COMIT

1 COMIT Cryptographically-secure Off-chain Multi-asset Instant Transaction network Making global payments as cheap, fast and easy as sending a text message. Abstract: SincethecreationofBitcoinin2009wehavesee nagreatpushtowardspublicand ,aglobalnetworkconnectingall thetransferofinformation,weproposeasyste m,similarinsizeandreachfor paymentsandtransactions:Acryptographical ly-secureoff-chainmulti-assetinstant transactionnetwork( COMIT )canconnectandex changeanyassetonanyblockchain to any other blockchain using a cross-chain routing protocol (CRP). COMIT isasuperblockchainnetworkthatallowsforin stanttransactionswhichare TimelockContracts(HTLC)acrosschainstosol vetheproblemofdoublespending s connectivityisprovidedbyLiquidityProvide rs(LP),whooperateononeormore blockchains,actingaspaymenthubsandnodeso nasinglechainandmarketmakers in a decentralized network for cross-chain asset conversions.

2 ThispaperlaysouthowCOMIT works,thebenefitsforUsers,LiquidityProvi ders andBusinesses;andhowthisdoesnotonlyaccel eratetheadoptionofblockchain technology,butfurthermoreallowsforaninte grationwiththetraditionalbanking system. White paper versioning: Authors: Dr. Julian Hosp Toby Hoenisch Paul Kittiwongsunthorn 1. Introduction2 Ecosystem overview2 Blockchain Ecosystem2 Bank Ecosystem3 Challenges of the current system of financial transactions3 Users [U]3 Liquidity Providers [LP] (defined in detail the next chapter)3 Businesses [B]4 Solutions with infrastructural problems4 2. COMIT - the Cryptographically secure Off-chain Multi-asset Instant Transaction network6 Comparing the Internet to COMIT6 The Internet - the network of Information and Communication6 COMIT - the Internet of Transactions7 Technical Details8 Minimal Requirements for a blockchain to be COMIT -compatible9 Double-Spend Protection9 Multi-signature (multisig)10 Time-Locks10 Hash function11 Building Blocks for COMIT11 Hashed Time-lock Contracts11 Payment Channels13 Cross-chain Payment Channels13 Initial route finding using the CRP (see next chapter for details)13 Sending the transaction across chains using HTLCs14 Settling the HTLC transactions into the underlying channels14 COMIT Routing Protocol (CRP)

3 16 How COMIT works from the perspective of Users, LPs and Businesses17 Users (U):17 Businesses (B):17 Liquidity Provider (LP):17 Advantages of COMIT18 Users [U] enjoy:18 Liquidity Provider [LP]:18 Businesses [B]18 3. Conclusion19 4. Acknowledgements19 5. References19 1. Introduction Inthispaperwearegoingtodiscussthedevelop mentoftheInternetoftransactionsalsocalle d COMIT (CryptographicallysecureOff-chainMu ltiassetInstantTransactionnetwork).Befor e wedescribeageneraloverviewandtechnicalde tails,wearegoingtolayoutthecurrentfinanc ial andeconomicchallenges, the same page, we will start with the status quo of both of these areas. Ecosystem overview Blockchain Ecosystem Since the start of Bitcoin 1 in January 2009, we have seen the introduction of a multitude of blockchains across all kinds of areas and financial markets.

4 Today we can count hundreds of public blockchains that amount to a total market cap of around 20 Billion dollars, excluding many more private blockchain installations. Lastyearwesawtheemergenceofpreciousmetal backedtokens,derivatives,entirelynewasse t classesrepresentingentireecosystems,ande venETFtokenstoinvestintootherblockchain (ICOs) WorldEconomicForumisevengoingasfaraspred ictingthat10%oftheglobalGDPwillbe storedontheblockchaininlessthan10years 2 .Intermsoftoday sglobalGDPthatwouldbe $ trillion. Oneoftheotherbigpromisesofblockchaintech nologytoday,isthecompleteautomationof 3blockchainanditsecosystemis noteworthyfortheir Turing-complete blockchain,whichallowsanysmartcontractto be executed on-chain, thereby allowing the trustless execution of any business logic.

