Prakash Pandey

Tradebits W H I T E PA P E R With  from the people at Tradebits The digital marketplace of the future V1.1 IMPORTANT: You must read and agree to the disclaimer attached to this whitepaper in full before reading this whitepaper. This disclaimer applies to all information provided to you by Tradebits B.V. (hereinafter: “Tradebits”). 2 Table of contents Abstract 7 The Opportunity Here to Stay 12 Market Size and Potential 12 Current Challenges 14 Trust/Regulation 14 Reliability/Stability 15 User Experience 17 The next 100 million users The Tradebits Vision User Experience 17 20 21 Customer Service 21 Customer Focus 22 Portfolio Centric 22 Multilingual 24 Mobile Experience 24 Social Trading 25 Business model 26 Transaction Fees 26 Buyback Program 27 Trust/Regulation 3 11 29 Policies 29 Security 30 User Level 30 Platform Level 31 Blockchain Level 31 Organizational Level 33 Tradebits Ecosystem 34 Tradebits Store 34 Users 34 Developers 34 API Lifestyle applications 36 Loyalty applications 36 Education applications 36 The Tradebits Exchange Overview of Platform 38 39 Technology 41 Reliable 42 Open Source 42 Decentralized 42 Transactor 43 The XBITS Token / ICO 4 35 48 Introduction 49 The XBITS Token 49 Purpose and Usage 49 Details & Supply 50 Use of Proceeds 51 Marketing 52 Liquidity 53 Ex Fund 53 Vesting Schedule 53 Rewards Program 54 Token Support 55 Company Roadmap 58 Team 58 Risks 61 Security 62 Compliance 62 Competition 63 Execution 63 Conclusion Disclaimer 5 57 64 66 For the vast majority of crypto traders, crypto trading is not about market analysis; but rather about opportunities to profit and say ‘see...I was right’ - Waseem Sadiq CEO, Tradebits Abstract 7 The inception of digital currencies can be traced back to the 1980s when David Chaum created the first cryptographic protocols and a digital currency called DigiCash. Chaum’s ideas for secure digital currencies paved the way for many of our modern cryptographic protocols. In late 1998 two significant inventions – hashcash and bit gold – introduced the concepts of chained proof of work and Byzantine fault-tolerance, forming the basis for what was to come. Bitcoin, the world’s first real digital currency, was introduced in 2008, marking the birth of the global digital economy as we know it. Since the launch of bitcoin, over 1500 cryptocurrencies have been introduced into the market with a combined value of over $470 billion. Bitcoin, which began life at $0.008 in 2010, is expected to reach $50,000 by the end of 2018. It is estimated that the global cryptocurrency market will be valued at over $1 trillion in 2018 and over $5 trillion by 2022. At the center of the fast-paced global digital currency ecosystem lies the lifeblood of the market -- the cryptocurrency trading platform -- where people buy, sell and trade digital currencies around-the-clock. Plagued by central intermediaries, the commercial trading platforms available today are firstgeneration designs, built mostly by tech enthusiasts with varying degrees of technical adeptness, and fraught with bottlenecks, downtime, losses, hacks and clumsy user interfaces. To make matters worse, when volatility hits, exchanges are sometimes left with little choice but to suspend trading and new user registrations while patching their outdated platforms. This litany of problems on the exchanges gives users little faith in the systems that should, at minimum, provide safe, secure and seamless trading. 8 Fast forward a few years into the future. It is estimated that around 1% of the world (~50M users) currently own and trade cryptocurrencies. In November 2017, Coinbase alone, the global market’s largest bitcoin brokerage and wallet platform, served more than 13 million active users. Given the current exponential growth rate of digital currencies, analysts expect the number of cryptocurrency users to reach 200 million by 2024, a saturation point where the vast majority of investors and casual consumers will embrace digital currency as a trusted store of value and exchange. Early in the evolution of cryptocurrency, no one foresaw that individual exchanges would be hammered with over 250,000 new user registrations in a single day, and daily trading volumes would reach the same activity levels as the New York Stock Exchange. And yet we have no choice today but to rely on first-generation technologies that were designed for a different time. If today’s exchanges can’t handle current demand, how can they possibly be expected to handle the flood of new users and transactions that will come as the market continues its meteoric rise? With unbridled market growth ahead, trading tools and technologies must change to meet unprecedented demand and lower levels of user sophistication. This begs for a fresh approach that transforms the way we trade and operate with cryptocurrencies. The new architecture needs to assure users that trade orders are successfully executed each and every time, without lockouts, downtime, or mishaps. Users must feel safe, and new registrants should not be intimidated by cryptic interfaces, a lack of customer service, or a lack of resources at their fingertips to guide them through the trading experience. We are proud to introduce Tradebits, a digital currency exchange platform designed for scale, performance, reliability, security and usability. The hallmark trait of the Tradebits platform is its soundness of design, leveraging the same principles used to power and secure the most demanding stock exchanges around the world. 9 On top of the platform lies a revolutionary approach to the cryptocurrencyexchange user interface-- resource-rich and configurable to match the sophistication level of every digital currency trader. To further enhance the digital currency trading experience, users will have access to 24x7 live customer service and a myriad of third-party trading apps and resources through the Tradebits Marketplace. As an added benefit, people who purchase XBITS become part of our exclusive coin buyback program, a model that supports the price development of the XBITS token/coin by allocating a percentage of the trading fees to buy back XBITS. 