February 20, 2018

An Interview with Kirill Suslov – The CEO at Finom and TabTrader Founder

The NewsBTC team recently reached out to Kirill Suslov, the CEO of Finom to know more about the FIN token sale. We asked him a series of questions and this is what he had to say.

NewsBTC: The market was excited about the latest news – you became the industry’s first company to take a bold decision of starting a new token sale right after the first one. What was your main idea for the second campaign?

Kirill: The FIN token sale focused on large market players and funds. Actually, we raised 80% of our funding at the presale stage. In total, more than 7,000 investors took part in the campaign, but there were not so many private investors. All contributors received NOM tokens as a bonus when purchasing FIN security tokens and asked a lot of questions on how they can apply them.

Exploring NOM applicability, we discovered that the more frequently the token works in the business ecosystem, the more services and transactions it serves, the greater benefit it brings. So we decided it should serve not only as a discount or a bonus tool for certain services but as a full-featured payment method within the platform. To that end, we should attract more private investors from the crypto community, the audience our ecosystem caters to, and reduce the initial purchase price in order to make the token more usable as a payment tool available even for small transactions. And, of course, we need many more NOM tokens for these purposes.

NewsBTC: What was the reaction of your investors? It’s a sensitive moment, isn’t it?

Kirill: I would say it was… different, as nobody has done that before. And, I have to say, it was much better than we expected. At the end of the day, nobody needs a useless gift, so a NOM token that has more value and application is much more attractive. Many of our investors understand that more NOM token holders and more transactions within the platform mean more capitalization and more dividends to shareholders (FIN token holders).

NewsBTC: You issued two tokens: FIN security and NOM utility. Why do you offer both token types? You could have just implemented additional emission of your security tokens.

Kirill: Yes, we could have done it according to the US legislation, but for the second token sale we decided to focus on utility tokens only. The release of FIN tokens was a bit of an experiment. No one has ever done that before, especially if we are talking about legality. The FIN token sale was guided by SEC (Regulation D of the American Securities Act of 1933), and the funds are being handled by the US-licensed escrow agent SharesPost. In fact, we digitized our company’s shares and offered them up for sale as tokens. A FIN is a share in our company, and it gives its holders dividends and the right to vote. We were able to underpin the tokens with Finom’s real profits.

However, security tokens have a certain drawback: according to the US legislation, they must be frozen for a year. Utility tokens are more familiar to investors, easier to issue, easier and faster to trade on exchanges. So, it is still an interesting challenge to combine both types, although the second token sale will be just for NOM tokens.

NewsBTC: You claimed to solve a huge market challenge – to design an all-in-one and single-window solution for the whole crypto industry, including mining, trading, and banking. Do you think it’s possible to implement?

Kirill: Our aim is to design the solution that may be called a financial Google-flavored service with blockchain and artificial intelligence. In our case we have 5 existing crypto services, forming an ecosystem of services with one login and one verification. Now we are working on services integration and reducing service commissions. In fact, when the services support each other, we do not need to pay a fee to different providers.

Indeed, such complex things like banking require huge expenses – for licenses, certificates, auditing and so on. However, we are still sure a platform where users get everything they need for their crypto operations including banking, payment processing and factoring right away is in high demand and can be implemented within the terms we offered in our roadmap.

NewsBTC: Why do you need the AI in your ecosystem?

Kirill: Virtual assistants are a good practice in the IT industry – Google Maps and Google Now, Alexa and Siri, AVR in the telco industry, and even bots in almost all the corporate channels, including banks. Ours will help the system to adapt to the goals of each user and suggest the most beneficial and relevant solutions. For example, the smart assistant can advise a user what to mine, when it’s better to buy some assets to increase revenue – as these processes are always ongoing and depend on a huge amount of factors, we need to add these AI and machine learning components.

NewsBTC: What do you mean by a single window in your ecosystem, can you give an example?

Kirill: Well, we developed the Beetle app for purchasing bitcoin or Ethereum via bank cards. It is combined with Cryptonit exchange, where users actually buy coins through Beetle’s interface. This app was one of our first joint projects. In the upcoming weeks, Beetle and Cryptonit users will have one login and one verification for both services.

The second example is Finom Cloud Mining, a service for renting computer power to receive revenue in cryptocurrencies. We’re launching it in March 2018. The equipment installation and maintenance are covered by Finom. This Cloud Mining service is based on our Cryptal mining center and Nanopool mining pool. Some of the crypto coins will be mined via Nanopool to strengthen the pool and make the cloud mining cheaper for its users.

NewsBTC: So how many businesses and services are in Finom Group now?

