Hey there! This is ChangeNOW, a leading instant crypto exchange service, and welcome to our very own Know The Coin show, where we interview the representatives of all the wonderful cryptos in the space. This episode’s guest is a writer and educator, the author of the first original Komodo white paper, Siddhartha, who was kind enough to join us here and share some info on the current situation of Komodo and their future plans.
The first question is our elevator pitch. ELI5 about Komodo in a couple of sentences.
Most platforms today want everyone is going to want to use one large platform. A lot of people think that Bitcoin is going to be the first world’s cryptocurrency. Or that Ethereum is going to be the world’s smart contract machine. Komodo’s different, and we believe that people would want to have their own blockchains, to use in small communities or even personally, to develop and innovate on their own.
And so, Komodo is a blockchain that serves the big challenge of the situation when you want to have a blockchain that tracks the courses of security. And so Komodo takes the power that secures the Bitcoin blockchain and recycles that on to other independent blockchains; then you can have a blockchain you can play with and update really quickly, while you are still connected, and you are still secured.
So, what Komodo allows you to do is get your own blockchain in a short time, but then again, it also allows for transferring value around.
Exactly! Rather than blockchain-centric, we’re asset-centric. Let’s say I’m developing some product for years, and I’m using some blockchain technology, and some of it starts from taking from other people, some — building myself, to make a digital property, a very popular blockchain. For example, Ethereum’s Decentraland. You have digital plots of land, and you build properties out of it, and you can buy those properties. The challenge with that kind of system is that when you are building on Ethereum, you are locked on the Ethereum blockchain and you can only use tools that Ethereum gives you.
Anytime you want to change, you contact Ethereum team and have to wait for them to update that change. On Komodo, you can have assets so you can build properties and update according to the ideas that you have. We use Bitcoin security to protect it. So anytime you want to update whatever is not working out for you, you are not locked in, because it’s an independent blockchain, so you can just disconnect from one equal system and connect to the other. And it’s not all that difficult.
So, you are basically taking the best of both worlds?
Arguably, yes. It is an evolution of a blockchain technology.
Ok, thank you! Would you mind telling our listeners a couple of words about yourself, your background and team?
Sure! I’m a published author and artist. I did business school at Carnegie Melon, but I didn’t finish the degree, because I thought that college is not worth it. But it was a great school. Then I published my first novel called “Wesley: a Spider’s Tale”, that’s how I got my start. I was always very comfortable with computers, with getting complicated things and trying to make them simple. That’s how I became useful to Komodo. At first I wrote their first White Paper.
And to understand how the team came to be, we have several superstars. One in particular, whom everybody loves and admires, is James Lee. He is anonymous. He’s been in a blockchain space since early 2013, 6 years. He discovered crypto during the initial Bitcoin boom. He began inventing the space, as he had 20 years of experience with the C programming language. When he discovered blockchain and changed everything in his job, he had 20000 dollars and he was looking for what to invest in, and he quickly turned it into the billions of dollars. Of course it’s dropped down now, somewhere to tens hundreds of millions, I don’t really know. The point is that he understands the blockchain technology in a way that only few people do, so he has this community of people who are gathering around his ideas.
But we don’t know anything about him personally, he just writes code and stays in the system when it should be done. It’s really intriguing — he stays away from politics, from personal stories, and it would be the best way that the technology can function. And about a year and a half ago, during that initial bitcoin boom, a had a really intriguing conversation with James, where I asked him some hard questions, and he came up with answers that I found to be intriguing and so I decided to become a part of his team, that is trying to make his vision work.
It is also interesting, as I see from your community, when some figures remain anonymous, it leaves a lot of intrigue for people, but eventually they start getting angry at the person who stays anonymous — why do you have to keep this a secret, why do you keep us waiting to know who you are. And the fact that entire community respects James’s wish to stay anonymous is also really great. And the fact that James has manages to get such a wealth — of knowledge, of money, of accomplishments — while remaining anonymous, is also something to be proud of as a community, and something to admire as someone watching from a sideline.
Yes, it’s interesting, because, if he was on a short term, — I don’t know anything about him personally, very-very little, — and the thing is that his code speaks for itself. And the thing is how governments are getting more involved in taking steps to getting the Komodo situation update accordingly, James’s plan is that he is going to continue remaining anonymous, and he just puts out ideas and code in a way he thinks it should be done.
