AMA with Shahaf Bar-Geffen and Dr. Nir Haloani hosted by Ian Balina
In case you missed our LIVE AMA hosted by Ian Balina, you can watch it AND read it!
Ian:
So what is COTI? Let’s just go to this first question. People want to hear, what is COTI?
Shahaf:
COTI is a blockchain 3.0 infrastructure solution that is focused on payments and stable coins. We have a solid adoption strategy with early traction from enterprises around the world. We are a real business with a real use case and revenues. We have built a full ecosystem that allows enterprises to issue their coin with us and list it with a full solution.
Ian:
So you are saying you allow people to issue coins. You are a platform that lets them issue stable coins and build payment apps?
Shahaf:
Exactly, yes. Let’s say you are Amazon and you want to issue the Amazon dollar because you have just recently seen Facebook that is about to issue its own stable cryptocurrency and use Whatsapp for payments. So you want to do your own thing and you want to issue the Amazon dollar, for instance, or you can just be a smaller marketplace or a government. So you need a solution, an infrastructure to create this coin. Now, you can’t do that with Ethereum because scalability is not up there and you’ll find a lot of setbacks when it comes to transactions.
So you need an infrastructure that was built for that, and this is the Trustchain. Our infrastructure was built exactly for that. So we will allow you to create a coin and list it immediately.
Ian:
So you are saying that Ethereum was not built for currencies. Is that because of the transaction fees?
Shahaf:
So there are a lot of things that make Ethereum incompatible with payments specifically and it’s not just Ethereum, EOS has the same issues and other cryptocurrencies as well. Nir, do you want to add why you think other infrastructures are not suitable for transactions?
Nir:
Yes, other than being scalability wise it is not really fit for handling, for example, stable coin use case. You should look at it as we have: The full ecosystem and the framework to support any use case and any opt-in and opt-out user into the network.
So if you are issuing an application with ERC-20 for example, you don’t get the added value of how people are going to use your currency.
You built a game, you have a token, but other than distributing the token to people, you don’t really have easy access to it.
By deploying applications on our network and “ERC-20 like” distribution and deployment, you will be able to get also the added value of having a pair, listing your token on an exchange (our exchange), ability to take fiat money and exchange it to the cryptocurrency and get real usage for your cryptocurrency, and not just deploying it and looking how to integrate it with 3rd parties.
Ian:
So you are saying the fiat gateway is already built into any stable cryptocurrency issued on your platform?
Shahaf:
Exactly. So we see it, it is quite clear that in the future, and it can be anywhere between 3 and 30 years, we will have digital currencies as a form of payment. Maybe they will be pegged to dollars or euros, maybe to gold, maybe to nothing. But we will have digital currencies and about 15 central banks, right now, are looking into it, top enterprises are looking into it. So there is very little doubt that this is going to happen.
The question is, who is going to give these organizations, the right technology, and the right platform for that. We think and we believe that the current blockchain solutions are not fit for that. And we believe that the Trustchain is specifically fit for that because we have built it that way:
We can handle more than 10 000 transactions per second right now. We have a TestNet out that proves that, that is absolutely needed. Transaction cost is less than a fraction of a cent. Privacy is kept. You have chargeback mechanisms. You have stability framework. You can deal with fiat on a licensed gateway. So it is a full solution.
Ian:
So that is what you call the Trustchain?
Shahaf:
Exactly.
Ian:
Okay, so I know you mentioned chargebacks, how does it work? Because that’s not really something you hear much in blockchain, right. When you send your money, typically it’s gone.
Shahaf:
Yes, in blockchain it’s like that. So when you think about mass adoption, and this is what we are aiming to, you really do want to have a chargeback mechanism because normal people when they buy something online, don’t just send cash in an envelope and hope to get the products, right. They want something more robust. Now as Dr. Holoani has designed this mechanism, I am going to let him explain how chargebacks work with COTI.
Nir:
The basic idea is to have a mechanism similar to a PayPal consumer/merchant flow. Interaction between the consumer and merchant, that’s something that is obviously solvable on the blockchain, but doing a refund on the blockchain, that’s something that is a bit complicated and this is something we have resolved embedded in the infrastructure. We have a set of decentralized collective, which helps us get to the majority decision, which resolves the dispute between the parties. If it is not resolved between them in a time frame or window frame of 2 weeks, for example, or more. It’s moved to the arbitrators who get to vote and the majority will decide if the dispute is in favor of the consumer or the merchant.
The basic idea is that it is only for payment between consumer and merchant. It’s not really for transaction in first case, it’s not for transaction between users. It’s mostly if you want to buy something and you want to get a protection for that, but the purpose for that…(09:23)
Ian:
People vote on it, right?