10 Part I The Opportunity 11 Here to Stay In the short span of just under one decade, the global cryptocurrency market has grown to include over 1,494 digital currencies with a market cap of over $470 billion. The number of digital currency traders today stands at around 50M, expected to exceed 200M by 2024. During boom markets in 2017, new user registrations on some exchanges were reported at over 250,000 in a single day with daily trading volumes reaching the levels of the New York Stock Exchange. According to Forbes, the global cryptocurrency market appreciated more than 1200% in the first 11 months of 2017. Some speculate that Bitcoin alone could reach a capital appreciation of over $7 trillion. The London Block Exchange believes that digital currency investment will over take stocks and bonds as its popularity rises in millennials. Market Size and Potential With digital currency exchanges struggling to fulfill current demand, and cryptocurrency market growth expected to explode over the next 5 years the market is ripe for a new industrial-class digital currency trading platform. 12 The worlds money in perspective All cryptocurrencies $400B All Money $83.6T Stock Markets $66.8T Physical Money $31T USD in Apple Circulation $730B $1.5T Bill Gates $86B Digital currencies have huge growth potential as we replace traditional stores of value (such as stocks, bonds, etc). 13 Bitcoin $41B Current Challenges Trust/Regulation ICOs (Initial Coin Offerings) have exploded, flooding the market with questionable opportunities and little to protect consumers from losing their money. Fragmented governance is beginning to appear in governments around the world, but it requires coordinated efforts to become truly beneficial to blockchain technologies as a whole. Tradebits will comply with Know Your Customer (KYC) & Anti Money Laundering (AML) Directive (EU) 2015/849 of the European Parliament. We have recruited dedicated personnel for implementing KYC and AML procedures and will scale the implementation by working with partners. Tradebits is focused on solving the trust challenges that plague digital currency exchanges today. Our team is growing, it currently consists of 25+ seasoned entrepreneurs and professionals that have successfully launched and operated multiple venture-backed startups. We are negotiating with the Dutch tax authority (de Belastingdienst) to ensure we have legal and tax precedence for implementing our governance model. In addition to this we are investigating the path to acquire a European banking licence from the Dutch Central Bank to be able to provide fiat gateways to the Tradebits exchange as well as other digital currency initiatives. 14 Reliability/Stability If you have some experience in trading on cryptocurrency exchanges, you’ve most likely had to deal with one or more of the following problems: • • • • Unable to open a trading account on your exchange of choice due to overload Unable to enter buy- or sell orders or even login at all Unable to get a timely response from customer support and having no updates on outstanding requests Your exchange of choice is mentioned in an article referring to shady business practices These issues are ironic considering that the entire motivation behind the decentralized digital currency movement was to keep money out of untrustworthy centralized financial institutions. And now, we’re all left with little choice but to trust faceless centralized institutions we know little to nothing about. 15 Reliability/Stability Problems with the current crop of digital currency exchanges are well known and have impacted traders accross the globe. 16 User Experience Average consumers entering the digital currency market struggle to interpret and navigate the complex interfaces of the exchanges. Absent a background in finance, even a simple task like understanding whether holdings have skyrocketed or shrunk becomes a chore, let alone trying to locate the data and supporting information necessary to make an informed trading decision. The next 100 million users The blockchain technology market is currently positioned between early adopters and the early majority. In order to cross this chasm and reach the next 100 million users, a next generation of cryptocurrency-related products are required. Products that appeal to both early users (as ambassadors and visionaries) as well as the majority of consumers. 17 The Tradebits Chasm Innovators 2.5% Early Adopters Early Majority 2.5% 2.5% Late Majority 2.5% Laggards 2.5% Tradebits Up to 2018 2018 and beyond The current crypto market is lingering in what’s called the “chasm”, where a big group of innovators and early adopters live. In order to cross this chasm and reach the majority of users, new type of products are required that appeal to both the early users (as ambassadors and visionaries) as well as the majority of consumers. 18 Have you ever received the question from someone in your close circle of friends and acquaintances: “which coins should I buy, I have no idea...”? We definitely have… Part II The Tradebits Vision 20 User Experience Customer Service In SaaS (software-as-a-service) and enterprise software, customer satisfaction and success represents a multi-billion dollar market. Both b2b and b2c companies have learned that it is far less expensive to retain a customer than to acquire a new one. Unfortunately, the leading digital currency exchanges of today have not yet learned these lessons. Tradebits has teamed up with industry-leading customer success executives to apply the lessons learned from mature industries to this newly minted space. Tradebits will build in-house support systems in combination with off-the-shelf solutions to: • • • • Gather insights into user behavior Provide guidance throughout the new user onboarding process Proactively identify and reduce churn risk Provide accurate resolution ETAs Most importantly all Tradebits support staff will be trained to treat the customer with the utmost respect and to always strive to address and solve concerns and issues they may have. Simple as this may sound, it’s not something traders experience from current digital currency exchanges. We will launch with a 24x7 customer support team around the globe that consists of native english speakers. Additional languages will be supported based on demand. 