(Creditcoin) White Paper

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Creditcoin
A Decentralized Credit Network

Tae-lim Oh | Gluwa. Inc.

11/06/2019

Abstract. Blockchain technology has enabled us to create objective
history—decentralized ledgers represent facts that are backed by verifiable
computation, not a bet on the trust in central authorities. Bitcoin1 proved the value of
its financial utility as a decentralized transaction ledger by leading to the creation of
a total cryptocurrency market capitalization in excess of $800 billion in early 20182.
A large market cap is insufficient to building a self-sustainable financial ecosystem,
however. This requires three pillars: savings, payments, and investment. Investment
works as a “wormhole” of sorts, connecting “parallel universes” that we call market
According to the IMF, global nominal GDP was $78.5 trillion in 2014. However, Aon

pegged the total size of the global capital investment market at $101.1 trillion in
June 20133. If this relationship stays the same for the cryptocurrency, then the $445
billion market cap at the end of 2017 means a potential cryptocurrency investment
market of $573 billion.
Creditcoin is a decentralized credit network that turns digital wallets into an
investment market. The miners of the market earn Creditcoin by mining blocks: The
miner of a block collects block reward. The network achieves robustness by
decentralizing credit history, while automatically punishing fundraiser default.
Investors can select credit history parameters to protect against various risk models.
Creditcoin and its network are designed as a simple blockchain that serves a single
purpose extremely well: enabling blockchain-based lending transactions. Since we
know blockchain is not a silver bullet, we leave to others related services, such as
identification and credit scoring. We also recognize that lending transactions
facilitate various business activities. Instead of implementing them within Creditcoin,
the blockchain achieves versatility through the creativity of its users and the ability to
connect with other blockchain networks.
1
"Bitcoin: A Peer-to-Peer Electronic Cash System - Bitcoin.org." https://bitcoin.org/bitcoin.pdf. Accessed 5 Feb.
2019
2
" CoinMarketCap." https://coinmarketcap.com/. Accessed 5 Feb. 2019.
3
" Global Invested Capital Market - Aon."
https://www.aon.com/attachments/human-capital-consulting/2014_Global-Invested-Capital-Market_WP.pdf.
Accessed 5 Feb. 2019.

creditcoin.org | s [email protected]
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This whitepaper:
(1) Introduces the vision of Creditcoin.
(2) Illustrates the Creditcoin ecosystem.
(3) Provides a detailed explanation of the Creditcoin protocol.
(4) Explains how Creditcoin gets distributed.
(5) Describes the design philosophy and history of Creditcoin.

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I. Introduction

The fundamental services of finance are savings, payments, and investment. Banks
hold funds from savers and make them readily available for withdrawal when
needed. At the same time, banks invest unused saver funds, turning dormant capital
into working capital for society. When done correctly, such activities can optimize
the flow of funds and increase the productivity of the economy.
However, this is not always the case. As seen in financial disasters such as the
subprime mortgage crisis, banks often take on far too much risk in an effort to
achieve high short-term gains. Since savers cannot get clear information on how
banks are redistributing their funds, and the goals of bankers often do not
necessarily align with those of savers, decisions contrary to the savers’ best interests
are often made without their knowledge or permission.
In response to the subprime mortgage crisis, Satoshi Nakamoto invented blockchain

technology to bring self-determination to economic activities. Before this invention, it
was nearly impossible to measure the objectivity of shared information without a
central authority. Today, you can perform financial transactions without having to
trust any intermediaries.
Although there are advantages and disadvantages to making one’s own investment

decisions, this can be a possible defense against credit crises. For example, the focus
of credit unions on benefits for their members influences the level of risk that the
unions are willing to take on. This might explain why credit unions survived the
financial crisis in relatively better shape than traditional banks.
The blockchain market seems very successful, with a $70 billion market cap and $1
billion daily transaction volume for Bitcoin alone in early 20184. However, it is still
difficult to use cryptocurrency in the current ecosystem, which is mainly developed
for fiat currency use. The long confirmation time, high fees and volatility of
cryptocurrency make it hard for people living in the fiat currency ecosystem to adapt
cryptocurrency into their lives.
Gluwa and Aella jointly created Creditcoin as an adapter that seamlessly connects
the best of the two worlds. It takes the blockchain closer to the original vision of
Satoshi Nakamoto: a sound currency for everyone.
4
" CoinMarketCap." https://coinmarketcap.com/. Accessed 20 Feb. 2019.

