NOTA White Paper

Abstract

A digital token backed by fiat currency provides individuals and organizations with a robust and decentralized method of exchanging value while using a familiar accounting unit.

The innovation of blockchains is an auditable and cryptographically secured global ledger.

Asset-­backed token issuers and other market participants can take advantage of blockchain technology, along with embedded consensus systems, to transact in familiar, less volatile currencies and assets.  

In order to maintain accountability and to ensure stability in exchange price, we propose a method to maintain a one-­to-­one reserve ratio between a cryptocurrency token, called USNOTA, and its associated real­world asset, fiat currency.

This method uses the XinFin Network (XDC) blockchain, Proof of Reserves, and other audit methods to prove that issued tokensare fully backed and reserved at all times.

Introduction

There exists a vast array of assets in the world which people freely choose as a store-­of-­value, a transactional medium, or an investment. We believe the XDC blockchain is a better technology for transacting, storing, and accounting for these assets.

Most estimates measure global wealth around 250 trillion dollars [1] with much of that being held by banks or similar financial institutions. The migration of these assets onto the XinFin Network (XDC) blockchain represents a proportionally large opportunity.

Cryptocurrencies were created as “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party” [2]. They created a new class ofdigital currency, a decentralized digital currency or cryptocurrency.

Some of the primary advantages of cryptocurrencies are low transaction costs, international borderless transferability and convertibility, trustless ownership, and exchange, pseudo­-anonymity, real-time transparency, and immunity from legacy banking system problems [3].

Common explanations for the current limited mainstream use of cryptocurrencies include volatile price swings, inadequate mass-market understanding of the technology, and insufficient ease ­of ­use for non-­technical users.

The idea for asset-pegged cryptocurrencies was initially popularized in the Bitcoin community by the Mastercoin white paper authored by J.R. Willett in January 2012 [4].

Today, we’re starting to see these ideas built being adapted. One should note that all crypto exchanges and wallets (like Coinbase or Bitfinex) which allow you to hold value as a fiat currency already provide a similar service in that users can avoid the volatility(or other traits) of a particular cryptocurrency by selling them for fiat currency, gold, or another asset.

Further, almost all types of existing financial institutions, payment providers, etc., which allow you to hold fiat value (or other assets) subsequently provide a similar service.

In this white paper we focus on applications wherein the fiat value is stored and transmitted with software that is open-­source, cryptographically secure, and uses distributed ledger technology, i.e., a true cryptocurrency.

While the goal of any successful cryptocurrency is to eliminate completely the requirement of trust, each of the implementations aforementioned either rely on a trusted third party or have other technical, market-based, or process-based drawbacks and limitations.

Our solution is a fiat-pegged cryptocurrency called NOTA.

All NOTA will initially be issued on the XDC blockchain via the XRC-20 Layer protocol and so they exist as a cryptocurrency token. Each NOTA unit issued into circulation is backed in a one-to-one ratio (i.e., one USNOTA is one US dollar) by the corresponding fiat currency unit held in deposit by NOTA. NOTA may be redeemable and exchangeable for the underlying fiat currency pursuant to NOTA’s terms of service or, if the holder prefers, the equivalent spot value in other cryptocurrencies.

Once a NOTA has been issued, it can be transferred, stored, spent, etc. just like any other cryptocurrency.

The fiat currency on reserve has gained the properties of a cryptocurrency and its price is permanently backed by the price of the fiat currency.

Our implementation has the following advantages over other fiat-pegged cryptocurrencies:

NOTA exist on the XDC blockchain rather than on a less developed or tested “altcoin” blockchain with its closed-source software running on centralized, private databases.

NOTA can be used just like Bitcoins, i.e., in a p2p, pseudo-anonymous, decentralized, cryptographically secure environment.

NOTA can be integrated with merchants, exchanges, and wallets just as easily as any other cryptocurrencies can be integrated.

NOTA inherit the properties of the XRC-20 Layer protocol which include: a decentralized exchange; browser-based, open­-source, wallet encryption; XDC-based transparency, accountability, multi­-party security and reporting functions.