And people can adopt that and follow his innovation. And this is the modes we can see between the Red-Hat and the Fedora communities, where Fedora is an operating system, that is used among people who value security, and Red Hat is a company that follows things from a legal perspective to make sure they are doing the things accordingly, but the Fedora is an open-source community, so they just take the best ideas. So, in Komodo James as a leader puts out the best ideas and leads the innovation.
How exactly did the Komodo come to fruition?
James originally just wanted to innovate, and he was probably one of the first 10 people to perform an atomic swap. It is when you move coins in a secure manner from somebody, who has a blockchain, without any middleman. So, the trick here is when I want to trade my Bitcoin and sell it for some Litecoin, whoever does it, goes to centralized exchange, they say: “ok, I want this much of Litecoin”, and you swap up a Litecoin for a certain price, and then you leave.
The trick here is that an initial exchange is acting as a middleman. And it comes with all the forms of corruption, and stakes, and hacking, anything can go wrong in there. And you don’t own your coins during that process, you hand them to the exchange. You just hope you’ll get them back.
And atomic swaps get rid of it. Most people don’t understand the significance of it. James was the one of the people who formulated this idea of decentralized exchanges back in 2014. And he formed a community called Next to do more of these basic platform things. So he relied on them on for hashing, core updates, and he was innovating about the atomic swap technology, about decentralized exchange technology, about being able to transfer assets between people in a free manner, and Next was something that surprised him — they instituted a paywall, and when they made that paywall, it broke a lot of the technology that he and his fellow innovators had built.
And he said OK, we are not going forward, it is going to hack your blockchain. We can have a blockchain that recycles security from some somewhere else and puts it in other independent blockchains, but developers can spend all this energy to make their blockchains to function however they want to, to use their creativity. They gotta be just walk away, if it’s not working. And the initial idea of Komodo — to allow developers to create their independent blockchains in a secure way. And it is a big challenge how you secure your blockchain. So Komodo was just a realization of that desire, doing pretty well.
What about James’s Declaration of independence for blockchain technology? This is what started the Komodo project, right?
Yes, exactly. Let’s see. We are the asset holders. Hereby declaring independence from any single blockchain. So, if I’m gonna spend all this time making some digital property, that does not belong to Bitcoin or Ethereum, it belongs to me. An open and jointly developed specification on cross chain, atomic and independent specifications will be developed.
This is atomic swap. If I have these assets from another project and they don’t work for me, I should be getting other from some secure community, on my own terms. Any current or future blockchain that is invited to join will need not only the promise protections for asset holders, they need to live up to them. Otherwise, all the assets will simply move to another blockchain that do protect them.
This was made in 2017, and based on his experience in 2015, when there was a paywall, that broke all the technology. And they realized that someone else just coming and ripping all they work off. It was a motivation to let people build their independent blockchains. You know, blockchain technology is not for a single person, though you can build one if you need it, I guess. And there must be trust, just as when you put money in a bank.
And when I play an online game, as WoW, with a lot of people, I trust them that they won’t change the nature of the game. And this blockchain technology makes trust not necessary, cause using encryption we know exactly what is in the data, so you do not have to trust somebody else. Even people in my neighborhood, cleaning the yard, may use a blockchain to have all the records in the data, and it is decentralized, so we all have it personally, on our own. And it does not matter what he said or she said.
The idea here is that small groups of people can own a blockchain and all the assets related to them, and not care what a Bitcoin does or what an Ethereum does. They can also just switch the security service provider, and they are fine.
How about governance? Who runs the show in the Komodo? Is it truly decentralized, or there are people who make core decisions?
First of all, decentralization is a goal no blockchain project has [achieved]. This is a scale from 0 to 10 - 0 being centralized, 10 being fully decentralized. In a life cycle of any particular economic ecosystem, it would start decentralized and then gradually become highly centralized. This is called Pareto principle and shows how this happens.
In Bitcoin, there are 6 mining pools that control the entire history of Bitcoin. And if you want to compromise how Bitcoin works, you have to compromise these 6 mining pools. They are all guarded by heavily invested people, and there are different theories about that. But the truth is that Bitcoin is centralized around miners who control the most powerful mining facilities.