Shahaf:
They vote and they stake coins, when they vote to back up their voting so they have an incentive to be right because if they lose the vote, meaning they were with the minority, they are losing the coins that they staked and if they were with the majority, they collect more coins. So we incentivize and have an evolution in the system that “survival of the fittest” if you may, of arbitrators.
Nir:
Yes, but they cannot randomly vote. They need to explain their voting, they need to base it on the facts and the documents the user provides. So it needs to be in detail. We have ways to assess if voting is just a random one, or it’s based on real facts, and if you are not aligned with the majority in a long time, in the long run, you are going to be just dismissed from being an arbitrator in the system.
Ian:
How do you prevent, I guess, a whale buying up votes or just having the largest amount of coins to stake? Do you guys have nodes or trust nodes?
Shahaf:
One person, one vote. It doesn’t really matter how much money you put in. The money will maybe dictate to some extent your payout, but it’s one person, one vote.
Nir:
And they are chosen randomly. So you cannot interact between arbitrators. No one knows who is assigned to which case, so they cannot communicate between them. That’s how we resolved it.
Ian:
So who’s your competition? Because you mentioned payments and what you are trying to do. I would think of Ripple?
Shahaf:
I would agree so. I would say, first of all we are not a payment network. We do have COTI Pay, which is our payment network. Meaning, we have taken Trustchain, our protocol, and COTI-X, our exchange, and on top of it, we have built COTI Pay. And we have about 5000 merchants that have signed in to use the network and we slowly on-board them. And I am happy to say that the first transaction with COTI Pay may happen tonight for the first time! So this is a very exciting day for us. But aside from that, aside from our own payment network, what we do is allow any organisation to build its own payment network, which is something nobody is offering to date. So, I would say our competition comes from traditional networks like PayPal, which we can win because we cost a fraction of what PayPal will cost you. So PayPal is a few percentage of your turnover. COTI is fractions of your turnover and blockchain solutions like Ripple and Stellar. Ripple and Stellar are aiming more to interbanking and remittance, and we are focused on consumer-merchant solutions. So, this is different, and the technology stack is different as well, and I think Nir is better at explaining how.
Nir:
Technology-wise, it is very different. I mean, we based all our decision based on trust. As we said we are a Trustchain protocol. Every entity in the network is applied with a trust, which defines how much power it gets in the network and what it can do in the network. How much fees are going to be assigned to each transaction? And also what is the Proof of Trust (PoT) needs to get consensus, needs to be applied for these types of transactions. But as we said before, other than being different as an infrastructure and as a protocol, the differentiation itself is mostly in the application level surrounding the solution. It’s giving a full ecosystem as we said. The ability to, not only deploy your own tokens but also to be able to make it useable and the chargeback protection, which is very essential and does not exist in other platforms.
Ian:
Alright, very nice. Is there anything you guys would like to show us? Maybe a demo, or a video, or a presentation?
Shahaf:
We will get some stuff ready and I will put it on in a moment.
Ian:
A question, which you guys can’t really answer, about exchanges?
Shahaf:
Yes, well, I can answer this, we have our own exchange called COTI-X, which has recently gone into “Beta” for selected users. And naturally, our coin will be listed there immediately. But again, as I have mentioned, because we already have utility, because we already have a net running, we feel we most likely do take the box of our utility token and naturally we will list COTI to have liquidity in various exchanges. Naturally, we are speaking with more than a few and we will have that happening probably in the upcoming month.
Ian:
Ok. Then people are asking since you guys are based in Tel Aviv, Israel, and so is Chromapolis. Is there a possibility of any partnerships between the two of you?
Shahaf:
Yes, we know the guys from Chromapolis really well. We have a different use case, naturally, so a partnership is not straight forward.
We did have the people from Cardano here last month. We hosted them for about a week and introduced them to the local ecosystem and I expect we will have interoperability (16:07) with them and share some knowledge and use cases.
Other than that we are working with Bancor, here in Israel, naturally and the wings foundation so that’s local partnerships.
Ian:
What kind of partnership do you have with Bancor? Because they are built on Ethereum actually, right?
Shahaf:
Yes. So they can help us with some aspects of liquidity and we are helping them with some other aspects with regards to fiat and it’s something we will announce pretty soon.
Ian:
Ok, so next question a person has is: are you guys replacing PayPal?
Shahaf:
Well, down the line, I hope we will either replace PayPal or PayPal will choose to use the Trustchain instead of using Visa’s and Mastercard’s rails because what is more important is the underlying rails and we go to that depth in our solution.
PayPal is a network so they have a lot of contracts with merchants and they have a user base, which is huge, right? But what is the underlying technology that they will use, that is I think the big question and this is where we want to plug in and show what we can do.
