COTI (COTI)

What is COTI

As internet connectivity becomes increasingly pervasive, and as transportation and communication costs decline, buyers and sellers are demonstrating a greater propensity to trade across borders, through online marketplaces and on a peer-to-peer basis. Yet despite the ease with which information, goods and services now flow, payments are still characterized by high fees, low approval rates and high abandonment rates. As a result of the friction imposed by existing payments solutions, the amount of trade occurring in the world today falls far short of its potential — to the detriment of individuals, merchants and the global economy at large. Bitcoin broke new ground by introducing the world’s first trust-less payments system — a system in which transactions are guaranteed by cryptographic proof rather than by trusted third-party financial intermediaries. And with its greater security, faster settlements, lower fees and greater transparency, Bitcoin provides a glimpse of what the payments solutions of the future may look like. However, for various reasons, neither Bitcoin nor any of its digital currency peers have garnered widespread adoption in the context of day-to-day payments. When Bitcoin’s pseudonymous creator, Satoshi Nakamoto, intentionally optimized for security, immutability and ‘trust-lessness’ at the expense of usability and scalability, he opened the void for a payments transaction network and digital currency that would later optimize for the common payments needs of typical consumers and merchants. The COTI team was formed to fill this void. COTI combines the best of traditional payments systems with the best of digital currencies — while working around their respective limitations — to provide a comprehensive payments solution that optimizes for the needs of typical consumers and merchants above all else. With its emphasis on scalability, instantaneity, buyer-seller protections and ease-of-use, and on building trust-based relationships that drive down transaction costs to reach as low as zero, COTI is the payments solution that will propel digital currencies from a place of relative obscurity to the forefront of mainstream adoption. COTI’s overarching goal is to enable the free-flow of value in the same way that the Internet enables the free-flow of information. To this end, COTI is developing a variety of technologies that will work in concert to provide consumers and merchants everywhere with a vastly improved payments experience. COTI’s development efforts are best understood through three prisms: its network core, its native currency, and its applications and services.Network core. The key components underpinning COTI’s network include:

• The Trust Scoring Engine, which automatically assesses the interactions between buyers and sellers over time, assigning each network participant with a unique Trust Score. Trust Scores provide a numerical representation of the relative value that each participant contributes to the COTI network, and are updated dynamically in response to newly-available information. In addition to signalling trustworthiness to prospective counterparties, thereby increasing the propensity for parties to transact, Trust Scores serve as a key driver of transaction fees: high scores are associated with low-to-zero fees, while low scores are associated with comparatively high fees.
• The Mediation System, which resolves disputes between transacting parties and maintains the integrity of the network. A first of its kind, the system leverages data science, game theory and an independent network of crowdsourced mediators to resolve disputes fairly and efficiently — without prompting a material increase in transaction costs.
• The Currency Exchange, which provides network participants with a means of moving seamlessly between currencies — both fiat and digital — by aggregating liquidity from internal and external liquidity pools. The exchange is complemented by an automated market-maker which maintains fair and orderly markets in a range of currencies.

Native currency. The COTI network’s native currency, abbreviated as XCT, is a digital currency that serves as a means of collecting network fees, as a means of compensating mediators, and as a means of exchange between buyers and sellers. XCT was designed to overcome the scalability challenges associated with incumbent digital currencies, and will excel in common payments scenarios by supporting instant, zero-fee transactions. After first achieving widespread usage in direct network use cases (i.e., fees and mediation), XCT will have a robust foundation on which to become more widely-used as a means of exchange – and to become known as the Currency Of The Internet. XCT’s value will be inextricably tied to the growth of the COTI network.Applications & services. COTI is developing a suite of applications and services that will provide individuals, merchants and crowdsourced mediators with seamless connectivity to the COTI network. For consumers, the COTI wallet and virtual debit cards will facilitate the secure storage, transmission, and exchange of digital and fiat funds. For merchants, the COTI processing solutions will facilitate the acceptance of payments in a variety of fiat and digital currencies at substantially lower processing fees. And for mediators, the COTI mediator client will enable mediators to contribute to, and be compensated for, the successful resolution of transaction disputes. COTI is laying the licensing foundations that will enable it to comply with existing regulations, both as a payments network and as a currency exchange. With respect to XCT and the handling of digital currencies more generally, the COTI team welcomes greater regulatory clarity and believes digital currency-specific frameworks will serve as a catalyst for the mainstream adoption of digital currencies. For this reason, COTI has entered dialogues with regulators globally to help shape their respective frameworks. In the interim, COTI is adopting banking industry compliance standards to ensure that its digital currency-related activities do not serve as a conduit for money-laundering or other illicit activity. The COTI team includes veterans of the payments, cryptography, asset management and banking domains – with experience ranging from Processing.com, Markets.com and PAY.COM, to Investec Bank, BlackRock and HSBC. The team has set ambitious development targets and is on track to launch the first phase of the COTI network in the first quarter of 2018. Thereafter, COTI will build on its robust technical foundations to continue making payments universally easier, more cost-effective and more trusted for the benefit of buyers and sellers everywhere. Ultimately, COTI will make more trade possible by enabling the free-flow of value in the same way that the Internet enables the free-flow of information.