Cryptocurrencies like Bitcoin, Ethereum and Monero which are the established projects in the cryptocurrency space have received a lot of media attention over the last several months. This has caused the media frenzy to overlook some very innovative smaller projects, like the Komodo platform. While the more established players have been surrounded by hype, Komodo has been quietly perfecting its underlying tech to solve real-world problems. Komodo’s BarterDEX, along with the built-in tumbler are some of the most useful tools in the cryptocurrency space that will help with mainstream adoption. Let’s take a look at what Komodo is trying to achieve.
What is the Komodo Platform?
Komodo is an open-source blockchain ecosystem which includes built-in privacy options like tumbling and zero-knowledge proofs. Komodo was forked from ZCash and has since grown into its private blockchain with several unique features. Komodo offers dICO, or decentralized Initial Coin Offering to offer other ways to crowdfund ICO projects, along with an in-built coin tumbler for increase privacy. This puts Komodo in a unique position that allows it to execute smart contracts, or decentralized applications more privately. However, the most important aspect of the Komodo platform remains Atomic Swaps. Atomic swaps allow for the exchange of one cryptocurrency for another cryptocurrency without the need for a trusted third party. Traditionally, changing one cryptocurrency to another required going through a third party exchange, like Binance or Bittrex. With atomic swaps, cryptocurrency exchanges can be bypassed for a more secure and automated exchange process. An atomic swap system uses a time-locked smart contract to facilitate the exchange. If both parties do not submit their funds in the allocated time pool, the exchange is nullified. Therefore, the whole process is entirely automated and trustless.
The Komodo BarterDEX
Atomic swaps are not new in the cryptocurrency space. Bitcoin and Litecoin have been working on atomic swaps for years now, but development is slow due to how heavily these networks are being used. Komodo, because it is built from the ground up, has been engineered to handle atomic swaps well. While Bitcoin is still struggling to make a few atomic swaps with Litecoin, Komodo has already performed hundreds of thousands of atomic swaps with its BarterDEX application. Atomic swaps are crucial for mainstream adoption as there are over 1600 cryptocurrencies, and converting one crypto to another is still a relatively cumbersome process. In a typical scenario, say where a merchant wants to accept Monero, but the customer wants to pay with Ethereum, atomic swaps are the most secure and decentralized solution.
The Komodo BarterDEX is the decentralized exchange that is built into the Komodo platform that allows trading cryptocurrency coins without counterparty risk. Counterparty risk is the risk to each party of a contract that the counterparty will not live up to its contractual obligations. Thanks to smart contracts, now we don’t have to worry about one party backing out of the trade. This makes the entire process atomic and immutable. The BarterDEX system works by employing atomic swaps efficiently and at present supports 95% of cryptocurrencies in existence. By decentralizing the exchange process, a lot of the problems with centralized systems can be removed. For example, hacks and fraud which are common in the cryptocurrency space like the Mt. Gox hack or the more recent BitGrail fiasco. Another problem is the arbitrary rules on a listing that affect the prices of cryptocurrencies. For example, when Binance announces that it is listing a coin, it can drive up the prices due to widespread speculation. Additionally, cryptocurrency exchanges are susceptible to government regulation and seizures. In recent months, China and Korea have both tightened laws regarding cryptocurrencies which has been problematic for users of exchanges based in those countries.
The BarterDEX has been in development by the SuperNet developers since before the inception of the Komodo platform. Because of the open-source nature of the project, it is much easier to add cryptocurrency pairings than traditional cryptocurrency exchanges. BarterDEX fully realizes decentralized order matching, trade clearing, and settlement. The order matching aspect uses a low-level public key to public key messaging protocol, and the final settlement is executed through an atomic cross-chain swap. BarterDEX is extremely easy to set up and takes less than 5 minutes for users to get started with using atomic swaps. The BarterDEX requires users to download the entire blockchains of the currencies that they want to transact in.