A new technology is emerging which promises Bitcoin privacy features and scalability, while avoiding core code changes and debates.
Bitcoin is much more than just a cryptocurrency. We all know that there are systems that are faster and reliable. There are blockchain projects that allow full anonymity and that are more scalable. Yet, we value Bitcoin more. Its infrastructure has been laid out for years, which gives it an advantage over other projects.
Making changes to the Bitcoin protocol requires the approval of the miner community, which is vast and distributed, making it hard to organize. However we have come up with an elegant way to solve these problems and unite the whole cryptocurrency space.
Bitcoin Privacy
Privacy can be achieved by sending bitcoins through a mixer, however, this solution is far from perfect as it requires a centralized service. A better alternative would be to send the coins in and out of a blockchain that provides anonymity features. The process could be automatized, so that all the coin conversions happen behind a curtain, so that the Bitcoin user simply receives his anonymised coins to his new address.
The problem is that such a solution would require a coin exchange, and as we know we currently have centralized exchanges only. This makes the solution no better than a centralized Bitcoin mixer, unless of course we could trade the coins without a counterparty risk. Luckily that will be possible soon, and it will enable us to complete our vision of Bitcoin transactions without a track record.
The solution we envision required us to create a protocol that would make blockchains talk with each other. Over the course of the past two years, such a protocol has been developed called ‘Iguana’. It enabled us to develop an atomic cross-chain protocol and special liquidity providers that give us a liquid decentralized exchange. We now have the basis to decentrally trade our bitcoins.
How about the privacy side? We wanted to use the best available privacy technology, and that came from the Zcash team: zero-knowledge proof construction called zk-SNARK. We forked that coin, named it Komodo, and plugged it into our own ecosystem. When our system comes online people will be able to manually go through the process and send private Bitcoin transactions.
To automate the process we will develop a decentralized Bitcoin mixer called Jumblr. Someday soon you will use your Bitcoin wallet to send out a private Bitcoin payment.
Bitcoin the Protector
Through a new consensus mechanism called ‘delayed Proof of Work’ we have come up with a way to extend bitcoin's domain. We use Bitcoin’s hashing power to secure other cryptocurrencies. In other words, we have created a new security layer or a two-factor authentication method for blockchains.
Our new platform Komodo sends regular group signed Bitcoin transactions to Bitcoin’s blockchain. Those transactions contain Komodo’s block hash, and upon confirmation the Komodo blockchain becomes as secure as Bitcoin’s. Special notary nodes handle the notarization to the Bitcoin blockchain and verify the new Komodo block matches with the records found on Bitcoin blockchain.
Any other blockchain can use our protection service by attaching themselves to Komodo’s blockchain. We are thus able to secure weak chains that would otherwise remain exposed to attack vectors. This is vital to fulfill our vision, as we are looking to create multiple weak chains with our ‘assetchains’ technology.
The idea was well crystallized by an article from Smith + Crown:
However, the dPow protocol has value beyond anonymous transactions. Developer jl777 writes, “I see KMD more as an “OEM” [Original Equipment Manufacturer] instead of retail, so the mass marketing for KMD is probably not needed.” In other words, KMD allows others to launch their own altcoins (based on the Bitcoin protocol) while Komodo helps provide it security, similar to how Apple designs and markets the iPhone while Foxconn manufactures it.
Bitcoin’s PoW mining will become a vital part of the overall cryptocurrency ecosystem. Already the Stratis Platform is considering using the delayed Proof of Work consensus to secure their private chains.
Bitcoin Scaling
Iguana and atomic cross-chain swaps allow us to do much more than just an exchange. We can in fact spawn a new Bitcoin compatible blockchain in a matter of minutes and make it “speak” with the other chains. We believe this to be the key in solving the scalability problem.
Bitcoin scaling can be achieved through loosely coupled Bitcoin compatible blockchains. The max transactions capacity can be scaled up by connecting the blockchains together in a hierarchy. If one blockchain can do ~100 transactions per second, then by connecting 100 blockchains together we can increase the capacity by a hundredfold. This is what our lead developer jl777 said:
Using Iguana’s loosely coupled Bitcoin compatible blockchains, effective tx/sec can be scaled up to very large levels just by creating many special purpose blockchains and connecting them together in a hierarchy. This type of capacity increase is for after the basic single chain, but the power of the atomic cross-chain swap is more than for just doing DEX.
The decentralized exchange is our first milestone, which is now just missing a GUI. We haven’t announced any timeline for these advanced features. For now our focus is to deliver the basic structure of our platform, which includes the basic ‘assetchains’ technology. In a comment jl777 gave a glimpse about what is coming:
Beyond assetchains, there will be smart chains which are special purpose blockchains that implement a dapp. Think of it like an ASIC that does one thing and only one thing, versus a CPU that is running an OS and doing many things at once. We expect this to be a very popular way to utilize blockchain tech, and the isolation it provides combined with efficiency that is further secured by dPoW, will hopefully make a good demand for KMD.
Help Our Cause
We watch the entire cryptocurrency space and look for ways to utilize the best solutions to create a decentralized future. We see crypto as its own industry, and believe that all projects should help each other. Here’s what jl777 thinks:
All the cryptocurrencies are competing against fiat! It's like a new industry that is gaining traction. Every project will help each other, and as a whole, all projects will benefit.
We are having an ICO to collect more funding for our project. With a bigger budget we can hire a bigger team and get faster development. That said, we are hiring, so please send us your application to contact@komodoplatform.com
Sunday November 20th is the last day to invest. Support us!
P.S. Join our Slack!