Nir:
Actually, it’s allowing anyone to be his own PayPal. Any merchant can be his own PayPal. He doesn’t really need to have a third party which gives him these services. He can white label the solution. He can run on our solution. In any case, the fees will be very minimal. He will get all the service of the services we have embedded and it will allow him to deploy it very fast and without the requirements of having a license to be a processor. I mean you can be a processor tomorrow morning on our website without being licensed for being one. And in cryptocurrency, that’s a major advantage. You can really do it! You don’t need to get the license of being a processor.
This is our story, “the cryptocurrency of the world”. You are not holding money for them.
Ian:
Very interesting. Alright, so, let me know when you guys are ready. Otherwise, I will keep the questions coming.
Shahaf:
Ok, keep the questions coming and we are going to show you in a second.
Ian:
You are selling only 30% of your tokens for 15 million US dollars. This looks a little too high.
Shahaf:
We are selling 30% of our tokens and giving away another 45% of our tokens. So down the line, 75% will be held by consumers, merchants, and enterprises around the world. I think that is pretty fair.
Ian:
So that 45% is an airdrop? Or it’s for investors, partners? What do you mean?
Shahaf:
Both. It’s a pool that is there for incentives. Whether it’s other enterprises working for COTI, consumers who are using COTI, merchants, and so on and so forth.
We have quite an extensive program for that. We have signed in more than 100000 users to download the wallet when it’s ready and get their first 100 COTIs for free. So that’s one thing.
And more than 5000 merchants have signed in using the incentive list.
We are now engaged with more than 40 top enterprises and governments around the world to issue their own digital currency and payment solution. So we need this huge pool to get the wheel running.
But I think that down the line, if we have 75% of our tokens out there it’s pretty good.
Ian:
Ok. Can you tell us the token metrics and also more info on your ICO and private sale?
Shahaf:
Yes, so overall there are 2 billion COTI coins, and these are the coins that are used for fees, arbitrators, and overall usage of the system. We are based on a DAG, on a graph, so it means we mint all the coins on day one and then slowly release them into the market.
Out of the 2 billion, 30% is sold to investors around the world, 45% is for incentives, 15% is for the team and the team has a 2-year lockup that hasn’t started counting yet. And advisors and early backers about 10% of the tokens again with a 12-month lockup. I didn’t mention it, but the investors are also committed to a lockup of 3 to 24 months.
So that’s the token metrics. As regards to fundraising, we had very early equity raise. We then had a token sale, and now we are finalizing our last raise, which is a combined offering of equity and coins. It is mostly for private accredited investors.
With that said, we are now looking at having the last stretch sold on a public sale in a specific jurisdiction.
Ian:
First of all guys, my team has definitely done its homework on you guys and we think you are a great project. I mean… I love the project, but there are only about 2 concerns I would say, as I told you, were the early investor bonus, which was pretty high for the early investors and then just the overall market, based on ICOs and crypto space (everything’s down 90% and no one is trying to add new money to crypto at this point). Other than that though, I think this project is amazing. I think you are going to do amazing things. I am not giving financial advice guys so always do your own homework, your own homework. It’s just my own opinion, but I think the technology is good and, personally, I am not invested yet. This is not a paid video. I am just sharing my opinion. I think the project is good and I think probably, down the line, I will get in, most likely on exchanges.
Shahaf:
So, what I want to share with you, I am going to show you the demo in a second, but 2 important things: 1) is with regards to early investors with big bonuses (and by big I mean anything from 50% to 70%), it is now as part of our total raise: 0.14%. So it’s absolutely and completely negligible as an overall strategy. And even that, most of it is locked up. So I really don’t fear that and most of the bonuses given, and by most, I mean overall I would say that our average bonus was between 15% to 30% with a substantial lockup going all the way to 24 months. So I think that the token structure sale is quite robust and I don’t fear a dump. It’s not in the numbers.
2) With regards to fundraising, of course, the winter is here. But what we have done is because we have realized that we are a real business, we are generating revenue, and according to our projections, we can probably generate profits of hundreds of billions of dollars down the line if we take a market share of about 2%. So with that, we actually have gone to traditional VCs and shown them there is this case. And they loved it. And we have been able to raise funds from traditional institutions because we have shown them, this is a real company, this is a fintech company that is using blockchain and can actually generate profits. So this is how we have accommodated ourselves to the different market, and naturally, this has always been our way. We have never been a foundation with a hope of someday getting adopted. We are not a solution that is looking for problems to solve. We’ve built COTI with a specific use case in mind, “how do we solve payments?”. “How do we solve a market where technology has not shifted or changed for 40 years?”, “How do we disrupt that?” And this is why we’ve built blockchain from scratch. This is why we’ve built the Trustchain. So once we had that, the use case was quite clear and the business case is clear, and we do have clients that are adopting COTI. We are generating the first order tonight. This is actually happening. And this is more than I can say on huge infrastructures worth billions of dollars in token value.