By the same principle, the power over any ecosystem goes to the 100 people in up to 6 months. It is true for Bitcoin, Ethereum and Komodo. In Komodo, we have elements of decentralized power, so that one group can dominate and make bad decisions. The Notary nodes and the stake holders, so the people who own Komodo, are the two competing fractions in Komodo. Every year, Notary nodes are elected by a stake vote. So, there are about 100 people originally bounded to Komodo who vote on Notary nodes to do their job.
There’s 62 total, but only 42 are on the election every year. The longer you are in Komodo, the larger your vote is. Notary nodes can not do transactions, they only recycle the Bitcoin history. The only power they have is a power of refusal. If some independent chain does what we don’t want to be involved in, like sex traffic, they refuse to do their job for these chains. A stake weighted vote is a community decision on who the Notary nodes are.
When you talked about using small blockchains for separate communities, it sounded like a sort of a more usable and accessible version of smart contract.
Yeah, here’s something with smart contracts. So smart contracts are not a new concept, they were as early as 70s or 80s. The reason why they were not used is that there was no way to ensure they were being honestly performed. And the amazing thing that happened to Bitcoin mechanism — to enable smart contract technology that may be used. And Ethereum was the first one to say — OK, let’s go grab up these ideas and tie them to a certain blockchain and so everyone can run their code on am Ethereum virtual machine on a computer.
They could only run the language that’s approved, Solidity. And everybody across the ecosystem runs the same code and looks what happens, and the blockchain says OK, send money from here to there. That’s the idea, and the Ethereum was the first one to that, a market leader in that regard. There are a few different problems with smart contracts — data and speed.
Everyone running on the same blockchain has to run the same code. This is useful when you have a small community where people are interested in the same thing. It becomes very cumbersome, if you start to expand into hundreds, millions, billions of people. There is a few reasons for that. First, everyone has to have each other’s data.
Ethereum is now 1.5 terabytes in size. When I first joined, it was about 200 gigabytes, it is just growing so fast. And if you want to be a person who accurately proves that that data is what it says it is, and this is the whole point of a blockchain technology — to know you don’t have to trust other people’s word — you have to download 1.5 terabytes of data and a lot of that data is just junk.
Some from the project that died, some scam projects, some ideas that are never going to be useful, so you have to download and maintain all of that, and this is how Ethereum started. You have to have tons of data and sink in it every time you need to update your hardware.
And what about Komodo?
Komodo does it differently. I’m going to have the data which is relevant to me, and it is relevant to me that data is passed to Bitcoin, to know it was secured, and Bitcoin has value. So you use a Komodo chain. It is a couple gigabytes right now, much smaller, and we are looking for ways to make it smaller, by the way. And I want to have the data on projects I care about.
So, I wanna to make a blockchain the statistics of characters, hit points, list of campaigns of “Dungeons and dragons” game I play with friends. I wanna take that data and go to another friend, take my character with me and play a different scenario. And I don’t know anything else, what’s happened on the moon, I just need the character. So Komodo comes in hand — if you have a small or medium-sized community, or a large one, you only use a couple gigabytes of data.
Another thing that Komodo does [better that Ethereum] in speed. The way that Ethereum is designed is that everyone tries to use the same blockchain. A blockchain is bound by size and speed. We talked about size. And speed is transactions per second. It is limited because maths and physics. Blockchain can handle about 15–20 transactions per second. EOS claims they can have 5000 transactions/sec, but we have not seen anything that would support them, but let’s just take it as a word for now.
Nothing is compared to what Visa and MasterCard are doing, which is 20–40 thousand transactions being performed every second with credit cards across the world. 5 thousands/sec is not enough for them. And Facebook claims there are 100 thousand likes per second. And that’s just likes, not updating, not clicks, not posts. And if a blockchain can only do 20 transactions per second, then we won’t be able to operate this amazing blockchain system, there won’t be the room for people to do what they want to do. This is what happens on Ethereum.
