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COTI, The Future of Decentralized Blockchain-Based Payment Methods


Interview with Shahaf Bar-Geffen, CEO of COTI, conducted by Jason Manolopoulos

COTI offers an innovative new network for decentralized and scalable payments that aim to make global commerce on a B2C and C2C level more efficient and economic.

We had the privilege of sitting down with the CEO of COTI, Mr. Shahaf Bar-Geffen at the Crypto Investor Show in London for a comprehensive interview on how COTI came to be, what it is and what the future holds for them.

About Shahaf Bar-Geffen

Can you tell us a bit about yourself, your background and what you were doing before COTI?

In the past 15 years, I have been an entrepreneur and have co-founded five companies—one of which was WEB3, a leading digital marketing company. Since my tenure there as of 2006, it grew from a two-person start-up to a multinational business that operates in 15 countries around the world. In my previous career, I was also an officer ranked Air Force Major, something that lent me an unparalleled managerial skill set. I decided to make the jump to COTI when I was approached to take the helm as CEO after I had been serving as an advisory board member for some time.

What was the inspiration behind launching COTI? 

COTI’s vision is to build a decentralized and scalable payments network to facilitate efficient global commerce in B2C and C2C settings. This will set the standard for a next-generation payment solution that is trust-driven, easy to use, instant and cost-effective. Although this will be the first use case for our TrustchainTM base protocol, we’d like to branch out to other industries that are facing trust issues,  transactions and need for mediation processes.

When and how did it come about? 

COTI was founded in early 2017 by a group of professionals with extensive experience in the payments, cryptography and financial services domains. The problem that merchants face these days is that they pay fees to many intermediaries and lose revenue opportunities to low approval rates, this was known to our founders and needed a decentralized solution that will bridge the better of traditional systems with, the better of blockchain.

COTI – Basic Overview

What is COTI all about?

At COTI, we’ve developed a base protocol called TrustchainTM that aims to solve the numerous shortcomings faced by cryptocurrencies and traditional payment methods. Our distributed ledger, the Cluster – based on a directed acyclic graph (DAG) data structure – works alongside a robust trust scoring algorithm and decentralized mediation system to provide the fastest and most scalable digital payments network around. Together these components provide a simple, secure and frictionless payment experience with low-to-zero fees.

What issue does it solve?

The payments industry has been monopolized by Mastercard and Visa for the past 40 years. Such traditional payment systems, however, face many shortcomings. Each transaction goes through a number of mediators who collect their respective fees. They are the primary cause for declined transactions, which drives down revenue and profits for merchants while turning away well-meaning customers. There is also little accountability for the underbanked population, which amounts to two billion people around the world without access to financial services and banks.

On the other end of the spectrum, digital currencies like Bitcoin and others have faced severe network congestion, giving rise to scalability issues, higher fees and slower settlement times. These issues are compounded by complicated user experience, lack of buyer-seller protections and volatile prices, which deem cryptocurrencies unfit for everyday payment use cases.

How does it work? 

The COTI network’s TrustchainTM  base protocol requires each new transaction to be verified by up to two other transactions to be added to the ledger, or the Cluster as we’ve coined it. To accomplish this, users are encouraged to run their own nodes that work to validate transactions in the Cluster. In DAG-based systems like COTI, greater network usage leads to improved scalability. As such, there is a definite correlation between the number of network users and the rate at which transactions are confirmed.

COTI’s base protocol also makes use of Trust Scores, which collectively form TrustchainTM, to efficiently reach transaction consensus and validation. Trust Scores incentivize users to contribute to the quality of the ecosystem and serve as a proxy for how reliable a participant will be in fulfilling transactions according to the agreed upon terms. They also serve as a key driver of transaction fees: high scores are associated with low-to-zero fees, while low scores are associated with comparatively high fees.

