Komodo currencies create a direct and decentralized pathway from the cryptocurrency market into the traditional financial system; they ease users into the world of cryptocurrency and blockchain-based applications by providing a familiar medium of exchange.
A bridge between the old centralized and the new decentralized financial infrastructures will help accelerate blockchain adoption. – Komodo Fiat Currency Whitepaper
The beauty of it is that Komodo can offer access to centralized fiat currencies through an unique decentralized mechanism. Other systems, by contrast, often require users to trust a third party that maintains a reserve of the same amount of funds in the actual currency.
The technology behind Komodo Currencies relies on two other innovative technologies called delayed Proof of Work (dPoW) and an atomic cross-chain swap protocol (DEX) as well as the Komodo blockchain. The dPoW protection mechanism allows these currencies to be as secure as the Bitcoin blockchain by attaching to the Komodo blockchain. The atomic cross-chain swap protocol lets users exchange the cryptocurrency in a decentralized and anonymous manner so that any currency can be easily converted to BTC.
To maintain a price consensus each notary node connects to the European Central Bank (ECB) daily price feed, which provides a reliable price feed service which is used by numerous financial services around the world. To cover the weekend, when there are no ECB rates, three data points are projected from the Friday price point based on differentials from the previous week’s data, thus allowing the PAX to maintain a consensus at all times. The Notary Nodes record these raw prices onto the Komodo blockchain whenever they mine a block.
All the nodes use the Komodo blockchain's price points to maintain a universal price consensus for each currency. Komodo coins (KMD) can be deposited and automatically converted into any Komodo currency since it is possible to calculate the exact conversion rate from those price points at any given blockchain height.
Conversion process to Komodo Currencies
This being the case, we have the necessary elements to allow users to easily adapt to blockchain technology and all the amazing features that the Komodo blocktech provides by giving users a familiar monetary unit that can be utilized by online merchants and payment services as fast and secure currency transactions.
Komodo currencies will be released in two stages; the first stage will be a proof of concept where we will keep the currency supplies somewhat limited.
You can learn more about our local Komodo currencies from its white paper. Stay tuned for the enhanced future release.