A decentralized system is one in which the control or the essential parts of the system are transferred to the peripheral cores. In this way, the whole system does not depend on single points of failure to operate.
This concept is not new. Already in 2002 the paper of Petar Maymounkov and David Mazières, which would create the protocol for P2P file sharing Kademlia, explained what technical problems were solved and why it makes sense on the Internet. However, it was not until 2009 that they began to explore the mechanisms of consensus and incentives applied to decentralized systems to replace the trusted authorities. This work resulted, among other things, in the technology we know as Blockchain.
Decentralization is a concept that has become fashionable and has solved many technical problems, but few understand the business problems it also solves. Some of the Bitcoin ecosystem startups have created admirable technologies, but that do not solve problems that anyone are willing to pay for. Others are aimed at too small markets where it is difficult to create solid business models, specially if they are based on volume. Being aware of this Coinffeine, with its technology and business model, has chosen a different path.
Coinffeine has created a protocol for exchanging currencies and bitcoins between people in a secure way, using payment processors to manage payments. In the future we also intend to allow exchanges between other digital assets: next generation financial products. We understand that this is the most natural way to exchange digital assets for money, an opinion shared by regulators and experts that we have been in contact with. In this way, instead of creating a new scenario that needs to be regulated, we reuse the existing infrastructure, creating synergies with financial players on the road.
By using Coinffeine, one of the benefits is that the assets traded are always under your control. You do not need to grant us their custody at any point in the process. This means that you never have to worry about news that an Exchange has been hacked or robbed. By doing an exchange with Coinffeine, you will simply never run that risk.
Another big benefit of our technology is that it is not necessary to provide personal information. Think in Coinffeine as a tool such as BitTorrent. You download it, install it and use it. Everything keeps between you and your partner. In this regard, it is noteworthy that the payment processor you use cannot relate payments between users with operations made outside the platform.
Finally, the P2P model allows reducing operating costs of the company: since it does not withstand deposits, it is presumably not considered an MSB.
Coinffeine manages to combine the resolution of various business problems through their protocol. These problems have been solved as a consequence of what the Coinffeine protocol offers: to convert the services traditionally offered by a service provider into contracts between individuals.
In following articles I will explain the tax advantages, the operational advantages and the reduction of costs by involving contracts between individuals and also the problems that Coinffeine solves in traditional banking.