NOTA employs a simple but effective approach for conducting Proof of Reserves which significantly reduces our counterparty risk as the custodian of the reserve assets.

NOTA issuance or redemption will not face any pricing or liquidity constraints. Users can buy or sell as any NOTA as they want, quickly, and with very low fees.

NOTA will not face any market risks such as Black Swan events, liquidity crunches, etc. as reserves are maintained in a one­-to-­one ratio rather than relying on market forces.

NOTA‘s one-­to-­one backing implementation is easier for non­-technical users to understand as opposed to collateralization techniques or derivative strategies.

At any given time, the balance of fiat currency held in our reserves will be equal to (or greater than) the number of NOTA incirculation.

This simple configuration most easily supports a reliable Proof of Reserves process; a process which is fundamental to maintaining the price-parity between NOTA in circulation and the underlying fiat currency held in reserves.

In this paper we provide evidence that shows exchange and wallet audits (in their current state) are very unreliable (i.e., flaws inProof of Solvency [6] methods) and instead propose that exchanges and wallets outsource the custody of user funds to us via NOTA.

Users can purchase NOTA from website or from any supporting exchange such as Bitrue which supports NOTA as a deposit and withdrawal method.

Users can also transact and store NOTA with any XRC-20 Layer enabled wallet like D’Cent. Other exchanges, wallets, and merchants are encouraged to reach out to us about integrating NOTA as a surrogate for traditional fiat payment methods.

We recognize that our implementation isn’t perfectly decentralized since NOTA must act as a centralized custodian of reserve assets (albeit NOTA in circulation exist as a decentralized digital currency).

However, we believe this implementation sets the foundation for building future innovations that will eliminate these weaknesses, create a robust platform for new products and services, and support the growth and utility of the XDC blockchain over the long run.  

Some of these innovations may include:

Mobile payment facilitation between users and other parties, including other users and merchants

Instant or near-instant fiat value transfer between decentralized parties (such as multiple exchanges)

Introduction to the use of smart contracts and multi-signature capabilities to further improve the general security process, Proof of Reserves, and enable new features.

Technology Stack and Process

Each NOTA issued into circulation will be backed in a one-to-one ratio with the equivalent amount of corresponding fiat currency held in reserves by NOTA.

As the custodian of the backing asset, we are acting as a trusted third party responsible for that asset.

This risk is mitigated by a simple implementation that collectively reduces the complexity of conducting both fiat and crypto audits while increasing the security, provability, and transparency of these audits.

NOTA Technology Stack

The stack has 3 layers, and numerous features. Here is a review of each layer.

1) The first layer is the XDC blockchain. The NOTA transactional ledger is embedded in the XDC blockchain as meta-­data via the embedded consensus system, XRC-20.

2) The second layer is the XRC-20 Layer protocol. It is a foundational technology that can:

a) Grant (create) and revoke (destroy) digital tokens represented as meta-­data embedded in the XDC blockchain; inthis case, fiat-­pegged digital tokens, NOTA.

b) Track and report the circulation of NOTA via https://explorer.xinfin.network/home and the XDC API.

c) Enable users to transact and store NOTA and other assets or tokens in a:

i. p2p, pseudo-­anonymous, cryptographically secure environment.

ii. open-­source, browser-­based, encrypted web-­wallet: XDC Wallet

iii. multi-signature and offline cold storage­ supporting system

3) In accordance with our terms of use, NOTA as the third layer is primarily responsible for:

a) Accepting fiat deposits and issuing the corresponding NOTA

b) Sending fiat withdrawals and revoking the corresponding NOTA

c) Custody of the fiat reserves that back all NOTA in circulation

d) Publicly reporting Proof of Reserves and other audit results

e) Initiating and managing integrations with existing XDC blockchain wallets, exchanges, and merchants

f) Operating the NOTA web­-wallet which allows users to send, receive, store, and convert NOTA conveniently.

Flow of Funds Process

There are five steps in the lifecycle of a NOTA:

Step 1 User deposits fiat currency into NOTA’s bank account.