(27:41) - Sharing the video of COTIpay Guide.
Ok, this here is the COTI swag. It’s the swag shop we have and what I want to show is how easy it is using COTI Pay, our COTI network, to actually buy things.
So basically it’s the same flow we are accustomed to and when you go to checkout, this is the first time you put in your details and then you can actually click “COTI Pay”. You can click “COTI Pay”, but it can be the “Amazon dollar”, it can be the “Facebook Pound”, whatever. But you click the coin, you pay with COTI Dime (so COTI Dime is our first stable coin on top of COTI Pay’s network). You login, you have an account. It’s very basic, it reminds you a lot of PayPal. You pay and it’s done. The transaction is made and kept on the graph. This can do 10000 transactions per second, right now.
Ian:
That quickly, you just made a payment using stable coin built onto COTI.
Shahaf:
Exactly. Now, I am going to show you another thing. I am going to show you the COTI-X, exchange.
(30:48) — Sharing the video guide of COTI-X
Ok, so this is COTI-X as I have mentioned. When an enterprise launches a coin with us, they usually need a fiat to crypto solution because their user base is not crypto people. It’s the average consumer. Millions and hundreds of millions of consumers around the world that don’t have an Ether wallet and what not. So they need an easy way to onboard that network. An easy way to buy your Amazon dollars. So we give them this solution because we have a licensed exchange that we own that allows you to easily take whatever you own, whether it’s fiat, bank deposits, credit cards, other cryptos, what-not, and just buy the coin that you need. We don’t even send you to that exchange. It’s streamlined within the process. You get what you need right away and you can buy the stable coin that that enterprise has just issued. The experience is quite like what we are accustomed to in exchanges, only a bit easier.
So this is another thing that I wanted to share with you and this is already happening in Beta stage.
Ian:
So is that the exchange platform that is built into COTI?
Shahaf:
Exactly. And we own 100% of it. The reason being is that, as I mentioned, we don’t want to have to force the enterprises we work with to actually go and do a listing process with a third party crypto exchange when this is not the use case and not what they have in mind. They have a simple e-commerce plan in mind, so we can provide them with that as part of the solution.
Another interesting thing that I want to share is actually the graph that we’ve built COTI upon. Do you see the COTI Cluster?
Ian:
Yes.
Shahaf:
(33:12) — Sharing the COTI’s Cluster simulation
Ok, so this here is the graph. Unlike blockchain, COTI is built on a blockless environment. Where all transactions are gathered into a graph, which gives it great scalability, and on top of it, we have a new type of consensus that Dr. Nir here has created, called the Proof of Trust (PoT), which is a new type of consensus. And what you can see here is that transactions are added to our network, so all of this is transactions. Orange are new transactions, and they validate previous transactions (those who are blue) and create these Trustchains on top of them because transactions with similar Trust Scores keep to similar transactions and when these chains are created, we automatically calculate the Trust Level on top of the chain, and when enough trust is gained on a specific transaction, we can validate it and money is sent. This is what you see here, for instance. This is a Trustchain. This can do unlimited amount of transactions per second because when this network grows, it becomes faster. Because you have more transactions that validate more transactions. Scalability brings more scalability.
We have a TestNet out that is doing more than 10000 transactions per second. We will have a main net in about 3 months. And it will again, go to tens of thousands of transactions per second, unlike blockchain solutions that have few or tens of transactions per second. We need to compete with the big players, with the Visas and Mastercards of the world, and then go all the way to 25K transactions per second. So we needed to top that with our solutions, and this is exactly what we aim.
Ian:
People say DAG is very fast but also a very huge drop bag to DAG versus blockchain, right? I forgot what the concern was, but it was something that you guys claimed to have solved.
Shahaf:
Yes, so one of the big things with DAG is that, aside of being complicated, DAG’s issue is usually around how to solve double spend. Double spend is quite a threat when it comes to DAG and I will let Nir explain our solution which is called the Double Spend Prevention node.
