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  • Coinffeine - How It Works

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    Bob wants to buy 1 BTC from Sam for $1000. They are paired through Coinffeine but need to exchange the assets without trusting each other. To facilitate the trustless exchange, both Bob and Sam deposit some BTC as a guarantee. The exchange then occurs in predefined steps, with the deposits ensuring neither party can cheat without losing their deposit. If Bob tries to cheat, he forfeits his deposit and gets no money. The exchanges continue until both parties have what they wanted, and then the deposits are returned.

    Original Description:

    A simple overview of how Coinffeine works.

    Original Title

    Coinffeine- How It Works

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    Bob wants to buy 1 BTC from Sam for $1000. They are paired through Coinffeine but need to exchange the assets without trusting each other. To facilitate the trustless exchange, both Bob and Sam deposit some BTC as a guarantee. The exchange then occurs in predefined steps, with the deposits ensuring neither party can cheat without losing their deposit. If Bob tries to cheat, he forfeits his deposit and gets no money. The exchanges continue until both parties have what they wanted, and then the deposits are returned.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    13 views9 pages

    Coinffeine - How It Works

    Uploaded by

    eafdeafd123
    Bob wants to buy 1 BTC from Sam for $1000. They are paired through Coinffeine but need to exchange the assets without trusting each other. To facilitate the trustless exchange, both Bob and Sam deposit some BTC as a guarantee. The exchange then occurs in predefined steps, with the deposits ensuring neither party can cheat without losing their deposit. If Bob tries to cheat, he forfeits his deposit and gets no money. The exchanges continue until both parties have what they wanted, and then the deposits are returned.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 9

    How it works

    Lets say that Bob is interested in buying 1 BTC for $ 1000 to have a simple example.

    At the same time, Sam is interested in selling at that price

    Then, they get paired by the Coinffeine network

    But, how can they do the interchange without trusting each other?
    $ 1000 1 BTC

    1.3 BTC

    0.3 BTC

    The trick: apart from the money to be exchanged Bob and Sam will have some bitcoins to be deposited as a guarantee

    The first step is to create such deposits simultaneously using the properties of bitcoin
    $ 1000 1 BTC

    deposits

    1.3 BTC

    0.3 BTC

    Then, value is interchanged in n predefined steps

    deposits

    Then, value is exchanged in n predefined steps

    deposits

    If one of them, for example Bob, tries to cheat on a round of exchanges...

    <
    crime doesnt pay

    deposits

    he wont get his deposit back so he cant make any money out of this

    deposits 1.3 BTC Thanks stranger! $ 1000

    My pleasure 0.3 BTC

    The exchanges continue until Bob has the bitcoin and Sam has all the fiat And finally, they get back their deposits

    Coinffeine
    A deeper, technical explanation can be found at the project wiki

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