Step 2 NOTA generates and credits the user's NOTA account or wallet. NOTA enter circulation. Amount of fiat currency deposited by user = amount of USNOTA issued to user (i.e., 10k US$ deposited = 10k USNOTA issued).

Step 3 Users transact with NOTA. The user can transfer, exchange, and store NOTA via a p2p open­source, pseudo-anonymous, XDC-based platform.

Step 4 The user deposits USNOTA with NOTA for redemption into fiat currency.

Step 5 NOTA destroys the USNOTA and sends fiat currency to the user’s bank account.

Users can obtain NOTA outside of the process aforementioned via an exchange or another individual.

Once a NOTA enters circulation it can be traded freely between any business or individual. For example, users can purchase NOTA from Bitrue, with more exchanges to follow soon.

The main concept to be conveyed by the Flow-of-Funds diagram is that NOTA is the only party who can issue NOTA into circulation (create them) or take them out of circulation (destroy them).

This is the main process by which the system solvency is maintained.

Proof of Reserves Process

Proof of Solvency, Proof of Reserves, real-time Transparency, and other similar phrases have been growing and resonating across the cryptocurrency industry.

Exchange and wallets audits, in their current form, are very unreliable. Insolvency has occurred numerous times in the XDC ecosystem, either via hacks, mismanagement, or outright fraud.

Users must be diligent with their exchange selection and vigilant in their use of exchanges. Even then, a savvy user will not be able to fully eliminate the risks.

Further, there are exchange users like traders and businesses who must always keep non-trivial fiat balances in exchanges. In financial language, storing value with a third party is known as the “counterparty risk”.

We believe it is fair to conclude that exchange and wallet audits in their current form are not very reliable.

These processes do not guarantee users that a custodian or exchange is solvent.  Although there have been great contributions to improving the exchange audit processes, like the Merkle tree approach [6], major flaws still remain.

NOTA‘s Proof of Reserves configuration is novel because it simplifies the process of proving that the total number of NOTA in circulation (liabilities) are always fully backed by an equal amount of fiat currency held in reserve (assets).

In our configuration, each USNOTA in circulation represents one US dollar held in our reserves (i.e., a one­-to-­one ratio) which means the system is fully reserved when the sum of all USNOTA in existence (at any point in time) is exactly equal to the balance of US$ held in our reserve.

Since NOTA live on the XDC blockchain, the provability and accounting of NOTA at any given point in time is trivial.

Conversely, the corresponding total amount of US$ held in our reserves is proved by publishing the bank balance and undergoing periodic audits by professionals.

Find this implementation further detailed below:

NOTA issues all NOTA via the XRC-20 Layer protocol. XRC-20 operates on top of the XDC blockchain and therefore all issued, redeemed, and existing NOTA, including transactional history, are publicly auditable via the tools provided at https:// explorer.xinfin.network/.

Let the total number of NOTA issued be denoted as NOTAissue and let the total number of NOTA redeemed under this asset ID be denoted as NOTAredeem. Let the total number of NOTA in circulation at any time be denoted as USNOTA.

USNOTA = NOTAissue - NOTAredeem

USNOTA = “Total Property Tokens”

NOTA has a bank account which will receive and send fiat currency to users who purchase or redeem NOTA directly with us.

Let the total amount deposited into this account be denoted as NOTAdepo and the total amount withdrawn from this account be denoted as NOTAwithd. Let the dollar balance of this bank account be denoted as USNOTA.

USNOTA = NOTAdepo - NOTAwithd

Each NOTA issued will be backed by the equivalent amount of currency unit (one USNOTA equals one US$). By combining the above crypto and fiat accounting processes, we conclude the “Solvency Equation” for the NOTA System.

The Solvency Equation is simply USNOTA = NOTAdepo

Every NOTA issued or redeemed, as publicly recorded by the XDC blockchain will correspond to a deposit or withdrawal of funds from the bank account.

The provability of USNOTA relies on the XDC blockchain as discussed previously and on several processes:

We publish the bank account balance on our website’s Transparency page.

Professional auditors will regularly verify, sign, and publish our underlying bank balance and financial transfer statement.

Users will be able to view this information from our Transparency Page.