Nir:
Actually, the main problem with DAG is that transactions are being confirmed in parallel, and try to do it instantly, the proof-of-work (in our case, it is proof-of-trust, but you can compare to it) which is required is very minimal and mostly for preventing stamp, and in our case, we solve the issue of untrusted transactions by applying trust (trust score) to every transaction, and by that, also defining the time and the proof-of-work required to confirm this transaction. The consensus we are going to get from the network and from the DSP nodes are going to be based on these trust scores. And if your turnover, your trust score, and your decay in the network are very high, it means we can trust you. It means that your transaction can be confirmed with the minimal consensus — only from DSP nodes, not all of them, but most of them. The system itself is built in zones, which means that not all the nodes need to be connected to each other. You can only define clusters, which can communicate between them, so we reach consensus a lot faster. The problem of double spend, as Shahaf said, is prevented by having a pre-balance and balance for every transaction. Every transaction is going to be confirmed only after the DSP nodes have reached a consensus and DSP nodes are not much in the network, so it is easier and faster to get confirmation from them on each transaction.
Shahaf:
I want to share one last thing with you.
(38:07) — Sharing COTI Demo presentation.
This is our full ecosystem, Trustchain protocol and the rest. As I’ve mentioned, we have the TestNet out, available on Github. It has been reviewed by quite a few third parties and got excellent reviews. You can actually register a node, and I’ll discuss how to operate a node with us. But you can see all transactions and you can actually run a node for COTI. Running a node for COTI is easy; it can be done on a laptop and mining can be done on a basic computer. You don’t need superchips to deal with that. Anybody at home, anywhere in the world, can run a node for COTI, and this is now getting available through the TestNet.
Ian:
Do you have to have coins for that? Is there a minimum for the coins or master nodes?
Shahaf:
Down the line, yes, you will need to stake coins to run the nodes, because this is how we can make sure that you are trustworthy and if you have something to lose. But you don’t need to be rich to start working for COTI — I think that’s the main point. And you can see some nodes running in the world right now.
Nir:
Actually, the staking is only for the bottom ranks of the network, it means it’s for the high-risk nodes. You’ll need to stake something to be an operator of a DSP and Trust Score node. To be a Full Node operator, you don’t really need to stake anything. You can just go to the onboarding of a KYC process and just run the instances.
Shahaf:
Right now we’re building it as a way that we’ll hopefully achieve in our main net, is that you can just log in, get an image on Amazon, run a node through cloud computing, profit from it and collect COTI coins because you helped us verify transactions with a very minimal effort from your side. So this means that this is a truly decentralized system unlike other systems, maybe like Ripple and Stellar where there’s either you can’t run a node or it just doesn’t have any incentives for you to run a node because the system doesn’t pay you for that. So this is like Bitcoin mining, only completely fair. We do see the exchange here again as mentioned, as part of our integrated solution.
Ian:
Okay, somebody has a question. Nick’s question is, how is this different from the payment solution vision that Pundi X is trying to do with its POS devices?
Shahaf:
Pundi X specifically is a hardware solution with some software that allows merchants, or everyday merchants, to actually collect cryptocurrencies as a payment form. The issue I see with that, and I have a lot of respect for Pundi X, but the issue I see with that is that you need to have a cryptocurrency to begin with to actually use the system. This limits the potential. Everybody has fiat, and only a fraction of a fraction has crypto. So what we are trying to get to is mass adoption. We’re trying to have everybody using digital currencies. And the way to get there is to simplify everything, and of course not to assume that all people have crypto and know how to deal with it. So we have actually simplified the whole process, and we are a solution that allows others to create their payment network. And by the way, we are now working with an upcoming contender, an upcoming competition with Pundi X, a company that is working in Korea and the US, and they are building a point of sale solution, and they are using our infrastructure to actually power that up. So this is the sort of partnerships that we are building. We are not in the hardware business, we are in the software business, and we are trying to work with as many players as we can to actually help them get adoption.
Ian:
Alright, good. People are asking about questions for the pre-sale and private sale and all that. All that info was mentioned earlier in the video, so just go halfway back in the video and watch it again. Or just go to your website or your Telegram group, I believe as well.
Shahaf:
Yeah, you can contact us there. And we’ll announce when we have a public sale, private sale inquiries. Just contact us directly and we’ll speak about that.
Ian:
Alright. Okay guys, if you still have any questions, the Menti code is still available. Menti.com, the code is 65–83–27. 65–83–27 to send in your questions. We’ll also take some questions here from the audience on YouTube. So, Ian Hawthorne is asking: When will COTI launch their bank card? I’m one of the selected ones in the first one thousand.
Shahaf:
We’re going to launch main net in March to June probably, and then we’ll follow. So hopefully by the end of the year.
Ian:
Can you explain the bank card? That’s just like a regular debit card?
