Many blockchain projects focus on solving complex problems like decentralized lending, market making, or identity management. But there is still a problem that is largely ignored due to the fact that most developed countries have premium access to a variety of solutions. We are talking of course about payments. Credit cards, payment processors like PayPal, bank transfers, all these types of payment methods can possibly be revolutionized by blockchain technology.
COTI is a fintech that is aiming to achieve this goal with its own technology focusing not only on simple peer-to-peer payments but on rather enabling companies to create their own fintech products effortlessly.
What is COTI?
COTI is an abbreviation for “Coin of the Internet” and was started in March 2017. While many cryptocurrencies and blockchain products are driven by the spirit of an open-source community, COTI is a fintech platform that is building payment solutions for other companies.
It offers a blockchain protocol that is meant to facilitate payments and is capable of handling up to 100.000 transactions per second. The underlying technology is called Trustchain which is based on a multi-directed acyclic graph that allows not only high scalability but also low transaction costs. COTI offers several services to business customers:
- COTI PAY – A universal payment solution
- A white label payment network for B2B customers
- Loyalty Network – allows B2B customers to create their own loyalty programs
- Global Trust System – Check out your customer’s wallet before interacting with him
- Stablecoins – Tokenize any fiat currency
- Remittance – Cross-border payment solution
Unlike other cryptos, the Trustchain is based on a consensus algorithm that is called proof of trust. It is basically a ranking system that allows users to interact cheaper and faster with the network if they have a high trust score. On the other hand, if a user is acting maliciously his trust score is reduced and costs, as well as transaction time, increase for him as a punishment for that behavior.
The COTI token
The COTI token is available on the Trustchain itself as well as on Ethereum as an ERC-20 token and on the Binance Chain using the BEP-2 token standard. Its purpose is to reward nodes for their work and to enable users to pay transaction fees with it or use it for payments with COTI Pay.
While the network relies on proof of trust the full nodes are still rewarded for their work through delegated proof of stake by collecting fees. Nodes also serve as mediators within the proof of trust-based network. If a transaction is disputed it is brought before a mediator for arbitration. In return, the mediator earns a reward.
Full nodes are also rewarded for processing transactions and adding them to the DAG. COTI has four types of nodes:
- Full nodes – They act as fee collectors
- Trust nodes – They collect KYC data and trust scores
- DSP nodes – They protect the network form double spend attacks
- History nodes – Those nodes preserve transaction data
This allows staking COTI tokens by running a node or delegating funds to a trusted node. This system is very similar to other solutions available on the market which means that the entry barrier for running a node is relatively high while delegating funds only demands to hold a small minimum amount of COTI.
The major difference between COTI and other proof of stake protocols is that stakers have to go through KYC. This is mandatory for users as well for mediators and stems from the idea that COTI is facilitating real-world payments between companies and consumers rather than being a cryptocurrency and is also closely connected to proof of trust. Ultimately, no participant can fake or change their own trust score by opening new accounts because identification is mandatory.
FAQ about COTI
Do I need to do KYC twice when buying COTI on LiteBit?
No, once you identified yourself with LiteBit you can buy, sell and hold COTI on our platform as well as send and receive the token. Only if you like to take a more active part in the COTI ecosystem you’ll have to undergo KYC with them.
Is COTI run by a company?
The protocol is decentralized but its code and products are developed by COTI Limited situated in Gibraltar. Think of COTI more as an innovative fintech that uses the power of blockchain technology rather than following the anonymous approach of developers like Satoshi Nakamoto.
Do I have to use COTIs products to send and receive the token?
No, since the COTI token supports several standards, it is not necessary to get associated with the Trustchain or the trust score. LiteBit supports COTI as an ERC-20 token on the Ethereum blockchain.