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II. Creditcoin Ecosystem

Creditcoin is a blockchain-agnostic investment protocol where investors can lend in
any cryptocurrency. The Creditcoin network is a general blockchain for investment
activities. The network connects investors and fundraisers with matching conditions.
The record of activities lasts forever on the blockchain, and the data could be used
for future credit evaluation by any interested parties.
An investment in the Creditcoin network starts by matching offers from investors
and fundraisers. A fundraiser posts seeking an amount, interest rate, and due period.
If there is an investor with matching conditions, the fundraiser and the investor
announce the deal to the Creditcoin network. The system verifies the deal’s
completion by confirming the transfer of the loan.
A collection of investments goes through a process similar to the investment
process. If the fundraiser is ready to return the investment with interest, the
fundraiser makes a repayment and announce the repayment to the Creditcoin
network. In some cases, the investor of a loan may exempt the fundraiser from
repayment of a loan.
Each announcement to the Creditcoin network has Creditcoin as a transaction fee.
Fees are locked on the network for roughly for a year and get returned to the user.
Overall, Creditcoins are presently functional in that they have been developed in
order to allow Creditcoin Users to: (1) lend, borrow, and repay currency on the
Creditcoin network; (2) have direct access to other Users for borrowing, lending, and
repaying currency; (3) interact on the network and communicate with other Users for
borrowing, lending, and repaying currency; (4) verify and validate transactions of
borrowing, lending, or repaying currency that are recorded on the Infrastructure; (5)
view and possess a decentralized and public credit history of Users which is
recorded and expands with each User transaction; and (6) mine, i.e. validate and
verify transactions and receive Creditcoins for such mining. The Creditcoin Network
empowers users with all of these functionalities.
Gluwa must make it clear that holders of Creditcoin have no rights to participate in or
govern that common enterprise or to share in the profits or losses of Gluwa and do
not represent an equity or other ownership interest in Gluwa or any other legal
entity. Creditcoin Tokens are not designed or intended to provide holders with any
income, dividends or returns based on the activities of the Company or any third
persons. Additionally, Creditcoins do not reflect or show the indebtedness of anyone
or anything, including but not limited to any person or entity.
A diagram of the Creditcoin network in a lending market is shown in Figure 2.
The details behind the Creditcoin protocol are explained in the next section.

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III. Creditcoin

1. Introduction
The Creditcoin blockchain is a network matching investors and fundraisers. A
fundraiser posts an offer to the network, pegged with some Creditcoin. The
Creditcoin works as a reward to the miners of the network. Investors can use the
credit history of a fundraiser on the Creditcoin blockchain to evaluate the risk of
potential investment, using a credit-scoring model of their choice. The fundraisers
can choose to share more information about themselves in order to receive more
favorable terms.
There are several reasons why we need the blockchain of credit investments:
1. Direct link between investors and fundraisers: Removes intermediaries to get

better interest rates and enables a variety of investment quantities that was
previously infeasible due to cost.
2. Decentralized and public credit history: Allows multiple credit scoring
systems and lets investors use the system that fits their market of choice.
3. Creating sustainable cryptocurrency ecosystem: Enables cryptocurrency
investment to build a sound financial ecosystem on blockchains. The financial
ecosystem is self-sustainable if and only if you can save, pay, and invest.
4. Security: Allow sharing credit history without providing personal information
to centralized institutions, which are often the target of hacker attacks.

2. User Flow
Introduction
Purpose
This section covers a step-by-step guide on how a Creditcoin user will use the
blockchain through a loan-cycle.
Scope
This section explains how a user would pay Creditcoin to execute a loan deal. From
the perspective of an investor, how to create a loan offer, find a fundraiser for the
offer, learn the fundraiser’s credit history, and make an investment. For a fundraiser,
how a search for a loan offer, request for the loan and make a repayment.

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Overview
Creating a transaction on a blockchain is essentially making an announcement. To
get your message recorded on a new block, you pay a transaction fee to the
blockchain. Unlike Bitcoin, which only has a send transaction, the Creditcoin network
supports a different type of transaction per each step of a loan cycle. Investors and
fundraisers pay Creditcoin to the Creditcoin network to process each stage of their
loan.
When Do You Pay Creditcoin?
The rule of thumb is, any action that adds more information on the Creditcoin
network will cost you Creditcoin. On the contrary, a work that does not add
information to the blockchain is free.
Fundraiser’s Flow
On the Creditcoin network, a fundraiser is an account that borrows funds from
another account.
I. Find a Loan Offer
A Fundraiser will start a loan-cycle by creating a bid order describing the loan
condition he wants. The bid order is announced to the Creditcoin network and
attract potential investors.
1. Create a Bid Order
A fundraiser can announce the details of his bid order. It includes amount,
interest, and maturity. For example, a fundraiser may offer to borrow 100
Bitcoin for a 10% interest per 30 days.
The fundraiser will pay Creditcoin as a transaction fee to the Creditcoin
network to create the order.
Note that the offer is in Bitcoin, not in Creditcoin. On the Creditcoin network,

you are not lending or borrowing in Creditcoin, but a cryptocurrency on
another blockchain. Currently, the Creditcoin network supports Bitcoin,
Ethereum, and ERC-20 token loans.
2. Find Investment Offers
If an investor likes the fundraiser’s bid order, he can create an offer. The offer

information includes a set of one add order and a matching bid order.
The fundraiser can retrieve a list of offers for free.