5 Bitcoinontheotherhandhasaverylimitedsmar tcontractinglanguageandprimarilyuses off-chainsmartcontractsistheLightningNet work 4 , 4whichisseeinganincreaseinpopularity as a possible solution to the Bitcoin scaling problem. Bank Ecosystem traditionalplayersandsomenewcomershaveal readyadoptednewtechnologiestocopewith 5inEuropeorSimple 6intheUSareusinglowcostonline asDBS,whowasawardedWorld sBestDigitalBank 7 ,andmanyothersareadaptingtheir businessmodelstobettercatertotheircustom ers needsbybringingmanyoftheirservicesonto mobile platforms and the Internet. Anothersolutionbankshavecomeupwithtoadap tsufficientlyistheintroductionoftheirown privateblockchainsanddistributedledgerte chnologies(DLT).

6 Insteadofparticipatinginthe publicblockchainslikeBitcoinandEthereum, theychoosetorunthetechnologyin-houseto retain full control over their business logic. Challenges of the current system of financial transactions Theabovementionedtechnologiesandinventio nsarebeingintroducedtobettercaterto end-users(U),bringmoreadvantagestobanks( andotherLiquidityProviders(LP))and businesses (B). We would like to list a few in regards to each of these three parties. Users [U] banktransfertotheirbelovedones, costs,banksarethereforeonboardingtheirus ersontoacheaperonlinebanking ,thecostsofcryptocurrencytransactionshav ebeen reduced greatly - to a fraction of traditional banking fees.

7 Countrieshavedeployedreal-timepaymentnet works,whicharevastlyfastercomparedto spublic blockchainseitherrequiretheausertowaitac oupleofminutesoramaximumofafew hours; bringing a great advantage to the speed of global transactions. Liquidity Providers [LP] (defined in detail the next chapter) arestartingtounderstandthechallengesnewt echnologiesbringtotheirlong-standing business model. Private blockchains seem to offer this long awaited alternative. welcome relief. arefacingmoreandmorecompetitionintheirso farwell-protectedmarketsegment. Whoeverisopenmindedintoadoptingnewbusine ssmodelswillkeepridingthewaveof that regard. Businesses [B] technologies seem to provide solutions to both these needs.

8 Solutions with infrastructural problems Ridingahorseseemedtobeagreatadvantagetoo nlybeingonfoot,butthentheautomobile came, daytheautomobilestartedtobemass-manufact uredbyFord, way,someoftheaforementionedattemptstosol vethechallengesusers,banksandbusinesses areexperiences,aremorelikeatrojanhorsewi thanunderlyinginfrastructuralproblem,rat her than an actual solution. Let us elaborate. mindbanksandmanyothergroupsstarttocreate individualprivateblockchains,whichisthen leading to a fragmented environment instead of mutual collaboration. Publicblockchainsthemselveshaveproblemsa swell:Transactioncosts,eventhoughbeing muchlowerthanbanktransfers, confirmationsuchascheckingoutahighticket iteminastorecannotworkviathetraditional blockchain,asthecurrentrequiredconfirmat iontimeofevenjustafewminutesisnotfeasibl ein a point of sales (POS) environment, where speed is critical.

9 Forusers, system,however,theyincreasinglyrealizeth atthefutureliesinthedecentralizedblockch ain ,mostlybecause theseusersneedtotrustnewparties(exchange s,walletsandpaymentproviders)whomany adoption process either. Thismovestheintendedeasyglobalaccessfurt herapart, offinancialinclusionoflow-incomecountrie sintotheglobalsystemoftransactionsisther eby drifting further and further away. This is bad for users, banks and businesses the same. What is going to be the inevitable solution: 2. COMIT - the Cryptographically secure Off-chain Multi-asset Instant Transaction network BeforewegointothedetailsofwhatCOMITis,wh yandhowitworks,wewouldliketodiscuss a similar model that was adopted over the past 30 years: Comparing the Internet to COMIT The Internet - the network of Information and Communication BeforetheinventionoftheTCP/IPprotocolthe Internetwasdispersedinmanylocalnetworks, communication(suchasletter,fax,telephone calls).

10 Therealbreakthroughonlycamein1973, whendifferentIntranetnetworksrealizedtha ttheycoulduseaunifyingInternetworkprotoc olto communicate among each other, thereby extending reach by compatibility even more. WiththerequirementsforanIntranettojointh esocalledInternetdroppingtothebare minimum,itbecamepossibletoaddalmostanyIn tranet,nomatterhowbasicorsophisticated their characteristics were. The initial adoption by users was relatively slow, as the services offered at the beginning were limited. There was one major factor however, that eventually sped it up significantly. The same providers that were already offering mail, FAX and phone services, could now add Internet services to their portfolio giving them extra revenue streams.