For clarity, we’d like to acknowledge that the NOTA System is different than the NOTA web­-wallet in terms of Proof of Reserves. In this paper, we mostly focus on Proof of Reserves for the NOTA System; i.e., all NOTA in circulation at any point in time.

The NOTA wallet is a consumer facing web­-wallet operating on closed-source code and centralized servers. Conducting a Proof of Reserves for this wallet is fundamentally different than what we’ve outlined above for the NOTA System.

We’re planning the deployment of a PoR-­based transparency solution for the NOTA wallet. We believe it will be the most advanced PoR-system in existence today.

It’ll overcome almost all the challenges outlined in the appendix on this topic. Please remember, users can always secure NOTA through managing the private keys themselves or through XDC Wallet.

Implementation Weaknesses

We understand that our implementation doesn’t immediately create a fully trustless cryptocurrency system. Mainly because users must trust NOTA and our corresponding legacy banking institution to be the custodian of the reserve assets.

However, almost all exchanges and wallets (assuming they hold US$ or fiats) are subject to the same weaknesses.

Users of these services are already subject to these risks. Here is a summary of the weaknesses in our approach:

We could go bankrupt

Our bank could go insolvent

Our bank could freeze or confiscate the funds

We could abscond with the reserve funds

Re­-centralized of risk to a single point of failure

Observe that almost all digital currency exchanges and wallets (assuming they hold US$ or fiat) already face many of these challenges. Therefore, users of these services are already subject to these risks. Below we describe how each of these concerns are being addressed.

We could go bankrupt

In this case, the business entity NOTA would go bankrupt, but client funds would be safe, and subsequently, all NOTA will remain redeemable. Most security breaches on XDC businesses have targeted cryptocurrencies rather than bank accounts.Since all NOTA exist on the XDC blockchain, they can be stored by individuals directly through securing their own private keys.

Our bank could go insolvent

This is a risk faced by all users of the legacy financial system and by all exchange operators. NOTA currently has several accounts with banks whom are aware and confident that NOTA’s business model is acceptable. Additional banking partners are being established in other jurisdictions to further mitigate this concern.

Our bank could freeze or confiscate the funds

Our banks are aware of the nature of and are accepting of cryptocurrency businesses. They also provide banking services to some of the largest cryptocurrency exchanges globally. The KYC and AML processes we follow are also used by the other digital currency exchanges they currently bank. They have assured us we are in full compliance.

We could abscond with the reserve assets ­

The corporate charter is public as well as the business owners’ names, locations, and reputations. Ownership of the account is legally bound to the corporate charter. Any transfers in or out of the bank account will have the associated traces and are bound by rigid internal policies.

Re­centralization of risk to a single point of failure

We have some ideas on how to overcome this and we’ll be sharing them in upcoming blog and product updates. There are many ways to tackle this problem. For now, this initial implementation gets us on the right track to realize these innovations in following versions.

Main Applications

In this section we’ll summarize and discuss the main applications of NOTA across the XDC blockchain ecosystem and for other consumers globally. We break up the beneficiaries into three user groups: Exchanges, Individuals, and Merchants. The main benefits, applicable to all groups:

Properties of NOTA bestowed upon other asset classes

Less volatile, familiar unit of account

World’s assets migrate to digital assets and the blockchain

For Exchanges

Exchange operators understand that accepting fiat deposits and withdrawals using legacy financial systems can be complicated,risky, slow, and expensive. Some of these issues include:

Identifying the right payment providers for your exchange

Irreversible transactions, fraud protection, lowest fees, etc.

Integrating the platform with banks who have no APIs

Liaising with these banks to coordinate compliance, security, and to build trust

Prohibitive costs for small value transfers

Several days for international wire transfers to clear

Poor and unfavorable currency conversion fees

By offering NOTA, an exchange can relieve themselves of the above complications and gain additional benefits, such as:

Accept crypto­fiats as deposit, withdrawal or storage method rather than using a legacy bank or  payment provider

Allows users to move fiat in and out of exchange more freely, quickly, cheaply

Outsource fiat custodial risk to NOTA, ­ just manage cryptos

Easily add other fiat currencies as trading pairs to the platform

Secure customer assets purely through accepted crypto ­processes

Multi-­signature security, cold and hot wallets, HD wallets, etc

Conduct audits easier and more securely in a purely crypto environment

Anything one can do with cryptos as an exchange can be done with NOTA

Exchange users know how risky it can be to hold fiat currencies on an exchange. With the growing number of insolvency events, it can be quite dangerous. As mentioned previously, we believe that using NOTA exposes exchange users to less counterparty risk than continually holding fiat on exchanges. Additionally, there are other benefits to holding NOTA, explained in the next section.