21 Customer Focus Tradebits has recruited a team of world class user experience designers and developers. We are taking a step back from digital currency exchange designs to rethink the fundamentals of how we interact with these systems. The results have been surprising and have given birth to the first digital currency exchange designed from the ground up specifically for the next generation of users. Rather than another adaptation of traditional stock exchange software, our team has designed a system that meets the needs of both novices and seasoned blockchain technology users. We have implemented an elastic User eXperience (UX) that dynamically scales the user interface based on the level of user expertise - and then adds, removes or simplifies how information is presented. For advanced market analysis Tradebits has partnered with ChartIQ to create clean, responsive, interactive and mobile-friendly charting experiences for our end users. We have used focus groups for different use cases, A/B testing, multivariate testing and built smart heatmaps to optimize the experience of our end users on the Tradebits Exchange. How often do you look online just to determine which coin to buy and then decide which exchange to buy it on? We feel it should be the other way around. The exchange should provide all of the resources necessary for tracking, investing and trading digital currencies. Portfolio Centric Through extensive user research, Tradebits has learned that current exchanges are market-centric, where as the majority of crypto traders are actually portfoliocentric. 22 Elastic user interface The Tradebits user interface is fully customizable for novice users as well as seasoned traders to provide them with all tools and information they need to make sound investment descisions. 23 Market-centric means that as a trader you look at the market and try to understand the dynamics that influence the behavior of other traders. By anticipating these dynamics you can either make or lose value. Market centricity stems from the world of institutionalized trading platforms where traders, often with significant subject matter expertise, come together to trade. In the cryptocurrency world, we’re focused squarely on decentralized and democratized thinking where market centricity is a hindrance to product adoption. In an attempt to empower users and make the entire user experience more portfolio-centric, Tradebits is implementing the same mechanics found in offline wallets, giving users better insight into their holdings with clear and actionable portfolio movement indicators. Multilingual Tradebits wants to ensure that non-english speakers can also use the Tradebits Exchange platforms and applications. Initially focused on English and Chinese (Mandarin) language options, over time Tradebits will provide support for German, French, Portuguese, Hindi, Urdu, Spanish, Hebrew, Arabic (standard) and Dutch. Mobile Experience Much like with the transformation of mobile phones, digital currencies are quickly becoming a lifestyle. What’s lacking most with this emerging lifestyle is an end-to-end mobile experience that provides features beyond simple wallet tracking apps that don’t actually allow users to invest or buy coins, but rather track their investments via manual input. 24 Social Trading Tradebits will provide collaborative tools for users to help socialize the dynamics of digital currency markets and trading. A portion of the user interface is dedicated to user-generated market tips/tricks and analysis. Consumers will be able to follow content producers to learn from their knowledge and experience. Content producers will be incentivized by a rewards coin which will be launched in addition to our XBITS coin. These rewards can be redeemed for XBITS tokens or other incentives like reduced trading fees. We will also employ a leaderboard and leadership icons to showcase success on the exchange, cultivating a culture of sharing and soft-skill building. We are also taking into consideration a profit-sharing program for producers to motivate them to create and distribute content both on and off of the Tradebits platform. 25 Business model Transaction Fees The business model of Tradebits is based on transaction fees. The software is developed in a way that price differentiation can be scaled to the individual user level. In this way there can be different trading fees per user depending on the number of trades and trading volume. In order to create a successful exchange, a deep and broad market is essential. Many users, many transactions and liquidity makes this all possible. We take the following revenue streams in consideration: 1 Transaction costs: per transaction, depending on the volume a transaction fee will be retained. 2 Added features: such as additional charts, faster information, real time order book viewer, news service subscription (forward). 3 Donation model where users decide for themselves how much they donate to contribute to the cost of certain requested features. Please note that for our financial projections, only revenue from transaction fees have been taken into account. We will charge a flat fee of 0,05% at buyer and seller’s side, hence each trade will deliver 0,1% in trading fees. We have chosen for a flat fee for simplicity. 26 Buyback Program We will initiate a buyback program which should result in a continuous upward pressure of the Tradebits token price. The tokens that are bought back through the buyback program will be burned, resulting in a reduction of Tradebits tokens in circulation. Whereas most coins have an inflationary component, the Tradebits token has a deflationary component. Tradebits will continuously allocate 40% of the generated trading fees to market orders to support the price development of the XBITS token. The following chart shows some projected scenarios for buyback volumes (40% of all fees) over a period of one year for a base case and management case scenarios: 27 Buyback program 40% of all trading fees are allocated towards our instant buyback program. 