Noting that more than 35 cryptocurrency exchanges have been hacked since 2011, Andrew Gazdecki and the associates who have helped him create the Altcoin.io exchange framed a simple question: “If we believe in the power of decentralization, why are we forced to use centralized currency exchanges that are vulnerable to these hacks?” It’s a great question, and in August of last year, the team began working on a solution. They came up with the atomic swap and became the first team to complete an atomic swap between the Ethereum and Bitcoin blockchains.
The Altcoin Product
Looking to improve the trading environment, the team at Altcoin.io created a secure exchange that allows coin holders to swap Bitcoin for Ethereum, or either of those for altcoins, in a secure and trustless manner. The need for trust is negated because the coin holder never gives up control of their coins. The coins remain in the traders’ wallets until the exchange goes through. If the exchange doesn’t go through, for whatever reason, the coins never leave the holder’s possession. This takes away—or at least reduces greatly—the potential for hardware failure, lost credentials, or other negligence.
The process also does away with the need for a middle man who would store the coins on a central repository, which Gazdecki refers to as a “honeypot for hackers.” It also speeds up the process from the 10 to 30 minutes that trades can take on the Ethereum and Bitcoin blockchains. The company’s ultimate goal is to create instantaneous trades.
Funding, Technology, and Progress to Date
A side project for the founders, all of whom have day jobs—Gazdecki was simultaneously the CEO of Bizness Apps Inc. until last month—the project has been self-funded, and there are no plans for an ICO. Gazdecki points out that the typical process is for a company to write a white paper, launch an ICO, and then have to hold on to a white paper that was written sometime before. Doing the process in reverse allows the team to be flexible.
Also, with blockchain technology moving as quickly as it is, most exchanges are built on technology that is obsolete. There’s no chance of that happening when you’re building the technology yourself, he says.
Being written on Ethereum smart contracts, Altcoin.io’s atomic swaps are fully controlled by the participants. Gazdecki says the company is doing its best to replicate the experience of a centralized exchange, but with a heightened level of security.
Where speed is concerned, the Altcoin team is working on a sidechain that will eliminate some of Ethereum’s scaling problems. Similar to Plasma—Ethereum’s own sidechain, which also remains a work in progress—Altcoin’s sidechain will be a second layer solution that will allow for faster trading speeds without SAC (security access control).
Based on the proof-of-authority consensus model, valid and agreed upon trades go through, and replicators watch the transactions and report on behaviors.
While the company is prepared for it to take some time for its lightning network to be added to the Bitcoin blockchain, and for the second layer to be added to Ethereum, they currently have a testnet version of the atomic swap wallet. Gazdecki says they are looking for a Q2 2018 launch (so it could be any day now), but they don’t want to rush things and risk not outperforming other decentralized exchanges. Before release happens, the goal is to provide instantaneous transactions and perform a proper security audit. This will be done by depositing tokens into an account that would put them on the Ethereum blockchain, where only the partners in the exchange would have sole access to the private key. Gazdecki says that Altcoin is also looking at the possibility of third-party wallet integration down the road.
The Typical Customer and Industry Direction
A lot of crypto traders are new to the space, so Altcoin is focusing on user experience to cater to people who aren’t familiar with decentralized exchanges. The end goal is to make the process of exchanging Bitcoin, Ethereum, and altcoins as easy as Coinbase did for buying bitcoin.
When talking about the direction of cryptocurrencies, Gazdecki says he sees a second wave of decentralization. Bitnetwork is live, and other decentralized exchanges—BitShares, AirSwap, and Hybrid Network among them—are coming to the market, but right now there’s no way to tell if there’s going to be a clear winner out of them. With liquidity being scattered the way it is, Gazdecki sees his company ultimately sharing liquidity with other exchanges. In Altcoin’s technology, he sees the potential to power thousands of exchanges worldwide.
He also says that it’s a company goal to enable point-to-point trades, and he sees the potential for other developers to add new experiences on top of it.
Future Plans for Altcoin.io
Altcoin.io has a simple game plan for the near future. They’re going to continue doing what they’ve been doing, which is to build the technology, focus on the innovation, and not get caught up in fundraising or creating a token simply for the sake of creating a token. Gazdecki speaks to the company focus when he says that if you “build something of value, it will take care of itself.”
That quote is such a fitting place to finish. It’s often pointed out that people take interest in the blockchain world for one of two reasons: Either they’re hoping to get rich quickly or they believe in the technology. If more people and companies believed in the technology as much as the team at Altcoin.io does, the space would experience fewer problems.
Written by Paul Keenan.