Towards an Open Financial System with COMIT

Those who are crazy enough to think they can change the world usually do.

— Steve Jobs

We, the team behind the COMIT protocol, believe that cryptocurrencies’ true purpose is to become a global payment system: a payment system that is censorship-resistant, non-discriminatory and open for everyone.

While some cryptocurrencies may indeed serve as a global mean of payment in the future, the true potential of cryptocurrencies goes way beyond that.

Especially in 2017 we have seen clear evidence of this potential with the ICO (Initial Coin Offering/Token Offering) waves. This and other events in 2017 that can be classified as “get rich quick” schemes or differently said: scams. While the real value of most of the tokens is questionable, it is incredibly exciting to have witnessed the movement of tokenising real world assets. In the foreseeable future tokens can represent various different real-world assets or securities with intrinsic value.

2017 was the start of a movement which was only possible because of cryptocurrencies. These allow to form world-wide, a truly open, censorship-resistant, non-discriminatory financial system. While true peer-to-peer trustless trading is still way off, cryptocurrencies are the first real platform that lets anyone participate in a free and open market, regardless of their geographical location, nationality, education, gender etc.

However, one could argue that this movement came too fast, the technology is not mature enough or too many bad players got involved. Too often did we introduce unnecessary centralisation, the need for trust and too often did we forget what cryptocurrencies and blockchain were all about in the first place:

Verify, don’t trust.

This trust was misused more than once In fact, according to a report by CipherTrace, over $4.26 billion have been stolen from cryptocurrency exchanges, investors and users since January 2019.

Most of the losses were unnecessary and could have been avoided by simply embracing the autonomous and trustless nature of cryptocurrencies (ignoring UX challenges for now).

The vision of an open financial system

We believe that in order to unleash the full potential of cryptocurrencies we have to cut out the middle man yet again. It should be possible to not only use the potential of one cryptocurrency, but to be able to exchange digital currencies without needing a trusted third party. Our vision goes towards an open financial system.

We believe in an open financial system — truly inclusive, censorship-resistant and non-discriminatory.

We believe that everyone should be able to participate in a global financial system. For that to become reality we need to remove the requirement of centralised trusted exchanges for trading: exchanging assets of any kind should be trustless, peer-to-peer and decentralised. Our mission is to research and build the missing pieces for this open financial system: a unified protocol to connect all the blockchains to allow for true trustless peer-to-peer trading. We believe that “connecting” blockchains does not have to involve yet another chain or token.

Connect all the blockchains — without adding yet another one.

To achieve this vision, there are some values that are crucial:

• Transparent and open: An open financial system requires a protocol to be open source, free and publicly available.
• Truly trustless: A truly trustless protocol is a non-custodial protocol. Neither the protocol nor the reference implementations will ask you for your private keys or assets.
• Verifiable: Blockchains allow us to verify. P2P exchange that only uses the underlying ledgers is 100% verifiable. No third party needed.

How to implement an open financial system

Connecting blockchains is hard — it is a complex problem to transfer ownership of an asset between two chains. But the solution to this problem does not have to be as complex as some platforms out there. Hash-Time-Locked Contracts (HTLCs) are one concept that make COMIT possible under the hood. HTLCs are not a new solutions, yet there are only few projects out there that offer a coherent implementation of atomic swaps using HTLCs.

COMIT’s Rust reference implementation is already capable of swapping Bitcoin to Ether and ERC20 (and vice versa). We call this the “smallest building block”. More abstract this means the problem of Layer 1 to Layer 1 atomic swaps is implemented fully. Adding more chains does not require heavy research, but might require some refactoring. But, even more interesting features are yet to come. Here is what we are currently working on:

Near-instant transactions: Time matters. Near-instant transactions are crucial for a financial system to work. However, instant transaction should not come at any cost, security, privacy and reliability have to be considered equally. While a lot of research is flowing into off-chain networks such as the Lightning Network, Raiden, Plasma, etc. COMIT will either be compatible with Layer 2 solutions or provide a complimentary off-chain solution to enable near-instant trade transactions. Lightning network integration is already in the planning.

Private trades: Censorship resistance and privacy are crucial for an open financial system to exist. While the former can be provided naturally by the underlying blockchain, the latter especially may get neglected during trades. In order to protect the market participants COMIT will support confidential transactions protecting the market participants’ privacy. A first step for achieving this is our proof of concept for Grin-BTC atomic swaps implementing Scriptless Scripts.

Community: Without adoption a protocol is not worth much. Help us to unleash the full potential of a trustless cross-blockchain protocol! If you are building a cross-blockchain DEX, a multi-currency wallet or a P2P payment solution: COMIT can do the heavy lifting for you. Recently we started an online workshop program, where we help developers getting started with integrating COMIT. You can also hit us up on Twitter or chat with us on Gitter.

The easiest way to get started with COMIT is by using create-comit-app, a project inspired by create-react-app. With create-comit-app doing an atomic swap (locally) between Bitcoin and Ethereum is a matter if minutes. If you want to check it out on testnet have a look at our testnet-demo project. Let’s build an open finance system together!

Happy Hacking! — Daniel