28 Trust/Regulation Policies Providing trust is a key element of what makes the Tradebits exchange unique. We will implement trust policies on multiple levels: 1 Transparency of % of coins in hot/cold storage a Provide insurance b Deploy mechanisms for verification proof of funds c Engage with external auditors 2 Fairness of transactor / Protection against front-running a Open source transactor b Provide detailed white paper on pipeline or architecture c Provide deployment verification 3 Broken trade policy 4 General security (regular external security audits) a Publish auditing methodology b Public reports without exposing vulnerable surface areas 5 Proof of reserve 6 Enforced team token vesting rules We will release a technical brief in which the implementation strategies for these - and more - policies will be discussed. 29 Security When handling the amounts of capital that digital currency exchanges work with, security must be front-and-center. The Tradebits 3-layer security architecture consists of: • The end user level • Authentication • Withdrawals • Platform level • Network infrastructure • Machine-level security • Blockchain level • Wallet • Integrity User Level On the user level we are implementing the following mechanisms to prevent unauthorized account access: • • • • 2-factor authentication Mobile one-time password verification Tradebits mobile app unlock Fingerprint authentication For withdrawals we require at least 1 out of these 4 mechanisms in addition to email verification for the withdrawal to proceed. 30 Platform Level On the platform level we are securing our infrastructure with industry standard physical and virtual (offline and online) access and authorization. We disallow the use of passwords, and access to hardware and software is restricted to a subset of our admin personnel with strong SSH-key based security access with IP locked access restrictions. Our infrastructure is designed with a security-first protocol. Most of our machines can only make outbound connections. Even transactors require physical biometric security for access and maintenance. Blockchain Level In a study performed by Ernst and Young, most security breaches were found to be caused by human error or phishing attacks aimed at employees. This in turns causes hot wallets to be breached and funds stolen. We have designed a proprietary security mechanism to authorize access to these hot wallets, compartmentalizing the impact of phishing attacks without risk to Tradebits’ hot wallets. Our system is based on biometric multisig patterns with rotating keys to authorize transfer of cold to hot wallets with third-party validation. Tradebits is planning to release our security system as open-source to encourage other exchanges to upgrade their security. Our hot wallets only contain a maximum of 2% of the liquidity available on the exchange. These hot wallets are not present in the same physical locations as where the exchange is hosted. They have their own separate access mechanisms. The remainder of the liquidity is divided between cold-storage as well as paper wallets, secured and backed by bank-level security and transport. 31 Security breaches Bitcoinica was exposed to hacker attacks through the hosting site vulnerability. The funds were stolen and the exchange was closed. The hacker could access the backup key storage of the exchange purse. The exchange was closed and funds partly returned to users. The exchange suspended trading, closed its website and exchange service, and filed for bankruptcy protection from creditors. Users did not receive compensation. Hack attempts were also made in 2012. Bitfloor 25 000 BTC Bitcoinica 43 000 BTC Bitstamp was hacked through phishing. As a result, the trading platform was completely reorganized. Losses were covered from reserve funds. The exchange did not use "cold storage." The exchange issued Bitfinex tokens (BFX) for users who lost their funds. Bitfinex 119.456 Mt. Gox Bitstamp 19 000 BTC 850 000 BTC Bithumb 420 ВТС Funds stolen in BTC March 2012 September 2012 February 2014 January 2016 Attackers compromised the employees’ computers. Partial compensation was paid to users. August 2016 July 2017 Source: EY analysis, Group-IB based on Securitylab, Vedomosti, Insider, company websites We have designed a proprietary security mechanism to authorize access to our hot wallets, compartmentalizing the impact of phishing attacks without risk to our hot wallets. Our system is based on biometric multisig patterns with rotating keys to authorize transfer of cold to hot wallets with third party validation. We have plans to - after extensive testing - release this system as an open-source product to encourage other exchanges to upgrade their security. 32 In addition to all these measures, we employ qualified security engineers (both white hat and black hat) to implement, as well as monitor and improve our security platform and procedures. We will also initiate a bug/security bounty program to incentivize external security researchers to spend cycles on penetration testing from a black box perspective as an extra guarantee when 0-day exploits hit the market. Organizational Level We will implement bank level security policies in our organization. This includes screen locking, preventing the use of unregistered devices, VPNs and other more traditional security mechanisms to prevent data leakage or unauthorized access to internal network resources. As part of this initiative, a security policy is being defined that details the various requirements and procedures for operating a financial business in a secure and responsible way. 33 Tradebits Ecosystem Tradebits Store The Tradebits Store is where third parties can offer products, services or plugins, built on top of the Tradebits Platform, to enrich and augment the user experience. Much like Apple did with their iTunes Store and Salesforce with their AppExchange, The Tradebits Exchange will open up new revenue streams for developers while offering additional solutions for users. This model has worked well for the Apple iTunes Store and the Salesforce AppExchange. We want to bring the same experience to the Tradebits Exchange. Users Tradebits has identified 3 key differentiators which we believe will catapult Tradebits to the forefront of digital currency exchanges: • • • User Experience - Tradebits is providing a customer-centric exchange that serves the needs of novice users and experienced traders alike. Customer Satisfaction - We don’t just inspire loyalty, we reward it, and through stellar customer service we will increase retention. Coin Buyback - We give back as we earn by introducing a buyback program designed to drive the market value of our XBITS token. Developers The Tradebits platform is the delivery mechanism that will be used for the implementation of third-party end-user applications. Our developer community will provide a continuous stream of new applications to enhance the trading experience-- end-user experiences powered by blockchain economies. 