The Mediation System adds an extra layer of support by providing buyer-seller protections in the event of transaction disputes. These can be related to billing errors, inadvertent transfers, unauthorized charges and undelivered goods or non-conforming goods and services. COTI’s approach to mediation involves harnessing an independent network of crowdsourced mediators to resolve disputes fairly and efficiently, without causing an increase in transaction costs. These mediators are rewarded for their efforts in COTI when successfully contributing to consensus.

What will COTI’s initial use cases be?

COTI’s initial use will be for the payments industry. Over time we envision that the COTI network will encompass other domains, such as insurance, money transmission, and high-frequency trading.

What are the business model and monetization plan?

Nodes in our network collect coins as transaction fees and for dispute resolution. COTI, alongside its network partners, operates such nodes. We’ll also be operating our own exchange, collecting fees for the trading of crypto assets.

Why does this need to be decentralized?

Keeping COTI’s services decentralized works to maintain low costs and high transaction confirmation speeds for the entire network. Because there are no third-party financial intermediaries, there will be higher acceptance rates and low cart abandonment rates in B2C settings. It will also help to account for the underbanked population, which amounts to two billion people around the world without access to financial services and banks.

DAGs (Directed Acyclic Graphs)

IOTA/NANO(Railblocks)/DigitByte are also trying to achieve frictionless payments.

There are a number of other DAG-based networks that have come to the fore, but what sets us apart is our TrustchainTM base protocol, Trust Scoring Engine, Mediation System, currency exchange and decentralized governance. While the payment space is our first use case, the TrustchainTM can be used for countless other applications that face processing shortcomings.

How does your tech differ specifically? 

Our TrustchainTM base protocol is based on a DAG data structure, but we take our consensus method a few steps further with the use of a Trust Scoring Engine, Mediation System, currency exchange, and decentralized governance.

How does your business strategy differ?

We’ve secured some strategic partnerships with companies from the financial industry, such as, which will streamline our go-to-market strategy. Beyond this, our TrustchainTM base protocol can be used across a range of business domains, such as insurance and remittance.

Who do you consider to be competitors from the crypto space? 

While other DAG-based digital currencies like IOTA, Byteball, and Nano can be considered competitors, we don’t explicitly see them as such. COTI has departed from both traditional payment systems and digital currencies to provide a one of a kind technological infrastructure and product offering.

COTI – Network/Token Economics

How do the token economics work?

The total supply of COTI tokens during the formative stages of the network will be limited to 2,000,000,000 COTI. These tokens will be allocated according to the chart below.

Proceeds from the sale of COTI tokens will be used to fund the development and expansion of the COTI network.

The maximum token price will be USD 0.1 per COTI. Discounts will be provided in line with each stage of the token sale.

Private sale: $0.079 per COTI
Public pre-sale: $0.083 per COTI
Public sale: $0.08 -0.100 per COTI divided across four tranches

How do you balance the diverging needs of the initial funders of the network versus future users? 

COTI is based on decentralized governance, which will provide voting rights for executing changes in COTI’s base protocol and deciding future use cases of the COTI coin. Futarchy governance is one such methodology that utilizes a team of experts who work to define metrics for implementing new developments. COTI coin holders can then collectively vote for the best possible outcome to reach a decision based on the wisdom of the crowd.

What happens if the token price rises too high, thus dissuading usage?

We have built merchant hedging services and hedging marketplace to balance that.

What will remain in the initial equity of COTI? 

10% of all COTI tokens will be allocated to the founders, team, early backers and advisors.

Trust Chain

How does it work?

The Trust Score Servers analyze user data, user behavior, and network payment statistics to calculate a Trust Score for each COTI network participant. The Trust Score as a metric helps to rate participants according to their trustworthiness and contribution to the COTI network.

Each new transaction attaches to two previous transactions in our directed acyclic graph (DAG) ledger, which we’ve coined the Cluster. However, they are not attached randomly but are added in accordance with their respective Trust Scores. This means that a transaction with Trust Score 60 will most likely attach to a transaction with a Trust Score within a similar range. This is how we create a chain of transactions with similar Trust Scores or a Trust Chain. A transaction can be confirmed once the accumulated Trust Score of each transaction reaches the predetermined threshold.