Shahaf:
Yes, it’s a very simple solution. So the idea about cards is that cards are like identification tokens. Mobile payments can replace cards, and any form of identification can replace cards, and cards can replace that form of identification. We already have a partnership with a bank that allows us to issue the cards preloaded with specific currencies. (44:40)
Ian:
That’s good. Okay, let me see if there are any other questions here. How many vendors will be using COTI during its launch?
Shahaf:
We already have a list and there needs to be some separation. There is a list of vendors that want to use COTI Pay, our payment network and we already have more than five thousand that are listed for that. And we are gradually onboarding that. And as I have mentioned, the first transaction is tonight. On the other hand, business-to-business solution. We are now engaged with more than 40 enterprises around the world, top names, some have already signed in, and I can mention Processing.com, Advanced Blockchain, Millenning that are doing remittance with us, so we already signed in major enterprises that will bring a lot of volume and a lot of user base. So we have that adoption in play as well. What I believe, is because of our strategy and our go-to market strategy, which is working with enterprises and publishers that have a grand user base and giving them a white label technology, I believe that this strategy, and the fact that we’re dealing with something so common like payments together will mean by the end of the year we will be the most widely used blockchain out there. This is what we are aiming to achieve with this strategy.
Ian:
Really? And what time frame was that you said?
Shahaf:
I think it will take us a year, and then we’ll be there.
Ian:
So in one year, you’ll be the most widely used blockchain?
Shahaf:
Yes, this is my statement. Let’s speak in a year’s time and see if I’m right about it.
Ian:
Because you don’t have quite a head start here.
Shahaf:
I know, but I think what we are doing is useful for the masses, and our strategy of working with top enterprises can actually bring in this adoption. This is why I’m betting so high.
Ian:
Okay, interesting. So, next question somebody has is: Is there an ideal region for COTI?
Shahaf:
Ideal region. Naturally, Asia is super adoptive for cryptocurrencies, and I and my team will be in Asia early next week for about two weeks. That’s big for us. We see very good interest from US enterprises as well. We see good interest from smaller governments in Asia that are looking to issue their stable coin. And with that said, I can’t announce it now, and I will let you know when this solidifies, but we are now working on a huge partnership in Africa. It will allow us to build a holistic solution from loyalty to payments in Africa. The potential, of course, is huge because people there really need this type of solution. Naturally, I’m referring to the unbanked. And we are working with Africa’s largest retailer to build such a solution, and I will announce it when it’s signed, I don’t want to jinx it, but the revolution may start from there as well.
Ian:
That’s the Amazon of Africa, right? The e-commerce company?
Shahaf:
I don’t want to give more hints, but you are aiming at the right direction.
Ian:
So, Bisesh is saying “Please promote this in India, it’s a good project.” Lots of people seem to like it. Barry says he likes it as well.
Shahaf:
Thank you.
Ian:
Next question is “Will COTI onboard Ethereum contracts with Ethereum Virtual Machine?”
Shahaf:
Nir will answer that. Actually, this is a super type of question for us, so I will throw the bomb and I’ll let Nir explain. Naturally, there aren’t any smart contracts over DAG right now. Some projects claim to be able to develop it. I hope so, but nothing is really happening. This year we will have smart contracts over DAG coming from COTI. It will be an on-chain solution. I’ll let Nir explain a bit more about this revolution.
Nir:
Actually, we’re going to be the first project which is able to deploy smart contracts on DAG, but also the only project that does it on-chain and not off-chain, differentiating us from Ethereum, we are doing the signing and the smart contract itself on-chain, it’s auditable, on-chain. We don’t need to look at it as off-line, auditable smart contract. We will also have the ability to get the stability framework to mint and burn tokens and connect all of it with our exchange to be able to circulate everything and collateralize it. Was the question “Are we going to support Ethereum in our smart contract in our platform?” As a first phase, the answer is no. We are looking at cross-platform integration and we are building a gateway, which will allow us to port stuff from Ethereum to our network. But if someone already has a smart contract with him or ERC-20 tokens with him out there, we will be able to deploy it on our network and to convert all of them to our network.
Ian:
Interesting. Okay, that’s definitely really ambitious. Definitely does bring lots of value.
Shahaf:
We didn’t mention that this is not the first company that we run. I’ve co-founded and exited two companies, Nir sold his company to IBM. So we’re not new to this game and we’re not aiming low.
Ian:
Yeah, you guys are definitely a team of all-stars.
Shahaf:
We’re not just trying to make a living out of it.
Ian:
Okay, next question is “What is the advantage of using COTI over Visa or Mastercard?”
Shahaf:
Fees. It’s 90% discounted. Cash flow. You get the payment right away, you don’t need to wait. These are both being achieved because this is not a centralized solution, but a decentralized one. Three: the organization that is building a payment network with us is setting the rules. So you’re not living in the Visa or Mastercard world where they set the entire rules and say what’s happening and what’s not happening. You set your own rules. I would say these are the big things, what else?
