Coinffeine: The Next-Gen Bitcoin Exchange

Coinffeine: The Next-Gen Bitcoin Exchange

Coinffeine is a new decentralized, peer-to-peer Bitcoin exchange based out of Spain. The company’s service operates trades in over 70 countries worldwide. Founded by four developers and software engineers the project has robust experience and talent. The business is pioneering the protocol to allow users exchange Bitcoin without a middle man. Customers can exchange anonymously with strong security on the exchange, with absolutely no third party or centralization.

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“Coinffeine is the next-gen bitcoin exchange, with a dramatically different approach than traditional exchanges. We exploit the full potential of the bitcoin protocol to give you the most secure, private and reliable platform in the market.”

Screen-Shot-2014-03-02-at-1.16.28-PMIn the future Coinffeine plans on creating technology to secure exchange features such as futures, and derivatives. The company was invested in by the venture capital firm Bankinter, a banking and financial institution from Spain. The spanish bank was the first in its region to invest in a Bitcoin service as part of its Entrepreneurship Program from May of 2013.

The exchanges founders Alberto Gomez Toribio and Sebastián Ortega spoke with Bitcoin.com about its unique exchange and how being decentralized it offers a whole new market.    

Bitcoin.com: Can you give our readers a description of what Coinffeine is?

Coinffeine: Coinffeine is a decentralized bitcoin exchange. It is powered by a exchange algorithm based on game theory to allow its users to exchange bitcoins for FIAT in a zero-trust scenario. The software is a desktop application that resembles a traditional exchange. Each user submits his or her positions to the order book. In the case of having a cross, an exchange  between the buyer and seller peers starts.

“Decentralized exchanges follow the same principles as the Bitcoin network. In Coinffeine, bitcoins are never deposited in any centralized service: they are under the user’s control in his or her local wallet at all times.”

— Sebastián Ortega

BC: Why do you believe there is a need for decentralized exchanges?

Coinffeine: Decentralized exchanges follow the same principles as the Bitcoin network. In Coinffeine, bitcoins are never deposited in any centralized service: they are under the user’s control in his or her local wallet at all times. Many centralized exchanges have experimented issues and security breaches that caused their customers to lost money. Coinffeine decentralization also means that end-users exchange among themselves without the intervention of a company. That is something unaffected by most Bitcoin regulations.

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BC: If decentralized exchanges advance in the market do you believe there will be some who will still use centralized exchanges?

Coinffeine: Surely! The drawbacks of centralization have different impact depending on user needs. Perhaps occasional users who exchange little amounts of bitcoins under friendly regulations would be willing to accept the centralized model. By contrast, those who are heavily affected by very restrictive laws and those who are concerned about losing control over their bitcoins will be predisposed to use Coinffeine instead.

BC: How is the Bitcoin scene and adoption in Spain?

Coinffeine: There is a lively Bitcoin user community in Spain. We had some enthusiasts that even drive 200 miles just to attend our beta testing program keynote. There was a very interesting initiative known as Calle Bitcoin , Spanish for “Bitcoin Street”, which brought Bitcoin to local shops in Madrid.

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BC: How many people are helping the development of Coinffeine?

Coinffeine: Apart from our highly talented team (developers, UX, media…), we received support by several bank companies. We were the first Bitcoin company to be invested by a Spanish bank (Bankinter). Also there is a lively community of enthusiasts who were testing the software from the early stages including some popular names as Mike Hearn or Félix Moreno.

“We believe one of the key points of Bitcoin is its distributed nature. And one the main drawbacks of the current exchange services start-of-the-art  is precisely their centralization. Coinffeine is here to bring the decentralization paradigm to the Bitcoin exchange world.”— SEBASTIÁN ORTEGA

BC: How does Coinffeine work for its users?

Coinffeine: Our exchange algorithm is based on game theory and some Bitcoin features as multi-sign transactions or micropayment channels. Each peer makes a deposit with a small amount of bitcoins in a multi-sign transaction. For each deposit, a time-locked refund transaction is created to ensure that funds can be recovered in case of failure. Then, a micropayment channel is established between buyer and seller. On each round, a small amount of fiat is transferred using a payment processor (OkPay, PayPal, etc). Then, the corresponding amount of bitcoins are transferred through the channel. If one of the peers refuses to transfer her part, she would lose her deposit. That incentive makes her proceed with the exchange as expected.

BC: Can users be anonymous with your exchange?

Coinffeine: Absolutely. No user account is needed to operate in Coinffeine. Nevertheless, since the user wants to send or receive fiat to or from other users, a payment processor account is needed. You are as anonymous as the fiat money system allows.

BC: Coinffeine is distributed like BitTorrent can you explain this?

Coinffeine: In BitTorrent, users offer the files they are sharing and the files they demand to download. Then, the client software supported by the P2P network matches offer and demand, sending offered files to other peers and receiving demanded files from others.

Coinffeine operates a similar way. Users publish their orders to the distributed order book, including bids (demand) and asks (supply). Then, the client software and the P2P network matches bid and asks, sending and receiving bitcoins using the exchange algorithm described above.

“Perhaps occasional users who exchange little amounts of bitcoins under friendly regulations would be willing to accept the centralized model. By contrast, those who are heavily affected by very restrictive laws and those who are concerned about losing control over their bitcoins will be predisposed to use Coinffeine instead.”

— SEBASTIÁN ORTEGA

BC: What’s the overall end mission when it comes to providing service for Coinffeine?

Coinffeine: We believe one of the key points of Bitcoin is its distributed nature. And one the main drawbacks of the current exchange services start-of-the-art  is precisely their centralization. Coinffeine is here to bring the decentralization paradigm to the Bitcoin exchange world.

The decentralized exchange intends to do just that by offering its beta services world wide. With this form of release the exchange has been welcoming feedback concerning its user interface. Coinffeines first actual release we are told is coming soon. The crypto environment will also welcome its first decentralized Bitcoin exchange as many centralized services have constant points of failure. Coinffeines aims to change the paradigm.

What do you think of decentralized exchanges? Let us know in the comments below.


Images courtesy of Coinffeine, Shutterstock, and Redmemes