Komodo to Soon Release Atomic Swap-Enabled Trading App, CTO Reveals

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Cryptocurrency exchanges have been under fire so far this year, as hackers have kept on targeting them and other events hurt the confidence users have in certain platforms. Atomic swap technology is set to revolutionize the way we trade cryptocurrencies and more.

As CryptoGlobe covered, a Chainalysis report has found that 60% of cryptocurrency exchange hacks were the work of two major players, dubbed “Alpha” and “Beta.” Alpha was described as a “giant, tightly controlled organization partly driven by non-monetary goals” that appeared eager to “create havoc as to maximize profits.”

Beta, on the other hand, was described as a “less organized” player that focused more on monetary gains from their endeavors, moving money less, and waiting longer before cashing out. Together, these have reportedly stolen over $1 billion from exchanges.

Moreover, cryptocurrency exchange Cryptopia was hacked earlier this year in an attack described as “unusual” by Elementus, as it lasted longer than regular attacks, and saw hackers cash out over $2 million from decentralized exchanges.

On top of all this, crypto exchange QuadrigaCX recently went down after its founder and CEO Gerald Cotten unexpectedly passed away. Cotten was reportedly the only person with access to $145 million worth of customer funds in cold storage. The complex situation cost one crypto trader his $420,000 life savings, and is still unfolding.

While decentralized exchanges exist, their liquidity problems have seen most users stay away from them. The solution, peer-to-peer exchange, has trust-based risks, which are hard to fix without the transaction being made in person. This, as seen, carries risks.

Enter atomic swaps. This type of technology, according to the CTO of multi-chain platform Komodo (KMD),Kadan Stadelmann, can potentially revolutionize P2P transactions, as it eliminates the need the need for any central party.

This, he said, won’t make centralized cryptocurrency exchanges useless, as there’s room for both. CryptoGlobe caught up with Stadelmann to learn more about atomic swaps and Komodo itself.

CryptoGlobe: Can you introduce our audience to Komodo?

Kadan Stadelmann: Komodo itself is a blockchain platform that was founded a couple of years ago. Our vision is blockchain interoperability, the interconnectivity between different blockchain systems, between different communities, between different blockchain protocols, and also different technologies.

We have a varied set of different technologies and tools that together do reflect this vision that we have. As you maybe know we have decentralized exchanges, applications using blockchain technology, and some sort of smart contract system. As you can see it’s a pretty complex framework, and that basically is Komodo.

CG: Can you help us better understand atomic swaps?

KS: Sure. So there are different forms of atomic swaps, I'll just make it as abstract and as simple as possible. What I'm talking about now is the so-called "cross-chain atomic swap," this is basically the atomic swap everyone is talking about right now.

In simple terms an atomic swap would mean an exchange of coins from one person to another, without any central party involved. This is a direct line between me and you, so we can use the atomic swap protocol to exchange our tokens without any central technology. This cross-chain atomic swap is basically the idea of trading, exchanging something in a trustless way, with the help of specific mathematics and cryptography.

A cross-chain atomic swap can involve different blockchain protocols, so we can trade for example Ethereum for Bitcoin, and this trade takes place on our central computers - there's no central server like a centralized exchange. The most important aspect of this technology is that we're able to trade without anyone else involved, just me and you.

CG: What do you see in the technology's future? What potential applications can you imagine?

KS: I think this technology can cover a lot of things. Not just exchanging coins and tokens, but also exchange technology, exchanging information, and other data forms and data in general. I think atomic swaps - this technology of exchanging something in decentralized and trustless ways - opens door to the whole industry.

We're potentially talking about doctors exchanging information, Universities exchanging knowledge, making it a medium of exchange. These universities could use atomic swaps to exchange knowledge in a trustless way. I think for the technology the use cases are endless, as it's very promising.

Where I see it going is of course the financial area: trading, exchanges, etc. Those will be utilizing atomic swaps first. I see atomic swaps on smartphones, apps, and even on a smartwatch app. It's a mighty technology.

CG: Specifying cryptocurrency exchanges, how will atomic swaps affect them? Will they be an asset to them?

KS: I think it's going to definitely be an asset, something that's positive for the industry. We even see centralized exchanges developing decentralized exchange technology, take Binance for example - it's a centralized exchange building a decentralized exchange.

The biggest benefit of a decentralized exchange is the security, as trades just happen between me and you. It's very very different from a centralized exchange. I personally believe there will always be users who're familiar with the centralized exchange and will always feel more comfortable just opening a browser and entering an exchange this way. I think centralized and decentralized exchanges will likely co-exist for a couple of years, before we see hybrid forms get created.

CG: How will atomic swaps work with layer-two scaling solutions like Bitcoin's Lightning Network?

KS: [Atomic swaps] will be possible on layer-two scaling solutions, definitely, but they'll be a little bit different. Basically you would need some sort of gateway. Even though the coins are "locked" on the scaling solution, I believe atomic swap implementations could wait until the tokens arrive at the endpoint, exit the LN, and get unlocked again.

So if we did a trade and the LN was involved, it wouldn't be confirmed until the last steps were done - coins unlocked and tokens out of the second layer. We've developed something we call a trust API - while we're always trying building trustless systems we know normal users don't like to wait for confirmations, so in this case the system will allow a trade without the wait for the confirmation, or without waiting for the bitcoins to exit the LN.

I see other systems doing the same, so we would have an additional validation and confirmation layer allowing us to use the LN for atomic swapping. But it'll be different.

CG: When will Komodo's BarterDEX be live?

KS: Our decentralized exchange is live, publicly accessible, and already online. However, BarterDEX just entered the alpha testing stage two to three weeks ago and we're preparing for beta testing. We will make a public pre-release soon, however this is still a backend software, there is no graphical UI available right now.