Nir:
Also the buyer-seller protection, it’s not something Visa really provides. They provide a fault prevention, but not really refund for a product or something like that.
Ian:
What’s the difference? It seems like the same to me.
Nir:
The difference is that if you say your product was stolen, and they are going to return you your money. If you say your product was broken, they are not going to chargeback.
Ian:
They don’t have chargebacks though. I know, I’ve done it.
Shahaf:
I think what PayPal is offering is a bit closer, or quite the same protections that we offer. But when you are using the old infrastructure of Visa and Mastercard, you will have declined transactions, specifically when you are trying to live in a global world, where you are buying from a different region you have card processing issues. If you open a shop in Miami and try to process cards from Brazil, good luck. You will have a 70% decline rate, I assure you that. All this is solved when you are using digital currencies, which are frictionless by nature.
Ian:
I think that’s big, because same thing with Nigeria, my friends over in Nigeria are saying “good luck using a credit card there”.
Shahaf:
Exactly. Sometimes, you know, when we live in First World countries and buy stuff domestically, we miss the point. We don’t see how it is elsewhere in the world. But most of the world is not in the US, and when you look in the future, we will transact much more than we did 30 years ago and more than what we are doing today. If you are trying to process cards, you will have issues because it’s an old technology that wasn’t built specifically for that.
Ian:
Okay, so Cryptofomo is asking again, how much are you raising?
Shahaf:
In this round, we are raising 15 million dollars.
Ian:
But the total is 30 million, from the first and second round?
Shahaf:
From the last two years overall is 30. We built it in tranches because we didn’t want to raise a lot of funds before we can actually have a net out. So we have a net out right now and we feel confident in raising more funds. So this is how we built it.
Ian:
Okay, next question. People have so many questions in this livestream. Next question from Antonio Green: What nodes are the most profitable to run?
Shahaf:
Probably full nodes, right?
Nir:
The Full Nodes are the easiest ones to run. You can profit more because you can specify the fees you wish to charge. But actually, DSP nodes and Trust Score nodes are more profitable because they get a fraction of all transactions in the network and not just the fees of the transaction being done over there. So a Full Node only gets a fraction of the transaction he handles, and DSP and Trust Score nodes get a fraction of all the network transactions.
Shahaf:
But you can’t get to a DSP or Trust Score node before you prove yourself as a Full Node operator.
Ian:
Okay. Next question from Chen: Can you explain the COTI reserve? COTI has a self market-making system?
Shahaf:
Because COTI is based on a graph and all tokens are needed to be created in day one, we created two billion tokens, but because we realized that nobody can predict the future completely in 10–20 years time, and we aimed COTI to be sustainable, we created a pool of two billion more tokens that are locked. We don’t have access to that. So they are not the company’s tokens. But if the majority of the network decides in a few years time that there need to be more tokens, they can split what we have right now and have more liquidity if that is needed.
Ian:
So, the total supply is two billion tokens or coins?
Shahaf:
Total supply is two billion, maximum supply is four billion.
Ian:
Okay, so two billion are locked up.
Shahaf:
Yeah.
Ian:
And when is that reserve going to be opened up?
Shahaf:
It’s really not up to us. If the majority of the network decides someday that they want to create more liquidity and have more coins out there, then it can be done. It’s not the company’s decision at all, but when you think of it, how many tokens do Ethereum have? It’s endless. Because there’s some inflation and more and more are created. Because DAG does not have inflation we needed to solve it somehow. So we created this pool that’s kept in a box which we can’t touch.
Ian:
Interesting. Next question: will COTI coins be available on other exchanges?
Shahaf:
For sure. We will not limit it to COTI-X. COTI-X would be the first because that is essential, but we will not limit it. We definitely want to have liquidity.
Ian:
Harry Todd is asking, “Can I issue my own coin on COTI? The Harry Todd token?”
Shahaf:
Well, if you can bring in the volume, then yes. You will be able to issue and list your coins as well. We’re quite picky to begin with, but sounds like Harry Todd is going to be very successful.
Ian:
Now, that’s been issued on a platform, so it’s not an ERC-20 token.
Shahaf:
No, it’s a COTI-based token. It’s a new standard.
Ian:
And it’s pretty easy to make a coin on your platform?
Shahaf:
We made it so it will be extremely easy. You don’t need to know Solidity, you don’t need to understand smart contracts. It’s a simple 1–2–3 wizard. You have your coin and it’s listed.
Ian:
Do you have to back it by anything?
