TL;DR- Coti has solid backing and investment, but has some major red flags with decentralization and privacy. If these things don’t bother you, then Coti could be a good investment. It’s partnership with Cardano’s Djed project might just be enough to take it to the moon.
What’s a ‘good’ investment, anyway?
So much of what makes an investment ‘good’ is situational. What is your investing time horizon? Are you planning to buy and hold for 20 years? Or is it Lambo or food stamps, you’re going all in? How much risk are you willing to handle? Do you already have f*** you money and you’re cool to YOLO into some wild trades? Or are you the head of a family of five living off of one income? You get the point.
My crypto strategy
Not financial advice- but my investing strategy has been to keep at least 60-70% of my portfolio in ‘HODL’ mode with Ethereum and Bitcoin. If you look at various bull runs over the years, the coins in the top 10 have changed constantly- except for Bitcoin and Ethereum. Crypto is risky enough as it is- I don’t mind being boring and keeping the majority of my holdings in BTC/ETH.
The remaining 30-40% of my portfolio is where I’m on the hunt for altcoins and bigger returns and more risk. This works for me because I’m in my mid-30s and retirement is still a long way off. This is where I start evaluating projects like Coti. If I choose the right alts and they deliver great gains- I take some of those gains and throw them into the HODL portfolio. Anyway, we’re here to talk about Coti.
What is Coti?
The COTI acronym stands for Currency of The Internet. Respectable enough, eh? COTI is set to work on the Cardano network. Coti was founded in 2017 by Samuel Falkon (cool name) and David Assaraf. The two quickly brought in Shahaf Bar Geffen as CEO and founded the Coti group, a Tel-Aviv based for profit. After the project received around $20 million in funding, the Coti mainnet went live in 2019.
The promise of Coti
The first crypto that’s able to perfectly solve the following three things will dominate in the future:
- Entirely decentralized
- Can handle extremely high transaction volumes
- Is secure and can’t be hacked or manipulated
Coti’s best promise is to handle the second item on this list- high transaction volumes. If you’ve traded Bitcoin or even Ethereum, you know how painstakingly slow those networks can be to confirm transactions. Isn’t this stuff supposed to be better than the legacy financial system?
Coti can to handle up to 100,000 transactions per second using a ‘proof of trust’ algorithm. Each node on the network has a trust core that improves which each transaction correctly reported and decreases with each transaction incorrectly reported.
For reference, big credit card companies like Visa can field 1,500-2,000 transactions per second on its network. You know when you have your card in the card reader when you’re checking out at the grocery store? That wait time would be decreased with a faster network and more transactions per second.
Coti’s tokens exist across multiple platforms- Coti does have its own native token, but it also exists on the Ethereum platform as an ERC-20 token and on the Binance Smartchain as a BEP20 and BEP2 token. It’s estimated that the vast supply (90%+) of Coti’s tokens are ERC-20 or Binance Smartchain tokens. This makes sense, since the main way retail investors can get access to Coti is through exchanges, and those exchanges hold the ERC-20 and BEP20 versions of the token.
If you’re look for the true native Coti token, set up an account on KuCoin and get it funded. KuCoin has no KYC and gets you access to tons of exotic altcoins.
Coti has a max supply of 2 billion tokens, with about 1 billion tokens already released. The remaining billion tokens will be released steadily between now and 2032.
This gives us an annual inflation of about 6%, which isn’t half bad compared to other tokens like Algorand. This isn’t quite as good as Bitcoin- which already has extremely low (~2%) inflation and won’t have any inflation after 2028.
How is COTI able to handle up to 100,000 transactions per second? There’s only one node handling all the transactions. If you check this video you’ll see that there are 8 nodes processing transactions but only one ‘full’ node. This goes against the crypto creed and web 3.0: that everything needs decentralization to permit any one actor from becoming too powerful.
KYC with Coti
In order to use COTI, customers must go through with the full Know-Your-Customer process, which I find terribly annoying and counter to what crypto is supposed to be. The whole purpose of cryptocurrency is to democratize finance. An important feature that makes this possible is the fact that crypto is trustless. This basically means that a crypto- Ethereum, say- doesn’t give a s*** who you are. It doesn’t need an address or proof of ID or a credit history. If you need a wallet, you get one and start transacting with it.
COTI abandons this feature by requiring a bunch of information from all its users. I see this as a major turn off to investors and a barrier to entry to people who may benefit from using COTI.
Much how the Ethereum has USDT as a stablecoin on its blockchain, Cardano will have Djed as a stablecoin on its blockchain. COTI will be the investment vehicle that accredited investors can use to provide collateral for the Djed project (with a nice return, of course).
Coti pumped with other alts in the February-May 2021 bull market, slightly before experiencing a ~70% drop. However, Q3 2021 saw Coti’s price increase back to all time highs ($0.65+) with announcements of Coti’s partnership with Cardano for the Djed stablecoin project.
If actual release of these features can still happen while we’re in the bull run here, I could see Coti reaching $2 or more. Otherwise, I think it may be a while before we see some returns that could offset the risks of Coti’s KYC and centralization issues.
There are so many good crypto projects out there that I haven’t yet been convinced that COTI is right for my portfolio. I love returns, but am still a crypto idealist- and I don’t like the KYC and centralization aspects. Still, the project has good funding and a smart team. And that’s plenty to be dangerous.