For Individuals

There are many types of individual cryptocurrency users in the world today. From traders looking to earn profits daily; to long term investors looking to store their Bitcoins securely; to tech-­savvy shoppers looking to avoid credit card fees or maintain their privacy; to philosophical users looking to change the world; to those looking to remit payments globally more effectively; to those in third world countries looking for access to financial services for the first time; to developers looking to create new technologies; to all those who have found many uses for cryptocurrency. For each of these individuals, we believe NOTA are useful in similar ways,like:

Transact in US$ or fiat value, pseudo-­anonymously, without any middlemen or intermediaries

Cold store US$ or fiat value by securing one’s own private keys

Avoid the risk of storing fiat on exchanges ­ move crypto-­fiat in and out of exchanges easily

Avoid having to open a fiat bank account to store fiat value

Easily enhance applications that work with other cryptocurrencies to also support NOTA

Anything one can do with other cryptocurrencies as an individual one can also do with NOTA

For Merchants

Merchants want to focus on their business, not on payments. The lack of global, inexpensive, ubiquitous payment solutions continues to plague merchants around the world both large and small. Merchants deserve more. Here are some of the ways NOTA can help them:

Price goods in US$ or fiat value rather than Bitcoin (no moving conversion rates or purchase windows)

Avoid conversion from Bitcoin to US$ or fiat and associated fees and processes

Prevent charge backs, reduce fees, and gain greater privacy

Provide novel services because of ­crypto-fiats feature such as Microtipping, gift cards, more

Anything one can do with other cryptocurrencies as a merchant one can also do with NOTA

Future Innovations

Multi­sig and Smart Contracts

Proof of Solvency Innovations

Conclusion

NOTA constitutes the first XDC-­based fiat-­pegged cryptocurrency in existence today. NOTA is based on the XDC blockchain, the most secure and well­-tested blockchain and public ledger in existence. NOTA are fully reserved in a one-­to-­one ratio, completely independent of market forces, pricing, or liquidity constraints. NOTA has a simple and reliable Proof of Reserves implementation and undergoes regular professional audits. Our underlying banking relationships, compliance, and legal structure provide asecure foundation for us to be the custodian of reserve assets and issuer of NOTA. Our team is composed of experienced and respected entrepreneurs from the XDC ecosystem and beyond.

We are focused on arranging integrations with existing businesses in the cryptocurrency space. Businesses like exchanges,wallets, merchants, and others.

Please reach out to us to find out more.

Appendix

Audit Flaws: Exchanges and Wallets

Here is a summary of the current flaws found in technology­-based exchange and wallet audits.

In the Merkle tree [6] approach users must manually report that their balances (user’s leaf) have been correctly incorporated in the liability declaration of the exchange (the Merkle hash of the exchange’s database of user balances).

This proposed solution works if enough users verify that their account was included in the tree, and in a case where their account is not included this instance would be reported.

One potential risk is that an exchange database owner could produce a hash that is not the true representation of the database at all; it hashes an incomplete database which would reduce its apparent liabilities to customers, making them appear solvent to a verifying party.

Here are some scenarios where a fraudulent exchange would exclude accounts and:

“Bitdust” Accounts: Inactive or low activity accounts would lower the chance that an uninterested user would check or report inconsistencies. In some cases, these long­tail accounts could represent a significant percentage of the exchange’s liabilities.