A popular application for Ethereum called CryptoKitties overwhelmed the blockchain, because people were buying and selling these CryptoKitties so fast that it shut down the whole blockchain, nobody could even use it. I tried to make some transactions during that period of time, and it took me nearly 24 hours just to send money from one exchange to another. Komodo does it differently. You get your own independent blockchain [for] people who care. And you can keep making more blockchains that are connected to each other, each can manage 20 transactions per second. And if one block gets overwhelmed, you can separate it to several blockchains.
And now people are happy to get their transactions in s real time. We made a speed-test this summer, and we hit 45 transactions per second in our ecosystem. Just using our own hardware. Now we have an Advanced partnership with Amazon, and, working with them, we should hit 1 million transactions per second and even more. It’s much easier to update hardware than to create some new-formed method.
As I got it, you offer, that every single product is run on a separate blockchain without interfering with others, right?
Correct. And the applications can share information with other blockchain-based apps. So if a blockchains has a transaction, another blockchain can see this transactions being performed, and then perform another transaction based on that outcome.
Now, I would like to talk about designated PoW algorithm, which is, I guess, a trademark feature of Komodo. You’ve said every transaction is protected by Bitcoin hash rate. How exactly does the Bitcoin network come into play? How does it influence Komodo mining? Someone has to sign the transactions, that happen either on every several blockchains, or, say, cross-change transactions. Could you please explain?
Sein: Let’s say I use an independent blockchain in a Komodo ecosystem. And I perform a transaction. This transaction goes to a mempool. And the miners can see it, because when you are running a software, you can keep track of the mempool. And miners can see it and take transactions, combine, record a blockchain. For doing that, the blockchain would give me a reward if I win, e.g. in Bitcoin. Miners just want to make money. And after, if they are honest, they want this blockchain to be stabilized to protect the history.
The challenge of course is that miners can’t mine everything. Bitcoin’s point is that if you want to attack, — it’s called a 51% attack — what you’re gonna do is to say Ok, there are 1000 people, mining Bitcoin right now, but they all are trying to make money out of it and try to secure that version of history. It I had enough money, I would buy a 1000 computers to have them at my warehouse, but I would have 1000 and 1 computer actually, and start mining a different version of a history, and while I’m making that false version of history, I can start spending money, if I have all the hash passwords of all these 1001 computers.
I can do that with Litecoin or Ethereum. And I can keep all of them. And as I have this much of a strong computing power, I still have Bitcoin. Now. It you want to do that, you’ll need nuclear power and more electricity than the country of Denmark has. That’s pretty tough to do. So it is hard to attack Bitcoin. It is also expensive — more that 500 000 dollars per hour. So the motivation to attack bitcoin now has disappeared — people are attacking smaller chains instead. 15 computers can make all kinds of false histories of Komodo chain.
That’s the big problem.
What we do is about 10 to 20 minutes we backup every independent chain to a Komodo main chain by taking a snapshot. This is called hashing. We create an encrypted phrase, proving that data existed at that point of time. Now we gonna write it in the Bitcoin blockchain and everyone can see it. So the information is confirmed on the Bitcoin network.
And all bitcoin miners can use the same encryption mathematics to prove that this data existed and it is protected by millions of miners. So it is impossible to attack them, because if you want to do a 51% attack on the independent blockchain system which Komodo is using, you will have to break Bitcoin, Komodo and the independent blockchain.
So three targets, and one of them in Bitcoin. Notary nodes are not making up numbers, all what they are doing is they take the data and write it into Komodo blockchain and into Bitcoin blockchain. The only power they have is refusal to authorize an independent blockchain. We don’t expect this to be an issue, this is much like a phone service provider. If a person pays for their bill, they get a secure connection as a service. The service shuts you down for illegal actions. It is very similar to Komodo.
You’ve said that the whole size of Komodo blockchain with the mempool is a couple gigabytes. It does occupy the space on the Bitcoin blockchain, right?
Yeah, but not in that sense. You don’t need all the data, in the Bitcoin blockchain you only need those little phrases, so will take all of the metadata. It is which blockchains are going to be authorized, which are using crypto conditions. Those are pieces of metadata. That data is compressed in a hash. Basically, all we have is the hash, the Komodo blockchain name, the height at which this hash was created, and the addresses from which whose were derived.