How are Trust Scores calculated for new users when there are no public databases for reference?

A participant’s Trust Score is initially determined by a general questionnaire and document verification. Trust Scores update automatically according to a user’s payment history and Big Data collected by the network


How much do you estimate the total node compensation cost to be as a percentage of transaction volume?

We don’t have precise figures as of yet, but this information will be released in future iterations of the network.

Who can run initial Nodes in the network? 

Independent network users that have submitted a necessary questionnaire and KYC documents will be able to run Nodes.

What incentive do they have to do so?

Nodes earn fees for providing their services to the COTI network.

Full Nodes

Can Full Nodes be run by merchants? 

It is possible for a merchant to run their Full Node along with a customized wallet if they think it will provide a better experience for customers.

The whitepaper mentions PoW to deter spamming, will this increase the cost of the network?

COTI’s PoW model is unlike any other digital currency like Bitcoin. Low-to-zero fees will always be a cornerstone of the functioning of the COTI network.

DSP Nodes:

How will you safeguard the COTI network from Sybil attacks and collusion?

All DSP Nodes are responsible for identifying any potential double spends from Sybil attacks. Another possible attack can occur when a malicious party with a highly trusted account attempts to confirm transactions from another self-created account. The attacker may try to attach high trust transactions to the anonymous transactions to reach the confirmation threshold.

This attack, however, is impossible as anonymous accounts have low Trust Scores. Such transactions cannot be confirmed, as an account with a high Trust Score cannot confirm a transaction from a low trust account.


You mention in the whitepaper that fees will be set to zero and that Nodes can set a fee based on the quality of their service. What will be deemed quality service? 

All COTI network participants are incentivized for their honest and trustworthy conduct within the system. Quality service is deemed to be timely, accurate and equitable.

Why include a cap on fees?

It’s crucial that the COTI network remain accessible to all participants, with speed, scalability and low-to-zero costs always at the forefront.


Who are mediators, and how are they trained?

Mediators are an independent group of users from all around the world. Individuals who wish to register as mediators must satisfy specific requirements before being admitted to the mediator platform. Among other requirements, mediators must demonstrate relevant language proficiency and undergo an online assessment to determine they have the aptitude to perform the mediation tasks to a high standard. COTI endeavors to make mediation open to a broad group of people and will make available online training programs that can assist candidates in acquiring the requisite knowledge for contributing to the dispute resolution process effectively.

How much capital are they required to stake? 

We don’t have precise figures as of yet, but this information will be released in future iterations of the network.

Because capital is needed for PoS, how will you protect against rich pools of users influencing disputes or contributing to collusion? 

They have no incentive to do so as mediators are picked randomly and assigned to cases that they don’t pick nor do they know the participants in. More so, not just the size of the stake determines the winning participants.


This is a utility token, which the SEC is against. What risks do you face?

According to the legal opinions received, COTI does not classify as a security, and the sale of COTI coins to members of the public does not constitute a breach of any relevant regulations. COTI coins will be made available only to American subscribers who meet the “accredited investor” status. A thorough assessment will be undertaken by an external reputable US-based service provider for such applicants to meet compliance standards.

Can this be deemed money transmission as per the FICEN? What licenses are required for COTI to operate? 

We are in the process of obtaining licenses for the following:

  • Payments and money services. Such licenses enable COTI-powered merchants to accept payments in digital and fiat currencies.
  • Exchange and e-wallet services. Such licenses enable COTI to provide consumers and merchants with the ability to hold, exchange and transact in digital currencies.

We are also working in accordance to distributed ledger technology (DLT) regulations set forth by the Gibraltar Financial Services Commission (GFSC), as well as know your customer (KYC) and anti-money laundering (AML) guidelines.

BP execution

What is your go-to-market strategy? 

