Colu, an Israeli provider of blockchain-based technologies, has built a version of Lightning Labs’ code that is compatible with Colored Coins. This would allow for the peer-to-peer (P2P) transfer of digital assets with effectively no verification time, a higher transactions-per-second (TPS) rate and almost no fees.
Colored Coins is an open source Bitcoin 2.0 protocol that enables developers to create digital assets on top of the Bitcoin blockchain. These can be used to issue financial assets and proofs of ownership, to store documents or to create smart contracts. Current projects leveraging the Colored Coins protocol include Mycelium, Swarm and DXMarkets.
The new version uses Lightning technology to transfer digital assets in payment channels and uses the Bitcoin blockchain as a settlement layer and dispute resolution mechanism that secures the assets.
In a new blog post released today, Colu’s Co-Founder and Vice-President, Mark Smargon, wrote:
“The decentralized nature of the Lightning protocol is an excellent choice for scaling Colored Coins because it provides the functionality of a true P2P transaction layer that doesn’t compromise security, and gives users control of their funds. Looking forward, we are excited about the possibility of being interoperable with all of the tools and services that adopt Lightning technology, as well as compatibility with other blockchains than Bitcoin as Lightning technology matures.”
The Lightning Network, a protocol for scaling and speeding up blockchains, was first proposed by Joseph Poon and Thaddeus “Tadge” Dryja well over a year ago. The payment layer utilizes Bitcoin’s basic programmable features and allows users to establish networked payment channels on top of Bitcoin. It promises to support a virtually unlimited number of off-chain transactions among users, at nearly no cost. Initially designed to solve some of the technical limitations of the Bitcoin blockchain, the Lightning Network protocol can be implemented on top of any blockchain.
Prior to launching Colu, founders Amos Meiri, David Ring and Mark Smargon had worked on the Colored Coins project since 2012.
The team is now working with Lighting Labs to build overlaying protocols to create native compatibility with the official Lightning code, Smargon said.
Meiri, Ring and Smargon launched Colu in 2014 to provide governments, businesses and consumers with the capabilities to create local digital currencies, and allow for the exchange of digital cash directly with one another.
Users engage via a mobile app, alongside a merchant dashboard containing comprehensive tools to manage transactions and discoverability features.
“Colu came about as a direct result of our previous venture, Colored Coins, which applies a blockchain digital-tag to assets, promoting decentralized control over the consumer transaction of goods,” Colu’s CEO and Co-Founder, Amos Meiri, told Bitcoin Magazine. “After further development and deployment of the service, feedback and usage data indicated that 60 percent of use cases for the technology were for local currencies. Realizing the gap in the market for a secure local currency solution, we developed the Colu of today, creating a channel … to build stronger urban economies and tight-knit communities through localized currencies. “
According to Meiri, local digital currencies in communities and cities can help “stimulate local growth, adding value to every dollar that is reintroduced to a local market, create jobs, strengthen socio-economic potential, encourage positive community action and improve the payment network infrastructure by making it accessible to real users.”
Despite the apparent potential, local digital currencies are still in their infancy when it comes to the general public’s understanding of the core benefits and the underlying technologies that make it possible, Meiri said.
Colu has already achieved significant milestones, having collaborated with fintech startup, Bitt, and the Central Bank of Barbados on the Barbadian Digital Dollar earlier this year, and getting established in Israeli cities like Tel Aviv through the Pishpesh Shekel project in the Jaffa area, and the Florentin Shekel project in Florentin, Israel.
One of the company’s latest achievements has been its debuts in Liverpool and the Camden area of London, a move that is part of Colu’s expansion plans to move into the European market through the U.K. before tapping into the U.S. market.
“Entering into new markets is a point of pride as we take Colu to the next level and establish the company as a world leader in open source payments and an innovator in blockchain technologies,” Meiri said.