Kirill: We have 5 services now – Nanopool, TabTrader, Cryptonit, Cryptal and Beetle.io. We are going to release some more soon: for example, a desktop application for mining with an easy interface and auto-selection of the most profitable coins for mining.

NewsBTC: Now it seems that you have no experience with banking services yet. How do you plan to cover this area?

Kirill: Sure enough, we faced banking with its operations and processes when back in 2014 we created a crypto terminal. Since then, we have become very closely acquainted with many banking aspects starting from licensing to legal approval. Now I can say we understand confidently how banking works and how it should work in the crypto industry. By 2020, we’re going to have a licensed bank and transform it into a crypto one with a network of crypto terminals.

A bit sooner, in 2018, we plan to release crypto e-wallets with linked debit cards. Miners will be able to use recently mined coins right away, transferring them to their wallets immediately. We’re also designing a platform for peer-to-peer lending.

NewsBTC: What is already done from your roadmap?

Kirill: In December 2017, Nanopool launched its seventh mining pool for a new cryptocurrency – Electroneum. The TabTrader team added Binance exchange to the app and is negotiating with Tidex and Lykke. Binance became the 23rd exchange in TabTrader.

Then, Nanopool received an ICP license (№ 苏ICP备17001807号-8) from the Ministry of Industry and Information Technology of China. The document allows the pool to be officially represented in the internet space of China and to work with its citizens. This happened with the help of our new advisor Xiaochen Zhang, President of Blockchain Frontier Group.

In January, Cryptonit exchange was reopened to new users, following extensive site rebuilding and rebranding. The exchange’s interface and trading engine have been completely revamped; it will allow the service to cope with larger loads.

We are going to announce more good news regarding our roadmap implementation very soon.

NewsBTC: What exchanges will trade your tokens, besides your own?

Kirill: We plan to release NOM tokens on the key crypto exchanges in March 2018. We are working on agreements with Bittrex, Exmo, CEX, YoBit, BitFinex, Wex, Liqui, Livecoin, Cryptopia, Binance and Mercado bitcoin.

FIN tokens will catch up to the NOM ones only 1 year later, as they are regulated by the US trade legislation and that’s why they have to be frozen for this period. This is common practice for the stock market. The lock-up period allows a reduction of the assets’ volatility and of the risks of insider dealing when entering the exchange.

All (except the US residents) will be able to trade FIN tokens at Cryptonit in 2H 2018.

Published at Tue, 20 Feb 2018 14:25:39 +0000

Interview

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June 17, 2017

Op Ed: Three Technical Requirements to Connect Blockchains Without a Token

In my last post, I was talking about how connecting all blockchains is the final stepping stone for mass-crypto adoption. Here I want to outline the technical building blocks with which this idea can be implemented.

Since I see a lot of downsides to having one large uber-blockchain connecting all others, I will focus on a token-LESS solution. This would have several advantages:

No need for an additional token.
Users can “remain” on their blockchain.
No need to trust a centralized third party.

There are a couple of downsides to such an approach however. Since there is no uber-blockchain or a centralized party ensuring the connection, there needs to be enough liquidity between two blockchains to be connected. If I want to transfer funds from the Ethereum to the bitcoin blockchain, for example, I need someone who, at the same time, wants to go from bitcoin to ether. For these two large blockchains, you will always find someone willing to go in either direction, but what about from Ethereum to a smaller blockchain or a small blockchain to another small blockchain? While I will be laying out a way on how that could even be solved, I want to stress that liquidity is the key economic factor in such a cryptographically secure multi-asset network.

Basic Building Blocks

Let’s look at the three very basic building blocks that are needed to connect any two blockchains:

Multisignature feature (Multisig);
Hashing functionality; and
Time-lock functionality

Let’s work through each of these three and combine them into a larger single picture.

1. Multisig is an old and well-trusted concept that can be compared to a shared checkbook with multiple required signatories. A multisig transaction allows for the enforcement of arbitrary joint signature rules. In the case of a cryptographically secure, off-chain, multi-asset, instant transaction network (COMIT) one would use 2-of-2 multisig transactions for which both signers have to sign a transaction to become valid and be accepted by the network (an example of this will follow right after). This means a multisig transaction established between two parties needs to be signed by both so that its outcome becomes valid and can be accepted by the network.

In the picture below, a transaction was created with 1 BTC as input; however, in order to get it out, both parties (Alice and Bob) have to sign the transaction:

2. Hash functions are standard cryptographic concepts. These are one-way functions to convert arbitrary data (in our case a secret “s”) into a unique hash “h.” This hash h can then be shared safely without anyone being able to compute the secret s used to create it. This allows us to build a hash-lock transaction which will only unlock the funds with the knowledge of the secret s. In order to route across different blockchains, we need the same cryptographic hash function available in the smart contracting language of each blockchain participating on such a route.