Shahaf:
Depends if you are building a stable coin. If you are not building a stable coin, then the answer is no. If you are building a stable coin, you need to decide on your strategy. If you want to create an off-chain collateral like fiat or an asset, yes, you will need to put that in place. We can help with COTI-X. If you are doing an on-chain collateral, meaning if you are using other crypto to back it up, then you can do that, or you can just have an algorithm that deals with supply to control price stability. And for that, the team is launching our own type of smart contracts, so you can even have that in place.
Ian:
Okay, so people are saying that you guys keep printing your own tokens. I think they either don’t understand it, or they have very big concerns with that. Can you go through that again?
Shahaf:
About what?
Ian:
About the reserve. So the coins in the reserve are for other people to issue coins on, or to use?
Shahaf:
No, no. The coins at the reserve are just there because there is no inflation mechanism on a graph- based product and because maybe in 10 years you will need more coins for liquidity. How do you deal with that then? In order not to realize in 10 years’ time that there aren’t any coins left and we need more coins, the idea is to have this supply that the majority of the network can decide to access through a decentralized governance — it’s not our decision — and then unlock it and divide it for the better interest of who are involved. So it’s not for us, and we’re not touching it, and we have no access to it.
Nir:
If you want to deploy your own token, then you’re going to define your own supply and how much you want to deploy on our network. It’s going to run in parallel, it’s not dependent on the COTI coins.
Shahaf:
Yes, this is important and maybe this was misunderstood. Let’s say you’re Amazon, and you’re issuing Amazon dollars on top of COTI, this is not a part of the COTI supply. You’re creating your own DAG with your own supply and setting up your own rules. So it’s not part of this ecosystem. If that wasn’t clear, I’m sorry.
Ian:
Okay, let’s wrap it up here, we’ll take a few more questions, and then we’ll close up. So, Cryptofomo is asking, actually, it’s Antonio, “How many coins are needed to run the DSP and Trustchain nodes?”
Nir:
It’s going to be stakes, it’s not defined, it really depends on the amount that you feel will protect us. It’s going to be locked for one year and then it will be released to the user, but the specific amount is not yet defined.
Ian:
Okay, what’s the current burn rate (monthly expenditure) of COTI right now?
Shahaf:
It’s a few hundreds of thousands of dollars every month. We are thirty people, so that costs money, especially Nir’s team, but we’re keeping it modest.
Ian:
Thirty people on couple hundred thousand a month?
Shahaf:
Yes. Pretty standard.
Ian:
Is that team all in Israel or is it a global team?
Shahaf:
All of the team is based in Israel. We do have third-party providers, usually around business development, which are working for us in Asia and the US, but I would say the majority of the team is in Tel Aviv, Israel.
Ian:
Okay, let’s see what else we have here. So Antonio is asking “What are the use cases for startups to look to use COTI infrastructure?” I think we kind of already covered that. That was kind of earlier in the stream. Maybe just give a recap?
Shahaf:
Sure. You can issue your own current digital currency with us, that will be used for payments so we will give you a full solution with your own payment gateway, fiat transactions, whatever you need to issue your own currency. And then you’re not dependent on the traditional infrastructure of banking and credit cards and what-not. You save a lot of the fees, and you get a lot of advantages from that.
Ian:
Alright guys, thank you so much for the questions, thank you for joining the live stream.
Shahaf:
Thank you.
Ian:
COTI Team, you guys have done a great job answering all the questions. Where can people find more about COTI?
Shahaf:
Our website, which is quite nice but is also upgraded these days, our social groups, the biggest one is on Telegram, and you can find us there. If you are a developer, you should probably go to Discord and follow us. I’m available at shahaf@coti.io or shahafbg at any of the social links, Telegram, Kakao, Line, WeChat — it’s all the same.
Nir:
You can also check the TestNet which is available. And everything we demonstrated in this session, you can check it on our website. Also on Github, you can check the code.
Ian:
Thank you so much. As usual, this is just me showing this video with you. This is not a paid video, I’m not investing in COTI at the moment, but to me it looks like an all-star ICO. I think probably in a better market most people would be on this. It does in a way remind me of Pundi X which was my best investment last year, but now at this time everybody is feeling the pinch. But that being said, this is just my personal opinion, not financial advice. Always do your own research. Consult your legal and financial advisor before investing in ICOs, or any project for that matter. They can be risky, you may lose all your money. Always do your own research. That being said, thank you so much and I’ll see you on the moon.
Shahaf:
Thank you Ian! Always a pleasure.
Join and experience our new achievement — the COTI TestNet wallet can be accessed here. You can also test our demo shop by purchasing goods using your demo coins. Visit our GitHub to review the Trustchain code and read more in COTI’s technical whitepaper.
