#1 Ben’s Pocket Guide to Komodo for Dummies And Smart People Too.
The first in my series of ‘pocket guides’. A brief overview of the Komodo Platform and a launchpad to explore it’s ecosystem.
A coin with optional privacy features that rewards you 5.1% per year, if you pay it a visit once a month.
$KMD is a mighty coin that offers optional privacy features to protect your privacy and rewards you for being active.
- You are rewarded for activity.
- To maximise your rewards, claim once a month. It is easy to claim through the Agama wallet.
- A $KMD coin, like traditional money, can be fungible. You have the option to protect your coins from being associated with past transactions by using Komodo’s Jumblr tool.
What is Jumblr? A decentralized cryptocurrency shuffler that allows your transactions to become incognito and protects them from being traced through a time or knapsack attack. It adds a privacy layer to your transactions because after your coins are Jumblr’ed, an analysis of the amounts that went in or times that they came out is futile. This function is unique to Komodo and does not require third parties.
Privacy and fungibility are important.
An important part of money is that it’s fungible, which means a coin is interchangeable and as good as any other. You can pay someone with a coin and the receiver won’t care where it came from. If a coin has a history then this can prevent it being fungible. This is important because privacy is a limit on government power, as well as the power of private sector companies. The more someone knows about us, the more power they can have over us and this is especially true if what we earn, pay for and save is public.
Examples
1. You are a business that receives a payment from a supplier. That supplier will be able to see how much money your business has, and therefore can guess at how price sensitive you are in future negotiations. They can see every single other payment you’ve ever received to that Bitcoin address, and therefore determine what other suppliers you are dealing with and how much you are paying those suppliers. They may be able to roughly determine how many customers you have and how much you charge your customers. This is commercially sensitive information that damages your negotiating position enough to cause you relative financial loss.
2. You are a private citizen paying for online goods and services. You are aware that it is common practice for companies to attempt to use ‘price discrimination’ algorithms to attempt to determine the highest prices they can offer future services to you at, and you would prefer they do not have the information advantage of knowing how much you spend and where you spend it.
3. You sell cupcakes and receive Bitcoin as payment. It turns out that someone who owned that Bitcoin before you was involved in criminal activity. Now you are worried that you have become a suspect in a criminal case, because the movement of funds to you is a matter of public record. You are also worried that certain Bitcoins that you thought you owned will be considered ‘tainted’ and that others will refuse to accept them as payment.
Delayed Proof of Work is like Two Factor Authentication for Blockchain.
Delayed Proof of Work (dPOW) recycles the enormous power of Bitcoin’s hashrate to protect smaller chains that may be vulnerable to co-ordinated attacks (i.e. 51% attack is an example).
If you ask an expert what delayed proof of work is, you might hear…
It’s a secure and robust consensus mechanism that protects your funds, offers security to independent chains and our ecosystem.
If your Grandma asked you what delayed proof of work is, you might try to explain it like Two Factor Authentication…
Factors of authentication describe fundamentally different ways you can prove you are who you say you are. There are three classic factors: something you know, something you have, and something you are. The classic examples of them are a password, a key, and a fingerprint, respectively.
The three classic factors have some pretty different properties. Something you know can be copied without your knowledge, but not physically lost and found. Something you have can’t be easily copied without your knowledge; it takes a physical theft to get it (in theory). Something you are is supposed to be hard to forge, but it may be easy to get.
Two-factor authentication uses two of these factors. The idea is that it should be harder to steal two different factors than steal one. For instance, if you need to use a key and enter a code to get in a house, someone who nicks your key can’t get in, and neither can someone who saw you enter the code. You need two different kinds of attack to get in.
Delayed Proof of Work is like two factor authentication because it adds a second layer of security where a checkpoint is created on a different blockchain (like how backing up and restoring your iPhone works when you’ve lost it or broken it). However, instead of it saving to your hard drive or to the cloud, it saves to Bitcoin. This means a project can restore their chain in the event of an attack. It also means the enormous power of Bitcoin’s electricity consumption is recycled to protect smaller independent chains that have adopted dPOW, so it’s pretty green, and it’s used it to back up a blockchain’s work. It’s a no brainer than a project should back up their work right?
Blockchain projects benefit from ‘delayed proof of work’ (dPOW) in a similar way to how people benefit from setting a restore point on their iPhone and a project would want to use it for the same reasons you use two factor authentication.
- a counter to attacks
- creates a checkpoint which can be restored
- adds a layer of security and resilience
- recycles the enormous power of Bitcoin’s hashrate to protect smaller chains that may otherwise be vulnerable to co-ordinated attacks
This notarization process (to create a checkpoint) on the Bitcoin blockchain happens roughly every ten minutes. The backups are then saved (notarized) onto Bitcoin because it has by far the highest hashrate available which makes it much harder to attack.