We are planning to release a mobile solution - a smartphone trading application utilizing atomic swaps - later this year. A third-generation decentralized exchange.

CG: What's the Komodo token's role in all of this?

KS: We haven't really created Komodo as some sort of gas or fueling token for a decentralized exchange or any other technology. Our tech is 100% open and Komodo is the flagship token of the platform itself. The coin utilizes all the technologies we've built, and Komodo is more or less a "mothership," in the sense that it's the big spaceship where everything else - the other small projects - are created.

Komodo is like this big base foundation that we've laid for all the new tokens we see. We have dozens of blockchains being created with Komodo, that's its role. It's the glue that sticks dozens of projects, developers, and communities together and connects them while providing them a compatibility layer.

CG: Komodo hit a near $12 all-time high during the crypto market's peak, and now it's under $1, are you worried about its price performance, or the impact this may have on people's perspective into the market?

KS: To be honest I have no issue with the current market condition. While people say this was a really bad bear market, I think its normal as all coins are kind of pegged to bitcoin and if bitcoin goes down they all do.

At the end of the day 2018, the year everyone calls the worst crypto year, was the best one for me and every developer I know. We never had so much technology get created, we never had so many contracts and deals be made in the blockchain space. Although prices are down and Komodo along with it, the price to me is completely irrelevant. For me personally, it's irrelevant and the market should never be linked to the technology layer, they're two different things.

CG: Is there anything else you'd like to share with our audience?

KS: Yes, take a look at Komodo. It is a very promising technology, a young platform, and we've never really looked at the rest of the ecosystem as competition. If someone's following the media, we have security collaborations and vulnerability disclosure agreements.

Our big, big vision was to connect blockchain and provide this compatibility layer - and we've done it. We're open for other blockchains, users and developers to join.

Facebook Answers Tough Questions About Libra by U.S. Senate Banking Committee

This article focuses on highlights from the testimony of Facebook's David Marcus, who is a co-creator of Libra and the head of the Calibra project, before the U.S. Senate Committee on Banking, Housing, and Urban Affairs (aka "Senate Banking Committee"), on Tuesday (July 16).

On June 19, the U.S. Senate Banking Committee announced that it will hold a hearing (“Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations") on July 16 to discuss Libra. This is the same Committee that wrote an open letter on May 9 to Mark Zuckerberg, Founder, Chairman, and CEO of Facebook, in order to get answers to seven questions about Facebook's proposed crypto-based global payments system.

For the sake of brevity and clarity, David's comments and those of the senators have been paraphrased and abbreviated. Also, although the actual hearing went on for almost two and a half hours, we focus only on the most interesting and difficult questions that Marcus was asked.

After reading his opening remarks, the questioning of David Marcus started. First up was Senator Crapo (who is the Chairman of the Committee).

Senator Crapo: Should the US not establish the rules?

Marcus: I agree. The U.S. should lead. Switzerland was chosen as the home of the Libra Association because it is a well-established place for many international organizations and not to escape from regulatory oversight. Libra Association will still be registered with FinCEN (as a money service business).

Senator Crapo: Which regulators will be providing oversight for Libra?

Marcus: We are happy to comply with all the appropriate regulators around the world.

Senator Crapo: What info will Facebook will collect when someone uses the Calibra wallet?

Marcus: None (i.e. only what is necessary for AML purposes). Also, people are free to use other Libra wallets (provided by third parties).

 

Senator Brown: Should anyone trust Facebook with their money?

Marcus: We have made mistakes. Trying to get better. Facebook is just one of 28 members of Libra Association.

Senator Brown: You get paid in USD. Will you pledge to accept 100% of your salary and other compensation in the Libra cryptocurrency?

Marcus: We are not trying to compete with bank accounts. Yes, I would.

Senator Brown: Both parties as well as the President are worried about Libra... What will convince you not to launch Libra?

Marcus: We agree that there are legitimate concerns. That's why we released the Libra white paper so early. We want to get this right.


Senator Toomey: There are lots of benefits in blockchain technology and cryptocurrency. We should be exploring this. We should not strangle this baby in the crib. Is it the plan at some point to seek the consent of participants so you could monetize Calibra users' financial data somehow?

Marcus: No. We will make money in two different ways. First, we expect the transactions taking place through Calibra to lead to more advertising by our business users. Second, we hope to, at some point in the future, partner with financial services companies to offer our users new products/services.

Senator Toomey: Regarding the Libra Reserve, what about the interest that will generated? It could become quite substantial. If Libra Association is a non-profit, why are you distributing this income to the members of the Association and/or the investors?

Marcus: This income will not be unlimited. We will need to find a way to manage the reserves.


Senator Tester: I am concerned about consumer security. With cryptocurrencies like Bitcoin, transactions are final and cannot be reversed. How will you handle theft?

Marcus: Calibra wallet will offer protection against fraud. Consumers will be made whole. We will do our best to resolve those claims as soon as possible.

Senator Tester: What kind of faith can we have in Libra?

Marcus: There will be no fractional reserve (unlike with traditional banking).

Senator Tester: How can you assure us that our money will be there?

Marcus: The reserve is one for one. We want there to be oversight of the reserve.

Senator Tester: How will you stop bad actors from using Calibra?

Marcus: To create a wallet, you will need a government-issued ID. We will go to through AML and CFT procedures.

 

Senator Tillis: How much money are you putting into the infrastructure?

Marcus: Facebook has the resources to innovate. We have not determined an exact budget.


Senator Warner: How will Facebook support third-party wallets? Will you make it easy for users to move their data from Calibra to other wallets?

Marcus: Yes.


Senator Schultz: Why is Facebook moving to crypto before fixing its other problems?

Marcus: We want to keep innovating and serving our users.