Digix and Coinify partner to create Ethereum-based crypto asset trading platform

Singapore digital asset company Digix   and Danish Bitcoin payment processors   Coinify   The collaboration has created a crypto asset trading platform based on the Ethereum platform that combines the functionality of Bitcoin with physical assets such as gold. According to Digix, the platform will soon add diamond assets.

Initially, Digix experimented with the concept of colored coins, but later found that this solution was not feasible because it required the consumption of Bitcoin and required a separate block explorer to view transaction history.

Kai Cheng Chng   Digix CEO and co-founder of the company told IBTimes:

“The longer the blockchain is, the slower it is to verify because you have to browse all the transaction records. So you need a centralized institution to store these transaction records, otherwise it is difficult to process the data.”

“We later tested Counterparty Coin, but we also encountered some problems. Augur, a prediction market built on the Ethereum platform, also encountered similar problems as us.”

Kai pointed out that it takes an average of 14 to 17 seconds to confirm a transaction using the Ethereum platform, while it takes at least 10 minutes using the Bitcoin network. At the same time, the technical solution used by Bitcoin is off-chain, which reduces security and leads to centralization issues.

Kai explained how the new system works:

When people use Bitcoin to buy gold, they need to issue a certificate to the Ethereum blockchain. A process called "asset agreement proof" will detect this certificate recording the buyer's gold bar and upload it to the InterPlanetary File System (IPFS), which will eventually be permanently imprinted on the network.

The second layer of the protocol is that the file needs to be hashed to a fixed byte length. Each entity on the chain must privately sign the blockchain using a digital key to recognize these certificates.

Smart Contracts

"Every entity, from the vendor to the independent auditor to the custodian, has to sign off on these documents to make sure they are 100 percent correct."

The second layer of the protocol is where the “smart contracts” run. This is where you can exchange all of your assets for tokens. Think of this smart contract like a digital vending machine, where you put a certain amount of valid input into it, then you will get some return.

“So in this case, when you put the certificate of proof of asset into this smart contract, what you will get is digital gold tokens. For example, if you have a certificate for a 100-gram gold bar, and you put it into our smart contract built on the Ethereum platform, and it is tested and proven to be valid, then you will get 100 Digix tokens.”

“The process is fully automated and decentralized. Once we deploy the certificate to the Ethereum network, it will exist forever. We use public infrastructure to store all transaction history and data, so users don’t have to worry about hackers breaking into our system to tamper with any transaction records or steal tokens.”

Kai said that the digital gold assets, or gold tokens, running on the blockchain can be traded peer-to-peer on EtherEx, or through crypto exchanges Poloniex, Kraken and Cryptsy.

Mark Højgaard CEO of Coinify, said:

“We are always looking for new ways to promote the adoption of digital currencies. In this case, we looked to Digix, as an application platform built on blockchain technology, and Coinify, as a Bitcoin payment processing service, as a perfect match.”

Morten Bebe Sales Manager at Coinify, said:

“Through this partnership, Coinify will enable the global Bitcoin community to purchase Ethereum digital assets using Bitcoin; while Digix’s fraud-proof and decentralized gold asset and token trading platform built on the Ethereum platform will help promote the development of the crypto ecosystem.”

Original article: http://www.ibtimes.co.uk/digix-coinify-marry-bitcoin-ethereum-gold-based-digital-assets-1525790
By Ian Allison
Translator: printemps
Editor: printemps
Source (translation): Babbitt Information