Nobody thinks about security until they’re attacked.
There have been a number of posts talking about how easy it is to rent computing power to attack small chains and even this website, which tracks the costs of performing hourly 51 percent attacks on PoW cryptocurrencies.
The statistics, however, succeed in showing how vulnerable PoW cryptocurrencies are to network attacks, at the moment. At least four different virtual currencies have suffered 51 percent in the last two months, including Verge (twice), Electroneum, Bitcoin Gold, and Monacoin. — thenextweb.com
If a project that had adopted delayed proof of work suffered an attack, the blockchain would merely revert to the most recently notarized copy of the chain. If Bitcoin loses superiority in terms of hashrate the dPOW mechanism can be switched to another blockchain on demand.
But, what is hashrate?
A proof of work blockchain needs a lot of calculations. Hashrate is the way it is measured. The amount of data hashed in a given time by a machine. It is a unit used to define the amount of calculations made by a machine. When you add all the machines together you have the hashrate for that blockchain (here’s a great chart that illustrates it). It’s like a river of transactions and the broader and wider it is, the harder it is to manipulate it.
Hashrate Historical Chart
Look how much bigger BTC’s hashrate is to anything else. This is important to understand. https://bitinfocharts.com/comparison/hashrate-btc-eth-bch-ltc.html#1y.
Atomic Swaps and Decentralized Exchanges.
What are atomic swaps? Atomic swaps are a method of trading cryptocurrencies peer-to-peer, directly from one blockchain to another, without the need to trust a third-party.
If you’d like to read more then check out ‘Atomic Swaps & Etomic Swaps, Explained in Plain English’ written by John Westbrook on Medium.
Why do you want an exchange to be decentralized?
- You own your private keys. A centralized exchange is a third party and requires you to trust them with your funds. If they’re hacked you’re at risk of losing your funds.
- Transaction fees are much lower. Centralized exchanges also require you to trade between pillars (i.e. BTC or USDT) which involve higher transaction fees and a greater number of trades than necessary to swap the token you have for the one you want (i.e. DOGE sell to BTC to buy KMD is two trades when all you really want is DOGE to KMD).
What is BarterDEX?
BarterDEX is Komodo’s decentralized exchange. You can trade with it or build on it because it’s an underlying technology as well as a platform to trade on. A good example of this is HyperDEX which is a graphical user interface (GUI) that makes use of the tech. This is important because Komodo lowers barriers to blockchain and creates tech that other people can use. It’s truly an open source and decentralized ecosystem.
- It has a fully working order book
- Komodo’s atomic swaps work between Bitcoin protocol and ERC20 tokens which means it supports over 95% of all the tokens and coins in existence.
- BarterDEX offers ‘liquidity power-ups’ which mean that you can place more than one buy order with the same funds (i.e. pick your top 5 coins and if any of them drop below 50% of their value you’ll buy it and cancel the other orders at the same time) which means your funds have a greater value!
- Komodo’s DEX has fast transaction speeds and super low transaction fees (0.15%). You can find live BarterDEX and Komodo Stats here.
Lowering Barriers on Blockchain
Komodo is a platform that lowers the barriers for entrepreneurs to build, crowdfund and scale on independent chains made secure by delayed Proof of Work.
What happens if all the projects build on one blockchain?
You can think of a blockchain as a motorway and if you build a project on the same blockchain as other projects you will be impacted by how well the other drives behave, or by the motorway introducing tolls, or you could suffer from congestion (i.e. if you’re familiar with how crypto kitties caused ETH transaction fees to greatly increase and transaction speeds to slow down then you’ll understand multiple projects on one blockchain cause a scalability and independence problem ).
Komodo offers asset chains which mean a project or decentralized ICO is given its own chain which uses Komodo’s technology. This also solves the scalability issue because using the motorway analogy we can simply open more lanes for a project with a high amount of congestion. This is possible because of the dPOW notarisation. It allows projects to launch completely independent blockchains that are each secured by Bitcoin’s hashrate.
Benefits of building on Komodo’s platform
Every independent blockchain created on Komodo Platform is automatically integrated into Komodo’s BarterDEX (DEX) which means they have instant access to liquidity for their token and their community can buy and trade immediately. If you compare this to a centralized exchange where projects are often met with a list of onerous demands and fees to be listed and risk being delisted then you’ll understand how important this is for any project especially smaller teams and decentralized apps (dAPPS).
A Universal Multi-Coin Wallet
The Agama Wallet is a universal secure, multi-coin wallet to store funds on and claim the 5% reward for your $KMD tokens. There is also a paper wallet available if you would prefer a cold storage option for those who want to maximize their security.
Resources
Community
Read more of the Pocket Guides I’ve written…
Your questions and comments are welcome and appreciated.
