Written by Shahaf Bar-Geffen, COTI CEO

As the saying goes, “May you live in interesting times” and for those involved in crypto throughout 2017 and 2018, this certainly has been the case. From the speculative bubble and bull run of 2017 driven solely by the hype of utility tokens, their intended network effects and the future promise of delivered tech, to the protracted bear market of 2018, in which a majority of utility tokens were found to be useless, delivered tech, if delivered at all, was underwhelming and the use of such tech non-existent, expectations surrounding cryptocurrencies and crypto projects have shifted dramatically in this time.

2017 was the year of decentralization and that mantra, the resulting hype and thus the ease of funding for ICOs, lead to a blatant disregard for the commercial and business development standards previously applied to fintech products, and was instead, at best, based off the premise of “Build it and they will come” and at worse “Promise it and they will come (or at least give you money)”. It seemed to be a foregone conclusion that decentralized versions of existing technology solutions were soon to take over the world and the main concern of the development community stemmed from how to scale such solutions for the explosive growth soon to come…

As much as 2017 was notable for the promises of what blockchain technology could deliver for the masses, 2018 was most notable for the complete failure to deliver on these promises. Projects who delivered tech failed to see uptake of such tech, with many projects failing to deliver at all. As the speculative bubble began to burst, runways for projects without an actual budget and business plan began to shorten and project goals constricted, with many projects folding altogether. Decentralization proved to be somewhat of a myth as time and time again, projects were proven to have a centralized component. Scalability became somewhat moot, after all, why scale when you have next to no users? Regulation, previously a dirty word, was suddenly welcomed into the space, not shunned.

Crypto now moves into 2019 as a much more mature, if not slightly wounded beast. Regulation has entered the space in a big way, driving the need for crypto projects to be compliant with regulatory authorities globally, curtailing the global funding free for all and cypherpunk hopes of true decentralization. Blockchain in itself is no longer seen as the solution, instead rather as the enabler. Most importantly, the lack of accountability, responsibility, transparency and deliverability of crypto projects in 2017/18 has resulted in a much more skeptical and discerning crypto market, with sentiment shifting from the speculative hype cycle and the resulting hypothetical promises into something much more realistic and more in line with traditional business goals- i.e the need for real companies with real products and real users who have an actual business plan…

A Brief History of (COTI) Time

The COTI project began in 2017 with relatively modest goals, to build a payment dApp on top of the Ethereum network. In a time in which Ethereum was shaping up to become the dominant transacting blockchain with Plasma, the Radien Network and sharding right around the corner, giving Ethereum the ability as Vitalik himself stated to, “scale it up to one hundred million (TPS)”, this seemed like a pragmatic approach, after all, why reinvent the wheel when it has already been created? With these improvements to Ethereum, COTI would have easily been able to implement its vision, that of an accessible to all, near instantaneous, low-cost payment solution built on blockchain technology.

However, as time passed, it became apparent these solutions were increasingly some time off, if to be delivered at all. Mindful of the fact that other payment projects, such as OMG, had stalled while awaiting these improvements and with Ethereum limited to a measly 15 TPS, it became obvious that if COTI were to build a payment solution on top of Ethereum, it would be severely limited, entirely reliant on the underlying Ethereum network, its developmental timelines and basically unusable when compared to existing real-world payment solutions.

After having already raised 15m USD, based on the original payment dApp built on an Ethereum premise of COTI, it would have been an easy out for COTI to simply deliver upon that promise, despite its obvious limitations, and fade into the general obscurity of the many ICOs who have now found their technology and/or business models to be entirely unsustainable. Instead, this was seen as an opportunity to not only deliver upon the original COTI vision, but also to greatly expand upon it, after all “those who cannot learn from history are doomed to repeat it” and to not learn from the collective trials and tribulations of 2017 would have been a significantly missed opportunity in developing a product in line with the needs and demands of the maturing crypto marketplace in 2019 and beyond.

The Ten Commandments of Adoption

“Do it right or don’t do it at all”

In defining the philosophy that marks the current incarnation of the COTI project, our team took into account the lessons of 2017/18 and the critical issues surrounding blockchain technology that have limited its ability, use and adoption in the real world. We have adopted this philosophy into our approach moving forward with COTI and summarised it into the ten commandments below.

1) Simplicity

Blockchain DApps need to be so simple that users could use apps without even knowing that they are using crypto.