“Colluding Whales” Attack: There is evidence that large cryptocurrency traders are operating on various exchanges and moving markets significantly. Such traders need to have capital reserves at the largest exchanges to quickly execute orders. Often, traders choose exchanges that they “trust”. In this way they can be assured that should a hack or liquidity issue arise; they have priority to get their money out. In this case, the exchange and trader could collude to remove the whales account balance from the database before it’s hashed.

Key Rental Attack: To pass the audit, a malicious exchange could rent the private keys to bitcoins they do not own. This would make them appear solvent by increasing their assets without any acknowledgment that those funds were loaned to them. Likewise, they could “borrow” fiat currency to do the same.

There are more attacks not discussed here.

Reaching Statistical Significance (reporting completeness): Even outside of these three attack vectors, a database that has been manipulated may never be detected if a sufficient number of users are not validating balances. The probability of getting 100% of the users to verify balances is likely zero, even with proper incentivization structure for users to verify their balances. Therefore, auditors would need statistical tools to make statements about the validity of an exchange’s database based on sampling frequency, size, and other properties.

Currently users have no way to receive compensation by legal means in case something goes wrong with the exchange. For example,when Mt.Gox closed operations, many users might not have independently recorded their account balances (prints screens,signed messages to themselves, etc.) in a way that could conclusively prove to law enforcement that this exchange’s I.O.U’s actually existed. Such users are at the mercy of the exchange to somehow publish a record of that hash tree or original database.

The proposed structure in which these audits would be performed still contains some subtle but important flaws.  In particular, the data reporting (hash tree) on the institution’s website gives no guarantee at all to users, as a malicious exchange could publish different states or balances to different groups of users, or retroactively change the state. Thus, it is fundamental to publish this data through a secure broadcast channel, e.g., the XDC blockchain.

Privacy is a barrier to entry for the adoption of an automated or open auditing system. While some progress has been made towards better privacy there is no perfect solution yet. Further, to build up an accurate user verified liability space, these users will have to report account balances with the exchange and Bitcoin addresses. Some users likely would not report this information regardless of the incentive, therefore providing cryptographically secure privacy whilst obtaining the reporting goal is paramount.

Time Series: The Merkle tree hash is a single snapshot of the database at a single point in time. Not having a somewhat continuous time series of the database opens significant attack vectors. Additionally, a time series of user reported information would also be required for piecing together the history of any reported incidents of fraud.

Trusted Third Parties: All of the current exchange audits have relied on some “reputable” trusted third party to make some type ofverification. In the Coinbase audit [7], that was Andreas Antonopoulos, in the Kraken audit [8], that was Stefan Thomas. If we absolutely must rely on a trusted third party, then only the highest audit standards and procedures should ensure this weaknessis fortified.

Limitations of existing fiat­pegging systems

Here’s a list of some of the common drawbacks and limitations of existing fiat-pegging systems.

The systems are based on closed­-source software, running on private, centralized databases, fundamentally no different than PayPal or any other existing mass­-market retail or institutional asset trading, transfer, or storage system.

Decentralized systems that rely on altcoin blockchains which haven’t been stress­tested, developed, or reviewed as closely as other blockchains, like XDC.

Pegging processes that rely on hedging derivative meta-­assets, efficient market theory, or collateralization of the underlying asset, wherein liquidity, transferability, security, and other issues can exist.

Lack of transparency and audits for the custodian, either crypto, fiat, or relating to their own internal ledgers (same as closed-source and centralized databases).

Reliance on legacy banking systems and trusted third parties (bank account owners) as a transfer and settlement mechanismfor reserve assets.

Market Risk Examples

In the collateralization method, market risk exists because the price of the asset being used as collateral can move in an adversedirection to the price of the asset it’s backing or pegging. This would cause the total value of the collateral to become less than the total value of the issued asset and make the system insolvent.

This risk is mitigated by the custodian closing the position before this happens; that is, when the collateral price equals thepegged asset price then the collateral is liquidated (sold on the open market) and the position is closed. A great approach, with merit, and used in many liquid markets across the traditional banking and financial markets.

However, as we saw from the global financial crisis, situations can arise in which the acceleration of such events causes a “liquidity crunch” and thus the collateral is unable to be liquidated fast enough to meet trading obligations, subsequently creating losses.With the cryptocurrency markets being so small and volatile, this type of event is much more likely.