34 Tradebits will deploy three key applications on top of the Tradebits Exchange platform in 2019: • • • Loyalty Lifestyle Education API Applications will be powered by the Tradebits platform, and will serve as references for third parties to implement their own applications on our platform using our TPML (Trading Platform Machine Language) protocol on top of the Tradebits API. We will incentivize both startups with grants and partners with development support through our Ex fund. The Tradebits platform will be used as a distribution vehicle to reach a wide audience and bootstrap these implementations. We will work with partners from our extensive network spanning the globe to develop and fund (from our reserved grants pool) applications that interact with the Tradebits platform. 35 Lifestyle applications As blockchain technologies move through the adoption and maturity lifecycle, we want to be on the forefront of how the next generation (teens and young adults) will incorporate digital currency as part of their lifestyle. We will support the development of software (or optionally down the road, hardware similar to Fitbit) for bumping tokens, allowing individuals to trade digital currency with micro interactions. Loyalty applications Customer loyalty represents a multi-billion dollar global market. Using many of the same basic trading features provided by the trading platform, Tradebits will develop a loyalty program. Loyalty points will be exchanged seamlessly across loyalty programs of any type, made available by registered users of the Tradebits Exchange. Education applications Education is and will remain a critical link to prosperity throughout the world. As digital currencies grow in importance, we will need to educate and train consumers. Tradebits will facilitate these educational programs by providing free or simulated chains. We will also co-develop training material for professionals and consumers to teach them how to trade responsibly and effectively. 36 Lifestyle application 37 Loyalty application Education application Part III The Tradebits Exchange 38 Overview of Platform The following diagram shows a quick overview of main components in our technology landscape: The Tradebits technology stack is based on extensive internal and external research. Our goal is to provide an architecture that is easy to build, deploy, and operate. We will use off-the-shelf components as much as possible, except for those areas where innovation or performance is critical. Our trading engine consists of a distributed, highly-available in-memory matching algorithm (transactor). By not touching the disk (except for writeahead logs) Tradebits’ TPS (transactions per second) is positioned far ahead of competitors at a rate of 1.6 million transactions per second per trading pair. Currently we are investigating on how to increase this number by implementing our matching algorithms on the GPU. 39 Overview User Security Market Client Watch App Market Client Market Client Watch App Updates Market Updates Loyalty App Market Updates Geo Clusters API Security Education App TEML Lifestyle App Trading App Trades Session Security Web API / Authentication Web App Updates Geo Clusters Orders Platform Security Persistance Partitions Realtime Push Session Security Buy/Sell Orders Replay Signalr Disruptor Consistency Order Book Updates Orderbook Security XBITS Blockchain Buy Orders Order Book Sell Orders Transactor 40 Updates LMAX Disruptor Queue Save Chain Consistency Technology Frontend Nginx Reverse Proxy Amazon Route 53 Envoy Application RubyOnRails Responsive HTML5 React/ES7 ASP.NET Signalr Core Queuing RabbitMQ / UDP multicast transports Log replay Apache Kafka Cache Redis Transactor .NET Core 2.0 LMAX Disruptor Durability Postgres Apache Kafka 41 Mobile app React native (iOS and Android) Desktop app Electron / React Reliable Reliability has been solved by companies the size and scale of Google, Uber, Facebook, etc. The techniques and tools for building large-scale systems with various failovers to keep up their systems have been perfected. Unfortunately, these methodologies have either been misinterpreted or neglected by the engineering teams of the popular digital currency exchanges. Running a highly available digital currency exchange on one master and one slave database server is inadequate. These platforms should be running on hundreds of servers. The Tradebits engineering team has implemented well-known techniques such as horizontal partitioning, geo clustering, shared-nothing-architecture, and write ahead logs to make sure Tradebits is always up and able to provide service, no matter the trading volume. Open Source We are considering releasing our transactor as open source software for the world to see and improve upon. We await authorization from our legal council and regulators on feasibility, but we will make giving back to the community a central tenet of our engineering team. Decentralized There has been a big push for decentralized exchanges to reduce the risk of security incidents resulting in the loss of liquidity and funds. During our first 2 quarters of operation, Tradebits will operate as a centralized exchange with added on- chain and cross-chain decentralized trading features. While on-chain transactions are relatively easy to facilitate, cross-chain transactions are still in their infancy. Before we provide support for cross-chain 42 transactions, we first need observe which protocols and methodologies become mainstream. During our centralized phase (first 2 