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3. Create a Deal
If a fundraiser likes an offer he received, he can accept the offer by sending a

corresponding deal to the investor. The deal will have the exact loan
condition described in the offer.
network to send the deal.
II. Make a Repayment
A fundraiser can repay the full amount to finish the loan-cycle without the
involvement of the investor.
1. Lock a Deal
Before making a repayment, the fundraiser has to block another account from
making any change to the deal. Else, we have a potential concurrency
problem. The fundraiser may be closing the deal at the same time as the
ownership of the loan is sold to another account. In this case, there may be
two transfers registered against the same deal order. The Creditcoin network
prevents the problem by requiring a fundraiser to lock the deal before making
a repayment.
network to lock the deal.
2. Transfer the Repayment to the Investor
A deal includes where the fundraiser would like to receive the investment.
Note that the repayment transfer happens on another blockchain (e.g.,
Bitcoin or Ethereum). The fundraiser may pay a transaction fee on that
blockchain, but not on the Creditcoin network.
III. Make a Repayment with an Exemption
Optionally, a fundraiser may negotiate with the investor for an exemption.
1. Negotiate for an Exemption
In some cases, a fundraiser may not be able to repay the full amount but a
part of it. If so, the investor may choose to accept partial repayment since it is
better than nothing. The investor and the fundraiser can communicate
outside of the Creditcoin network and negotiate for an exemption.
Since the negotiation happens outside of the blockchain, it does not cost any

Creditcoin.

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2. Send a Partial Repayment
Once the investor agrees to exempt some of the loan amount, the fundraiser
will have to repay the rest. Just like the investment transaction, the
repayment transaction also happens on another blockchain (e.g., Bitcoin or
Ethereum).
The fundraiser may pay a transaction fee on that blockchain, but not on the
Creditcoin network.
Note that in case of repayment with an exemption, the fundraiser cannot conclude
the deal on his own. The investor needs to approve an exemption by registering the
partial repayment transaction ID to the Creditcoin network. Learn more about the
process in the Investor’s Flow.
Investor’s Flow
On the Creditcoin network, an investor is an account that lends funds to another
account.
I. Find an Investment Opportunity
An investor will start a loan-cycle by creating an ask order describing a loan offer.
The ask order is announced to the Creditcoin network and attract potential
investment deals.
1. Create an Ask Order
An investor can announce the details of his ask order. The detail includes
amount, interest, and maturity. For example, an investor may offer to lend
100 Bitcoin for a 10% interest per 30 days.
The investor will pay Creditcoin as a transaction fee to the Creditcoin
network to create the order.
Note that the offer is in Bitcoin, not in Creditcoin. On the Creditcoin network,

you are not lending or borrowing in Creditcoin, but a cryptocurrency on
another blockchain. Currently, the Creditcoin network supports Bitcoin,
Ethereum, and ERC-20 token loans.
2. Find Matching Bid Orders
Using the ID string of an ask order, the investor can search for matching bid
orders. Fundraisers create bid orders by describing the desired loan
conditions. The investor can retrieve a list of matching orders for free.
3. Review a Fundraiser’s Credit History

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If an investor is interested in any matching bid order, the investor can retrieve

a full transaction history of the fundraiser who created the deal. Each bid
order includes an identification string of the fundraiser, a sighash. The
investor can use the sighash to retrieve the fundraiser’s credit history from
the blockchain for free.
4. Create Investment Offers
If the investor likes the credit history of the fundraiser, he can create an offer.

The offer information includes a set of one add order and a matching bid
order.
network to create the offer.
If the fundraiser likes the offer, he will send a deal to the investor.
II. Make an Investment
If an investor likes a deal, he can accept it by registering the investment transaction
on the Creditcoin network.
1. Transfer the Investment to the Fundraiser
A deal includes where the fundraiser would like to receive the investment.
Note that the investment transfer happens on another blockchain (e.g.,
Bitcoin or Ethereum). The investor may pay a transaction fee on that
blockchain, but not on the Creditcoin network.
2. Complete the Deal
Once the investment transaction is confirmed on the blockchain, the investor

can make the investment official by registering the transaction ID to the
Creditcoin network.
network to complete the deal.
III. Collect a Repayment
A fundraiser can repay the full amount to finish the loan-cycle without the
involvement of the investor. However, an investor may choose to exempt a partial
amount of the repayment.
1. Negotiate for an Exemption
In some cases, a fundraiser may not be able to repay the full amount but a
part of it. If so, the investor may choose to accept partial repayment since it is