And those going every 10 to 20 minutes. As for data space we’re putting into bitcoin, my guess is that it is probably less than 10 megabytes, but I don’t know for sure. This makes Bitcoin extremely useful.
Now, I’d like to talk about Z-transactions. Up until February this year, there will still be private transactions on the main Komodo chain, but then if I am correct, the private transactions on the main chain are being ceased. However, they will still be allowed on side-chains. So does that mean there will be more cross chain Z-transactions in the future?
For those who don’t know, a Z-transaction is the ability to move coin from one address to another without leaving data in the public domain for later analysis. Many people think of it as higher security, because as long as everything is done properly, there is nothing about the transaction in a public domain.
It differs from Monero, because they just mix the tumble to the 8th degree, so they keep mixing to try to make it really hard. But the data is still there and as computers get more powerful, people can come and get the story. And in case of Z-transactions there is nothing there, no leftovers.
In Komodo we realized that people tend to want privacy on independent chains without needing it on the main chain. And it is impossible now to transfer coins from chain to chain using Z-transactions. But there are technologies and I’m assuming we will start working on it, it’s just not the highest priority right now.
All this stuff, by the way — Z-transactions, privacy — was mostly invented in 80s and 90s. Industry as a whole has not gone close to compromising all these ideas people came up with at those times. Right now, we are focused on privacy in your own ecosystem, your own blockchain. And transferring between one blockchain to another, you can use different instruments, such as Tor, VPN, so no one knows it’s you who is doing that, and also atomic swaps, and cross chain burn protocols.
Have you had any use cases so far? As Amazon Web Services that you’ve mentioned so far, that are already employing the protocol.
The integration with Amazon Web Services is coming up, we partnered with them last year. This is going to allow people not to be so technical to work with their own blockchain. We are hoping to make this super simple. As simple as buying a computer and turning it on — swipe up the credit card, open up the box, push the button and it works. That’s we are trying to do, and Amazon web services is a big part of it.
They are helping Komodo to get to a user-friendly stage. Komodo is doing the same thing as Steve Jobs, Microsoft and others did with the computers — turning giant machines into user-friendly thing for everyone. That’s gonna be the process that takes a while. Now we have people who are just those first computes users - they want to build their own computer, but they are getting 51% attacked and they are looking for a security recycling service.
The project I’m really excited about is the project that is run by the former Microsoft vice president of technology division, Mike Tartany. His project allows people to develop identities in anonymous situations. I don’t want to say to much as I don’t want to give their point wrong. But the idea is that you create an identity that ties you not to your personality, but to the decisions you make, which is useful on anonymous services. This is what our lead developer does.
We trust him, because he has a 5 year track record of his decisions and his code.
Let’s talk about the market for a bit. What do you think is happening with the market right now during this massive cryptowinter and do you think it will clear up anytime soon and maybe there are any projects you have faith in?
The idea is that when the technology rises, people get super excited, and then people go down the mountain. It takes 15 years to realize all the creativity we had. Now what we have here, people are trying to realize: "Ok, Bitcoin has gone from 0 to 20000 dollars. What is going to be next, will we still have Bitcoin or some cases similar to it?" But again, we cannot make a computer which serves the whole world.
We need a better strategy — a lot of small computers. So it was exciting when first micro chips came out and everyone could build their own computer. I don’t want to make price predictions for Komodo, I can’t predict the future. Own faith is that people will be able to make their own secure blockchains. Most people don’t understand what is happening and what happened to the Ethereum. Some people would argue that it is unusable because of being so crowded. As the understanding spreads, we can hope for a sustainable future for Komodo.
What do you think about Komodo’s situation right now? I know that you guys have a lot planned for the future, so maybe you have some thoughts which you can add on top of what you’ve already said about that.
The exciting thing for Komodo is that I don’t want to give it away. Our marketing team is trying very hard to switch to a situation that we will not talk about things that we will do, but we will talk about what we have done. And we are on a very good spot, because we are working on an atomic swap based decentralized exchange.
This is a very useful technology. And the partnership with Amazon Web Services allows us to do make technology that’s is easier available and accessible. We feel very good about our current position. I’m aware about who of our few competitors are, but I’m not aware of anyone who is going to be as far on a long path as we are or far ahead.
Hope you’ve enjoyed this interview — stay tuned for more!