quarters of operation), Tradebits will invest heavily in security measures and infrastructure to alleviate security concerns and provide confidence in asset security. Transactor Tradebits has implemented the LMAX Disruptor, a high performance interthread messaging library designed to provide a low-latency, high-throughput work queue in asynchronous event processing architectures. The disruptor ensures that any data is owned by only one thread for write access, therefore reducing any potential write contention. We have implemented the LMAX Disruptor pattern in our trading engine with priority queues for both buys/sells as well as ticker updates. Our trading engine is fenced off by a cluster of signal servers that provide interactivity and push updates to the user interface. Each trading pair has a dedicated transactor instance running on physical cache aligned CPUs with (for active coins) 256GB+ of RAM. For less active coins, we provision hardware with less memory capacity. We have clustered our servers in lanes depending on trading pair volumes and activity with automatic lane transitioning. Each trading pair has a hot-spare standing by which is kept updated through a fiber optic data connection with extremely low latency. In the case of a calamity or lane transition, the hot spare is swapped out in real time without users experiencing any downtime or delay. Market data and order book updates are pushed to a message bus which has various attached listeners, either to push signal updates to the UI or write transactions out to our persistent storage cluster and data warehouse. 43 Trading coins has become a lifestyle. If you have teens in your inner circle, they will most likely have asked you about the coins you own. - Faisal Mirza Co-founder, Tradebits Our front-end servers are geo distributed to minimize the roundtrip hops towards the end user. The front-end servers and persistent storage servers are scaled horizontally (partitioning), a problem well understood in the distributed computing space. All instances are deployed using Rancher and Kubernetes to allow auto scaling with minimum administrative intervention. We are also building a platform for allowing machine learning solutions to operate on our order book and trading volume data. We will deploy an Apache Kafka cluster to log all activity in our platform and push this through to a deep learning platform. Lastly-- in our Q2 release we will have off-site hot spares running that can take over (degraded) scenarios in which the whole primary data centre goes offline. 45 Smart lane switching 16GB 64GB 256GB The Tradebits infrastructure is smart enough to decide when it needs more capacity and initiate smart lane switching to acquire the required bandwidth. This ensures our platform can cope with heave trading spikes. 46 We believe the cryptomarket is still in its early stage and could grow to trillions. - Waseem Sadiq CEO, Tradebits Part IV The XBITS Token / ICO 48 Introduction To fund the development of the Tradebits platform, XBITS blockchain, and liquidity pool, Tradebits will initiate an Initial Token Sale (also referred to as the presale) and an Initial Coin Offering (ICO). The XBITS token will be sold during our presale and ICO. In addition, Tradebits will initiate a buyback program. Our buyback program will support the price development of the XBITS token. The XBITS Token The XBITS coin will be issued when developed. In the meantime an ERC20 token will be used for the token distribution. 200 million tokens will be issued. When we launch our XBITS blockchain, we will swap the token on a 1-for-1 basis. For the private-only sale, Ethereum will be accepted as a method of payment. At the pre and main sale, Bitcoin and Litecoin will be added. Purpose and Usage 5% 5% 15% 45% 15% 15% 49       Exchange Liquidity 90M Development 30M Team 10M Marketing 30M eX Fund 30M Advisory Fees 10M Details & Supply Token Name XBITS Invite-only Presale To be announced (up to 35% discount) Presale To be announced (up to 20% discount) 50 Main Token Sale (ICO) To be announced Tokens issued 200mln tokens Initial price per token 0.5 EUR Total supply 500mln XBITS Use of Proceeds All ICO proceeds will be invested according to the following model: AMOUNT IN XBITS ICO Proceeds SOURCE- PERCENTAGE 100% Liquidity exchange - 45% Marketing - 15% Development - 15% Ex fund - 15% Team - 5% - 5% Advisory fees and other costs TOTAL 51 USAGE - 100% Marketing We have various marketing initiatives planned that will launch Tradebits to the top 5 exchanges by volume. ICO marketing Telegram Social media Ad buys Link building Content marketing Referrals + bonus (word to mouth) Mainstream PR Print media Billboards Speaking engagements Sponsorship Growth channels Cap.exchange Icobello.com Mobile portfolio management apps Bonus incentives / give away Distribution partners EX fund ATM vendors App platform 52 Liquidity We will initiate a liquidity pool consisting of 45% of proceeds that will allow us to make the market for newly introduced tokens. This pool will also provide the ability to underwrite ICOs that will be listed on Tradebits. Ex Fund The Ex fund will be allocated to invest in applications described in this document (as well as new initiatives) that will increase the distribution potential of the Tradebits exchange. Vesting Schedule Team members and advisors who have been awarded coins are vested for a period of 4 years; 25% per year. 53 Rewards Program During our token sale we have various bonus incentives available for early decision makers, the following table depicts these in details: 54 Private Invite-only sale Bonus Invite only 35% Invite only 32.5% Invite only 30% Invite only 27.5% Invite only 25% Invite only 22.5% Token Presale Bonus Week 1 20% Week 2 15% Week 3 12.5% Week 4 10% Week 5 7.5% Week 6 5% Week 7 2.5% Public Token Sale (ICO) Bonus Week 1 Buy at par value Token Support Tradebits will support trading in the following coins from go-live: • • Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), Monero (XMR), Bitcoin Cash (BCH), XBITS (Tradebits Coin) Immediately after launch we are also looking to add the following coins to our economy: Lumen (XLM), EOS, ADA Tradebits will add chain-compatible tokens such as ERC20 tokens in the first 6 months focusing on the top 100 chains by volume. We will keep an active eye on new developments and if we notice new chains becoming prominent, we will consider adding it. Our goal is to cover 70% of the top 100 coins in the first year of operation. 