We’re building an entire ecosystem consisting of the COTI coin, wallet, exchange and debit card. We have also signed a partnership with, which will grant us access to thousands of merchants around the world by offering genuine value. Our merchant acquiring strategy is predicated upon providing the best possible solutions for merchants that need us the most across industries that face processing issues like travel, pharma, global e-commerce and more.

How will you scale? 

Our TrustchainTM base protocol is inherently scalable as it’s based on a DAG data structure. The higher the network participants, the faster the confirmation times.

How will you solve the typical chicken and egg problem of onboarding merchants in the beginning?

We currently have a partnership in place with that will grant us access to over 10,000 international merchants.


How will decentralized governance work? 

Our decentralized governance model will provide voting rights for executing changes in COTI’s base protocol and deciding future use cases of the COTI coin. Futarchy governance is one such methodology that utilizes a team of experts who work to define metrics for implementing new developments. COTI coin holders can then collectively vote for the best possible outcome to reach a decision based on the wisdom of the crowd.

Personal Reflection

What have your proudest moments been since you launched COTI?

Probably two moments:

  1. Being recognized by a CTO of a very famous DAG project as a very smart protocol
  2. Being recognized by a very famous banker as a good investible story

What have your biggest mistakes been?
Building an offshore R&D team…

What experiences can you share about doing an ICO?

You are going to need a lot of advisors. Pay the higher price and pick the best ones. A-players attract other A-players. B-players attract C-players.

COTI is a fascinating and ambitious project, what worries you the most?

So many things… I would hate for it not to achieve its full potential due to reasons we can’t control like market sentiments.

Payment systems

Why has VISA/Mastercard not yet been disrupted?

VISA/Mastercard is a traditional payments system that has been around for the past 40 years. It had regulatory backing, buyer-seller protections and trusted third party intermediaries that have enabled it to thrive more than ever over the past few decades. These sort of pillars have their own inertia. Consumers and merchants alike are taken over by the force of habit.

Nevertheless, third-party financial intermediaries have only driven up transaction costs due to rising transaction fees. Such payment methods also cause common issues experienced in cross-border e-commerce, such as chargebacks, false positives and low approval rates by credit card companies. Rolling reserve requirements for merchants are also a point of friction and drive down profits for global businesses. Some digital currencies like Bitcoin and others have tried to solve these shortcomings, but have missed the mark in terms of providing a use case for everyday payments. That’s where COTI comes in with its low-to-zero costs, instantaneity and buyer-seller protections, as well as regulatory and licensing frameworks.

How will VISA/Mastercard react once COTI gains traction? Can they tokenize themselves?

Credit cards won’t be disappearing anytime soon, but major providers will need to keep pace with the value proposition of many digital currencies.

How do you think merchants will react to this?

We believe the reaction will be a positive one. We have a lot to offer to merchants – from low-to-zero fees and low rolling reserve requirements to buyer-seller protections and hedging services.


Is your outlook bullish or bearish for 2018?

I would say bullish. Blockchain is here to stay.

COTI’s base layer protocol and API for merchants are both in progress. COTI has also been working on developing its exchange infrastructure and consumer wallet offering and on defining the mechanics of its Trust Scoring Mechanism and Mediation System. The exchange and the consumer wallet are approaching completion and will be put to work this year.

What are some of your favorite tech projects?

Small niched ones like Cognito Protocol and super sophisticated ones like GHOST

Are you worried about the scaling issues in the cryptomarket?

We have our grounds covered concerning scalability within the COTI network, so that will not create hiccups for us down the road. Many other digital currencies that operate on proof of work (PoW) systems are inherently non-scalable and will be faced with increased network congestion in the near term.


What is your vision for COTI in 2023?

By 2023 we envision that we’ll become the next generation digital payments network, as well as a processing solution for many other industries that are need of our base protocol.

Where will the cryptomarket be in the next five years? 

We think it will be booming, particularly for digital currencies that provide the best value proposition for their users. Scalability, instantaneity, low-to-zero fees and ease of use all within a regulatory framework will be crucial for a thriving cryptocurrency market.

About the author

CEO @ COTI Group

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