Additionally, the overall approach suffers from other liquidity and pricing constraints since there must be a sufficient supply of users posting collateral for the creation of the pegged­ assets to exist in the first place.

In the derivatives approach, the price of the asset is pegged through entering one of several derivatives strategies, such as: swap strategies, covered and naked options strategies, various futures, and forwards strategies. Each strategy has their own strengths and weaknesses, the discussion of which we won’t engage in here.

To summarize, each of these pegging processes themselves have similar “market risk” characteristics as the aforementioned collateralization method. It should be noted that the two methods are not mutually exclusive and often paired in a specific trading, hedging, or risk management function at legacy system financial institutions.

Finally, we that believe some combination of the above approaches may become a secure, reliable, and generally risk-­free processfor backing or pegging assets; however, at this point in time, this is not a direction we feel is feasible to take to ensure liquidity and price stability.

Further, we believe that a reserve­-based approach will always be in existence and complement these other approaches as the entireindustry grows. As advances in technology continue, we will evaluate and incorporate any benefits available while maintaining the guarantee of 100% redeemability.

Legal and Compliance

NOTA is a subsidiary, a project and a trademark wholly owned by EC Assets LLC.

NOTA is concluding a principal–agency agreement with the exchanges NOTA with cooperating with. According to these agreements, the exchange will provide anti­money laundering compliance work and customer due diligence procedures as agent for NOTA as principal.

Through these and other measures, NOTA is undertaking customer due diligence, record­keeping, and reporting procedures consistent with U.S. law and laws of multiple other jurisdictions.

NOTA currently has accounts with traditional banks which are aware and confident that NOTA’s business model is acceptable.

These banks are satisfied with our processes and our business operating in accordance with their respective banking regulations,as all the banks had been requested to check this with their own legal, compliance and head office before opening accounts. NOTA is fully committed to have a compliant operation and to provide the maximum level of comfort to our banking partners here.

In addition, these banks have worked and are working with other blockchain based businesses.

Glossary of Terms

Digital currency

As defined by http://en.wikipedia.org/wiki/Digital_currency

Stablecoin

As defined by https://en.wikipedia.org/wiki/Stablecoin

Cryptocurrency or decentralized digital currency

Any type of cryptocurrency that is open­-source, cryptographically secure, and uses a distributed ledger. See:http://en.wikipedia.org/wiki/Cryptocurrency

Real­world currency, or fiat currency, or national/sovereign currency

All types of currency that are not cryptocurrencies as defined above.

Cryptocurrency system

A collection of software and processes primarily created to enable the existence of a cryptocurrency.

Legacy financial system

Any financial system that is not a cryptocurrency system.

Asset-­backed or pegged cryptocurrency

Any cryptocurrency whose price is pegged to a real­world asset, i.e., it’s not a “utility­backed” cryptocurrency.

NOTA

A single unit (or multiple units) of fiat-­pegged cryptocurrency issued by NOTA

USNOTA

A single unit of crypto­-US$ issued by NOTA

TUSNOTA

Collective amount of USNOTA in circulation at any point in time.

NOTA System

Collectively refers to all process and technologies that enable NOTA to exist

Proof of Reserves:

The process by which the issuer of any asset­-backed decentralized digital token, cryptographically or mathematically proves that all tokens that have been issued are fully reserved and backed by the underlying asset.

References

[1]  

https://www.thefinancialist.com/wp­content/uploads/2012/10/2012­GlobalWealthReport­.pdf

[2]  

http://www.bitcoin.org/bitcoin.pdf

[3]  

http://www.deloitte.com/assets/DcomUnitedStates/BitcoinTheNewGoldRush

[4]  

https://github.com/mastercoin­MSC/spec

[5]  

http://unenumerated.blogspot.com/2005/12/bit­gold.html

[6]  

https://iwilcox.me.uk/2014/proving­bitcoin­reserves

[7]  

http://antonopoulos.com/2014/02/25/coinbase­review/

[8]  

http://www.coindesk.com/krakens­audit­proves­holds­100­bitcoins­reserve/