55 A digital currency exchange can be compared to real estate in the crypto ecosystem. Therefore, the Tradebits exchange and token is prime real estate. - Amresh Bajnath Co-founder, Tradebits Part V Company 57 Roadmap Tradebits is building the most high-performance, flexible and reliable digital currency exchange platform, capable of scaling and handling an unparalleled number of users and transactions per second and adaptable to the skill level of any trader. Team Waseem Sadiq (CEO) Waseem is a serial entrepreneur with a strong background in technical leadership. Previously Waseem co-founded Inbox2 (acquired, used by 90 million users) and Fileboard (based in San Francisco), a leader in the sales-enablement software space. Waseem also advises and coaches entrepreneurs/CTO’s and CEO’s on implementing and adopting highly scalable software solutions and growth systems. Waseem co-founded Tradebits in 2014. Amresh Bajnath (CFO) Amresh is a successful entrepreneur in the field of property investments and cryptocurrencies. He is a former banker and has managed a EUR 1bn debt portfolio comprising Real Estate, Acquisition Finance and Corporate loans. Amresh holds a Masters degree in Finance from the prestigious Nyenrode Business University. Amresh co-founded Tradebits in 2014. 58 Faisal Mirza (CTO) Faisal has been involved in high-volume e-commerce marketing and technology roles for the past 10 years. In addition serving as a board member of several high profile foundations in the Netherlands, Faisal studied Computer Science at the The Hague University. As one of the cofounders of Tradebits in 2014, Faisal was instrumental in architecting key algorithms in the first version of the exchange. Axel Macro (CLO) Axel is an experienced lawyer and entrepeneur. In addition to having worked for the most prestigious law firm in The Netherlands, representing the State of The Netherlands, Axel has authored several legal textbooks and has served as a lecturer at the Bar Association. Axel has founded several high successful international companies and from 2006 to 2012 served as Chief Legal Officer of a publicly traded company. Axel studied Law in both Leiden and Edinburgh and over the past few years had developped a keen interest in cryptocurrencies. 59 Atiq Khan (COO) Atiq is an entrepreneur and former Googler. At Google, Atiq was responsible for multi million dollar ad spend. Atiq co-founded multiple businesses including the startup accelerator Punchlime, where he was instrumental in helping venture backed startups grow. Atiq has also been the director of customer success at the San Francisco based startup Fileboard where he achieved extraordinary retention rates. Atiq holds an MScBA degree in Business Information Management from Rotterdam School of Management, Erasmus University. Atiq joined Tradebits in 2018 in the role of COO. Arjan Brouwer (Business Development & Partnerships) Arjan has over 15 years of experience in finance and investment management in various relationship management and business development roles in The Netherlands and UK. Arjan is also involved as investor and advisor to a number of tech and blockchain startups. Arjan holds a Master’s degree in International Management from the University of Nymegen. Arjan joined Tradebits in January 2018 in the role of Head of Business Development & Partnerships and is heading up the Tradebits office in London. 60 Part VI Risks 61 Security Security is the foremost concern for any exchange today. At Tradebits, we take security very seriously. We have recruited industry-leading security designers and experts to continuously improve, test and scale our security measures. Tradebits is currently in the process of recruiting a senior security expert from the industry to join our advisory team. As part of providing guarantees to our users, we are also in the process of acquiring insurance for capital held in our hot and cold wallets. To minimize the risk of a data breach, the vast majority of user assets are stored offline in cold storage. Tradebits will only keep enough assets on the exchange to enable low latency withdrawals. Cold assets are maintained in air gapped computers stored in various bank vaults across the world. We have developed a software solution that allows us to transition assets from hot to cold wallets with biometric signatures. The physical access to the air gapped computer is only allowed for dedicated security personnel, who don’t have the ability to initiate or authorize withdrawals. Compliance Tradebits has recruited legal and compliance talent to help understand and implement any necessary policies, procedures and/or operational modifications to stay within the boundaries of any regulatory requirements. We are also implementing KYC and AML procedures in accordance with European guidelines, although not currently required by Dutch law. 62 We are also implementing a GDPR policy as required by EU laws. Lastly we have started a negotiation process to enforce precedence and gain clarity on any regulations that will affect Tradebits. Competition As of January 2018, coinmarketcap.com lists 175+ digital currency exchanges. Suffice to say, competition is fierce in the exchange space. Void of any longterm vision, we believe the majority of these exchanges will eventually go out of business. The players that understand adoption and the needs of the digital currencies world will win. We fully intend to be amongst the market leaders. Execution There are a several execution challenges that can be mitigated by hiring the right talent, building the right partnerships and executing on our vision. Our executive team has done multiple successful startups and understand how to execute and how to overcome challenges that are typical in hyper-growth startups. In addition, we are building a world-class advisory board that will make sure we steer in the right direction. 