Blockchain should be an underlying technology, not something that is the sole or main selling point. Do users care which cloud service their favorite apps run on? Of course not — if it runs well.

While the underlying technology that powers COTI is extremely complex, the user and merchant-facing tools developed have been designed with simplicity in mind.

2) Accessibility

Blockchain dApps need to be accessible to as many users as possible.

Utilising existing technology solutions and ecosystems that already have a foothold and user base is one of the most important aspects of bridging the gap between legacy and blockchain solutions. It is unrealistic to expect blockchain to completely replace legacy solutions in the short term. What is realistic is creating alternative solutions that provide a competitive advantage to legacy systems and allow them to operate side by side.

In a world in which over five billion people own a mobile phone, it is of critical importance that dApps are accessible from traditional app marketplaces, such as Apple’s App store and Google’s Play store.

The COTI Pay dApp will be available on the Apple App store, Google Play store and also as a web application.

COTI will also offer merchants access to a merchant dashboard that provides detailed data and reporting functionality on their COTI Pay transactions. Within this dashboard, merchants can choose which COTI Pay-supported currencies they wish to accept, as well as their preferred settlement currencies. The dashboard will also provide merchants with wallet-like functionality that enables them to make payments to COTI Pay wallet holders and to other COTI Pay-powered merchants, as well as the ability to use COTI-X’s facility to exchange currencies.

3) Usability

Crypto solutions need to be as user-friendly as existing legacy solutions. Users are unwilling to wait more than a few seconds for transactions to be confirmed and both users and merchants are unwilling to pay high fees for simple transactions.

Creating a crypto payment solution that utilises the advantages of blockchain technology while retaining the same level of usability and functionality of legacy payment solutions, without their obvious disadvantages, is key to actual adoption.

COTI offers a full POS (Point Of Sale) software suite that seamlessly integrates with COTI Pay. By utilizing the COTI POS, merchants will benefit from all COTI Pay advantages, while also being able to accept normal credit and debit card transactions. All that is required at the consumer and merchant end is access to the application on a mobile device to facilitate payments.

COTI Pay Payment Flow, Mobile App

COTI Pay Website Plugin

4) Volatility

Volatility is one of the key weaknesses of cryptocurrency, especially in relation to payment solutions. Merchants will not accept a form of payment that may drop in value the next day, in the same way users are reluctant to pay with a currency that may appreciate in value the next day.

Providing stability, and in turn confidence, to both users and merchants is key to new payment methods being adopted by the masses. Integrating a stable coin into crypto payment networks is undeniably the best way to counter this volatility and reduce any such associated risks for all parties involved.

COTI has developed the COTI Dime, a generic price-stable coin pegged to USD 10 cents. The COTI Dime exists only within the COTI platform and serves as a price stabilization method ensuring usability for everyday and mainstream use by users and merchants.

5) Scalability

Once a user and transaction base has been established, scalability becomes a key element that effects crypto payment networks. Many crypto users will remember the issues Bitcoin had at the height of the crypto boom, with an average transaction cost peaking at $55 and many transactions taking hours or days to confirm.

Crypto networks must be designed with a scalability solution in place from the onset - not something that will potentially be added in or developed in time, as a network grows.

The COTI Trustchain is based on a DAG (Directed Acyclic Graph) infrastructure, a much more efficient and scalable blockchain solution than a traditional ledger. The Trustchain TestNet, with a limited amount of nodes, is currently running at 10K TPS and will scale past 100K TPS once in production. This means the COTI network will be able to support and sustain a transactionary level that surpasses legacy networks such as Visa and Mastercard… from day one.

6) Liquidity

Liquidity for legacy currency (fiat) is something we all take for granted. After all, liquidity is essentially secured by the government of the issuing currency.

In crypto, however, this is a different story, and many projects who have received significant amounts of funding have suffered from issues of liquidity, either from not being able to be listed on exchanges, or from a lack of consumer interest in their tokens.

COTI has created COTI-X, an internal interoperability exchange and settlement layer on the COTI platform, serving three main purposes, an enabler of cross-currency payments, direct transfer of one currency to another and importantly, an enabler of liquidity on the COTI platform, via the conversion of COTI coin to COTI Dime and other cryptocurrencies/fiat. COTI has dedicated a pool of 45% reserve tokens specifically for creating and supporting liquidity for the COTI coin and COTI Dime via COTI-X, without the need for external exchanges or liquidity providers.

