deposit and your reputation.

By holding your deposit, they can ensure that you behave properly or risk losing it. As a participant or delegate, you each get part of a scrambled private key called secret shares whereby if enough correct secret shares are provided and combined with either user’s part to make whole the private key, you’re entitled to the reward. As you have to stay online to provide your key, it encourages uptime.

There are several tiers of mediators where you can be a small time regular mediator running a Themis node that doesn’t guarantee constant uptime, to giant institutions that have these nodes running with no down time. These tiers are rewarded proportional to their staked tokens and reputation.

Objectives of Themis

User scenario

Alice and Bob want to do a trade; Alice has bitcoin, Bob has a gold ring. Now, using Themis’ services, Alice sends her bitcoin to an address hosted by Themis, and is given a third of the private key with the another third going to Bob. The remaining third is given to both. The parts that were given to Alice and Bob exclusively is also given to the chosen mediators but scrambled into pieces. Once the private key is received, Bob sends his ring through the mail.

Good trade

The transaction is confirmed by Alice and via an oracle getting information from FedEx with the delivery information. The Alice then sends her key to Bob who can now access the funds.

Bad trade

On arrival, Alice comes to the conclusion that it is not really made of gold and raises a dispute. Alice then goes ahead and provides proof that the ring is not really made of gold. The mediators then look at the evidence and vote amongst themselves. Alice is declared correct and the scrambled key held by the mediators is then put together and given to her. She is able to use the key to retrieve her payment.

Mediator scenario

Having excellent reputation and a sizeable deposit handy, you were selected to become a mediator along with eight others. As a trusted peer, common peers can send you additional capital to increase the deposit to the necessary size. You are given part of the scrambled private key.

Good trade

Nothing is required and everyone splits the transaction fee proportional to their deposit.

Bad trade

Because a dispute was initiated, you review the information and decide that Alice is in fact correct that it was not gold. Majority of the votes went to Alice, and the combined secret shares to access the funds is given back to Alice. You receive a split fee for the transaction and for the dispute, to which some is sent to the common peers who helped with the deposit. Two of the mediators failed to respond in reasonable time and do not receive the reward.

Other users then grade your decision and your reputation quickly grows and increases your chance to mediate once again.

What do they have to show for it so far?

Fully sold out during presale

Having raised the required 22,000 ETH for development back in April purely off private and presale, they were forced to cancel their main sale.

A win by popularity vote to the Hadax Exchange

Thanks to overwhelming support by their community, they were able to win entry to the DEX owned by highly coveted Huobi group.

Increasing awareness via bounty campaign

Before their bounty program ended, the number of participants had quickly grown to 12,000 strong.

What is ahead for Themis?

Since their private sale in April, they have been quick to meet deadlines and have launched their testnet this month to the great delight of their community. It contains the basic functions of the Themis chain including multi-node operations, node voting, smart contracts, crypto asset group escrow, block browsers, GET web wallets, secret-key segmentation and secret-key recovery. For every module the code will become open source to help develop the blockchain even further.

The testnet also contains a few innovations that have been added. They have temporarily adopted the POA consensus mechanism, integrated the one-time escrow address creation to guarantee the security of each transaction, completed the smart contract to escrow the secret-key fragments on the blockchain, and came up with the first concept of the escrow node.

With this out of the way, the road ahead to the mainnet launch in October looks clear.

Over the counter trades utilising crypto will only grow in popularity as more and more people embrace the cheap, fast and private nature of cryptocurrencies. If they pull this off, they might just become the AliPay of the future.

If you’re in search of more information regarding Themis, be sure to check out their whitepaper:

https://themis.network/public/Themis_Whitepaper_EN.pdf