63 Conclusion 64 Tradebits is building the world’s most robust exchange, designed to handle millions of transactions per second with unparalleled continuity of service. By investing in Tradebits you will be buying into the future of digital currency trading. Our buyback program will re-invest 40% of all trading fees into buy orders, thus supporting the price development of the XBITS token. We look forward to collaborating with you and hearing your feedback and thoughts. In the meanwhile, please follow us or send us a note on our internet properties: Website: www.tradebits.co Email:-Linkedin: https://www.linkedin.com/company/tradebits-exchange/ Facebook: https://www.facebook.com/TradebitsExchange/ Twitter: https://twitter.com/TradebitsX Reddit: https://www.reddit.com/r/TradebitsExchange/ Telegram: https://t.me/TradebitsExchange 65 Disclaimer IMPORTANT: You must read the following disclaimer in full before reading this whitepaper. The following disclaimer applies to all information provided by you by Tradebits B.V (hereinafter: “Tradebits”). No supervision The information in this whitepaper is not approved, authorized, registered, endorsed, reviewed or under supervision in any way by any supervising authority. Tradebits or the ERC20 tokens are not registered in any country or jurisdiction with respect to the investment described in this whitepaper. Tradebits has not requested or obtained any approval, authorization, registration, license or legal exemption, or supervision from any supervising authority. No prospectus This whitepaper does not constitute a prospectus for the purposes of European Directive 2003/71/EC (as amended, reinstated or supplemented from time to time) and may not contain the information as referred to in European Regulation No. 809/2004 (as amended, reinstated or supplemented from time to time). This whitepaper has not been approved by or filed with any supervising authority. The ERC20 tokens are not listed on any type of exchange or other trading platform. No liability You hereby agree and acknowledge that Tradebits or its affiliates is not responsible or liable for any consequence, such as (without limitation) damage or loss, caused by or relating to the use or inability to use, the reliance on or actions induced by information in this whitepaper. No advice The white paper is for information purposes only. It is not intended to be, nor should it be construed or used as, financial, legal, tax, investment or any other advice. Get advice Before making an investment in the ERC20 token, any interested party must review such investment thoroughly and carefully with their financial, legal, tax, investment or any other professional and knowledgeable adviser to determine the consequences of such an investment, both in general as for their specific situation. No reliance This whitepaper is not intended and must not be taken to form the basis of any investment decision and does not purport to contain all information that may be required to evaluate the ERC20 token. No solicitation The information in this whitepaper is not intended to and shall not in any way constitute an invitation to invest in the ERC20 token that appear or are mentioned. Potential investors should read the latest version of the white paper carefully before any investment is made. No offer This is not an offer or a solicitation of any offer to buy or sell any ERC20 token or to obtain or to dispose of any interest in any entity, fund, property, goods or anything else of value, nor shall it form the basis of a contract or commitment. Proprietary This whitepaper is proprietary and is intended only for the person to whom it had been delivered. Under no circumstances may it be shown, copied, transmitted, distributed, or otherwise given to any person other than the authorized recipient, without the prior written consent of Tradebits. No party is authorized to provide information other than that which appears in the whitepaper. No accuracy No representation, warranty, guarantee or other assurance express or implied, is made or given Tradebits or its affiliates as to the accuracy, validity, completeness, verification or sufficiency of any information set out in this whitepaper. 66 No updates All information is as of the date indicated, and is subject to revision, modification and updating without any obligation to notify anyone thereof. Tradebits is under no obligation to update the information to reflect changes after the publication date. Forward-looking statements An investment in the ERC20 token is speculative and involves risks. Any return estimates given or indications of past performance are provided for information purposes only and in no way constitute a guarantee or an indication of future performance, earnings, results or returns. Distribution restriction The information in this whitepaper is not intended for distribution to, or use by, any one in any jurisdiction or country where such distribution or use would be contrary to the law or which would subject Tradebits or its affiliates to any regulatory requirements with such jurisdiction or country. Third party sources Certain information in this whitepaper may have been provided or prepared by third parties. Such information has not been independently investigated or verified. We have assumed that such information is correct. Changes Tradebits always has the right, in its sole discretion, to vary, suspend or terminate the investment in the ERC20 token, irrespective of the advancement, until the moment the hard cap of 100,000,000 EUR has been reached, without liability for any losses, costs or expenses. Website You hereby agree and acknowledge that Tradebits or its affiliates is not responsible or liable in any way for any loss or damage that may occur in the event of any failure or interruption of the internet, any exchange, trading or other platform, any website, including Tradebits’ website or any other systematic or technological failure. Governing law and jurisdiction This whitepaper shall be governed by Dutch law. Any disputes resulting from this whitepaper shall be submitted to the competent courts in Amsterdam, the Netherlands. All rights reserved! 67 Tradebits Netherlands United Kingdom Mauritskade 51 One Canada Square 2514 HG Den Haag London, E14 5AB