7) Immutability

While blockchain can provide great security and transparency via the use of immutable ledgers, the lack of third parties in the transaction chain becomes an issue when a payment is completed but the service or product is not delivered by a merchant.

In order to replace legacy payment solutions, crypto solutions need to provide the same level of buyer-seller protections that users currently have in legacy payment systems. While transactions can still be written to the blockchain in an immutable fashion, there must be recourse for a user in the event of a failed deliverance of a service or product.

COTI has developed an Arbitration Service that offers dispute resolution through a decentralized collective of highly trusted network participants that allows for similar or surpassed levels of dispute resolution as offered on legacy payment solutions, such as PayPal, Mastercard or Visa.

COTI Arbitration Process

8) Portability

One of the reasons there are so many different cryptocurrencies is that each currency serves a different purpose and has different features. There is no one size fits all cryptocurrency. In the crypto payment ecosystem, it makes no sense for a user or merchant to deal with multiple cryptocurrencies, as the overhead required to manage this outweighs the benefits of doing so. However, like state-sponsored fiat currencies or company issued reward points or gift cards, there is a specific demand for a bespoke solution that is indicative of a brand or particular ruleset.

As such, governments and enterprises need to have the ability to issue their own cryptocurrency or token, backed by their own branding, real-world assets or other on-chain collateral, defined by their own criteria or rulesets.

By creating the COTI platform, COTI gives enterprises and governments the ability to issue their own currency on top of our infrastructure, essentially white labeling our entire platform, enabling for extreme ease of deployment of a crypto-based solution without the necessary time, cost and expertise usually required. This enables our solution and the COTI network exposure to the billions of users who are catered to by enterprise and government.

9) Anonymity

As crypto matures and continues to mature, the support of regulatory authorities is key to both the acceptance and adoption of cryptocurrency as a payment method or value transmission. As such, despite the founding premise on which Bitcoin was founded, for widespread support and adoption, a cryptocurrency that will serve for mass payments can’t be anonymous.

In this sense, transactions themselves can still be private, however for full support or regulatory authorities, and in turn acceptance and adoption worldwide, users using crypto must follow industry standard KYC and AML processes to remain compliant with enterprise and government requirements.

Privacy is a cornerstone for COTI, meaning transactions cannot be tracked back to a specific user, as a multi-address is implemented for each transaction by a one-way hash function. Users and merchants must undergo a KYC and follow AML processes to be involved in the COTI ecosystem.

10) Transparency

Transparency is often used in reference to the blockchain itself, however, transparency regarding the operations of blockchain companies has been a constant conversation in the crypto community during the bear market, as runways and token prices for projects have collapsed. Due to the lack of oversight and regulation of companies in the crypto space, and with investors being sold utility tokens that represent no stake in the company itself, ICO’s have acted in a no rights and no responsibility manner towards token holders.

Crypto companies should have the same, or greater, level of transparency regarding their funding, operations and future plans as real-world businesses.

By moving to an equity-based funding model, COTI will open itself up to a level of transparency and responsibility to stakeholders that is representative of its status as not just a crypto project, but also of a real-world company.

The Path to Adoption

“Actions speak louder than words”

Mindful of the many broken promises of other ICOs, COTI has taken great strides to not only deliver upon its original commitments but to greatly surpass them, based off the current needs of both our project and the crypto market in general.

In keeping in line with these commitments, in the past six months, we have —

Converted our token only ICO raise into an equity + bonus token issuance model (commonly known as a Simple Agreement for Future Equity with Bonus Token Allocation, or SAFE-T for short) and raised additional funds based off this model in the last six months.

Early Adoption to Mass Adoption

“Every once in a while, a new technology, an old problem, and a big idea turn into an innovation.”

COTI decided early on to focus its efforts around a blockchain for payments and stable coins because it believes that the first “killer app” for blockchain, the app that the masses will use, will be one that uses a price-stable coin that is designed specifically for payments. After all, payments are something that almost every person in the world does every day - and something that blockchain and cryptocurrencies do especially well, with the right design. COTI’s goal is to combine the innovative technology it has developed with an aggressive business development strategy based on partnership agreements and a referral program that ensures a significant amount of users and merchants from day one.

It is our aim that within the first twelve months of the COTI main net release, the COTI network will host the most transactions per day of any crypto network!

Moving forward with COTI and our plans for mass adoption, we have committed to —