In the picture below, someone put 1 BTC into a contract, but Alice can only take it out once she has the secret (which she normally would get from Bob).

3. Time-lock is a simple requirement for funds to be locked up until a future date. Blockchains are found to have two different time-locks: relative and absolute. Absolute time-locks will lock a transaction output until a fixed point in time in the future, whereas relative time-locks will lock a transaction output relative to an event or a point in time. That is to say, a relative time-lock rather defines a time span than a specific point in time. Time-locks are a requirement for trustless payment channels, and relative time-locks are recommended as they allow for indefinitely open payment channels.

In the example below, someone put 1 BTC in, but in order for Alice to get it out, she has to wait a predefined time.

Putting It Together

If we go ahead and combine these three building blocks, we get something called HTLCs (Hashed Time-Lock Contracts) whose states can be updated on a multisig basis. HTLCs combine the concept of a time-lock for refund purposes with a hash-lock. If the recipient can provide the secret s for the hash-lock before the expiry of the time-lock, he will be able to retrieve the funds. Otherwise, the sender can safely reclaim the funds. In case one party wants to update the HTLCs state, he needs the other party’s approval (signature). This is how the multisig function comes into play.

In the example below, Alice put 1 BTC into the contract with Bob. Bob can either take the 1 BTC out if he gets the hash from Alice within a predefined time, or Alice will get the funds back automatically after that predefined time has past.

Two HTLCs can be coupled with each other resulting in something called atomic transactions. To do so, the recipient first generates a secret s and computes its hash h. Subsequently, the recipient will share this hash h with a sender who in turn creates the first conditional transaction, i.e., its output is (hash-)locked by h. This output can only be redeemed with the knowledge of the secret s.

In layman’s terms, this would mean that if Bob wants to send Alice 1 BTC and wants ETH in return, they could open two payment channels (one with BTC and the other with ETH) and couple them with a hash h. Bob sends Alice BTC as long as she sends him ETH. In case either one backs out, the original amounts would just be returned.

The Full Route

Now we can stack an arbitrary amount of transactions onto each other as every node in this chain can safely use the same hash to create a transaction which is also conditional on knowing the secret s. This hash is initially shared with the sender, who will then subsequently send a conditional payment to the first node requiring knowledge of the secret s to redeem it. Each node in the route can then safely forward the transaction while adding the same condition to the transaction redemption. Through the use of HTLCs we can guarantee that either all of the transactions via this route get fulfilled or all payment channel transactions will be unredeemable. No trust has to be put in any of the nodes in the middle of the route. In the end, you have a chain of transactions which all depend on the same secret to be fulfilled. When the receiver takes the last transaction and uses the secret to redeem the money, every other node will see the secret that was used and can then fulfill their own incoming transaction.

After the secret s has been shared across the route, every payment channel will then settle the transaction back into the channel. This is done by updating the payment channel’s state to the final balances and then invalidating the HTLC transactions by revealing the invalidation key k to the payment channel counterparty, which will eventually make the transaction complete.

The time-lock mechanism is used as a refund mechanism in case of an intermittent routing failure. The time-locks need to be stacked from receiver to sender to make sure no one is able to cheat by having a shorter period than someone after him/her and thereby being able to pull out first.

Conclusion

These transactions can span within the same blockchain, but can also go cross-chain as long as you find someone who is willing to transact on both blockchains. This is where the concept of liquidity and routing comes in. To go back to the beginning where we thought about connecting two low-liquidity blockchains we see now, that we actually don’t necessarily transact between those two directly. By using stacked payment channels one after the other, money could flow from one low liquidity chain to a high liquidity chain and then to the final low liquidity chain.

This concept connects payment channels to a large network that is now:

Cryptographically-secure (relies on cryptographic standards),

Off-chain (like the Lightning- or Raiden-Network) ,
Multi-Asset (cross-chain),
Instant (no need for a transaction to settle on the blockchain as updates only happen between the parties until it gets broadcasted)
A Transaction Network, such as COMIT.

In the next blog post, I will talk about the concept of liquidity and Liquidity Providers (LP) and also on how routing through such a network could work.

This is a guest post by Dr. Julian Hosp, the co-founder of TenX and co-author of the whitepapers of TenX and COMIT. The views expressed are his alone and do not necessarily reflect those of bitcoin Magazine.

The post Op Ed: Three Technical Requirements to Connect Blockchains Without a Token appeared first on Bitcoin Magazine.

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