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better than nothing. The investor and the fundraiser can communicate
outside of the Creditcoin network and negotiate for an exemption.
Since the negotiation happens outside of the blockchain, it does not cost any

Creditcoin.
2. Accept a Partial Repayment
Once the investor agrees to exempt a loan, the fundraiser will have to repay
the rest of the loan. Just like the investment transaction, the repayment
transaction also happens on another blockchain (e.g., Bitcoin or Ethereum).
After the repayment transaction is confirmed on the blockchain, the investor
can finalize the exemption by registering the repayment transaction ID on the
Creditcoin network
network to register the repayment transaction ID.
IV. Transfer a Bond
An investor may choose to transfer the ownership of a loan, bond, to another
account. We call the new account a “collector.” Once a bond is transferred to a
collector, the repayment of the loan will be sent to the collector. This allows investors
to liquidate their bonds before the maturity of their loans.
1. Searching for a Collector
An investor can find a collector for the bond outside of the Creditcoin
network. The blockchain does not support any communication tool for this
purpose.
Since the search and communication happen outside of the Creditcoin
network, it does not cost any Creditcoin.
2. Searching for a Repayment Order
A collector will send a repayment order to the investor to purchase a bond.
The investor can search for outstanding repayment orders on the Creditcoin
network for free.
3. Accepting a Repayment Order
A repayment order will include payment for transferring the bond. If the
investor likes the repayment order, the investor can transfer the bond by
accepting the payment.
network to accept the repayment order.

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Collector’s Flow
On the Creditcoin network, a collector is an account that receives the ownership of a
loan from another account.
I. Purchase a Bond
A collector can buy a bond from the investor to transfer the ownership of a loan,
bond, to his account. Once a bond is transferred to a collector, the repayment of the
loan will be sent to the collector. This allows collectors to acquire bonds closer to
maturity.
1. Searching for a Bond
A collector can find an investor outside of the Creditcoin network. The
blockchain does not support any communication tool for this purpose.
Since the search is a read-only process, and the communication happens
outside of the the Creditcoin network, it does not cost any Creditcoin.
2. Create a Repayment Order
A collector will send a repayment order to the investor to purchase a bond.
The repayment order includes a payment to the investor for the bond. The
payment can be in any cryptocurrency supported by the Creditcoin network
(e.g., Bitcoin Ethereum, or ERC-20).
The collector will pay the Creditcoin transaction fee to the Creditcoin network

for creating the repayment order.
3. Searching for an Accepted Repayment Order
The collector can search for accepted repayment orders on the Creditcoin
network for free.
4. Close a Repayment Order
After a repayment order gets accepted by the investor, the collector can
finalize the purchase of the bond by registering the payment transaction ID.
In other words, the collector closes a repayment order. The payment happens
on another blockchain, and the collector may have to pay a transaction fee on
the blockchain.
Once the repayment order is closed, repayment of the loan goes to the new
owner - the collector.
The collector will pay Creditcoin as a transaction fee to the Creditcoin
network to close the repayment order.

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Conclusion
Creditcoin network has been built to support various investment scenarios and
assists in decision making and transitioning of the relevant artifacts through their
lifecycle.

3. Software Architecture
Introduction

Purpose
This document provides a comprehensive architectural overview of the system,

using several different architectural views to depict various important aspects of the
system.
Scope
This Software Architecture Document provides an architectural overview of the
Creditcoin system developed by Gluwa, Inc. to provide a decentralized credit
network.
Overview
The Creditcoin system is a decentralized credit network for investors and borrowers
and to facilitate efficient and safe transactions between parties. A special
cryptocurrency named Creditcoin is used as an aid in performing transactions and
incentivizing parties to support, develop and expand the network and keep it
operational.
Architectural Goals and Constraints
1. To support decentralization, the network is based on blockchain (distributed
ledger) technology.
2. To reduce the work required to build a robust and trustworthy foundation for
the network, an open source blockchain project was selected based on
feature completeness and ease of configuration and modification
(Hyperledger Sawtooth).
3. The network supports the booking of investment and borrowing orders in a
credit market order book for which canceled or outdated orders are of little
interest.

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4. The network supports matchmaking, communication between involved

parties, and deal booking. The latter is stored permanently on the ledger and
may be used for dispute resolution and credit history verification.
5. The network supports interoperability with other cryptocurrencies through a
generic gateway that may be customized for use with a particular
cryptocurrency.
6. The network uses a special consensus algorithm to incentivize validators and
prevent network abuse.
7. All performance, bandwidth and storage requirements were taken into
consideration to develop the architecture.
Use Cases
The figures below summarize the various use cases.
User Use Cases

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Investor and Fundraiser Use Cases

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Subsystems and Layering

The Creditcoin system is built on top of the Sawtooth project, which provides an
implementation of a distributed ledger and interoperation between distributed
components of the network. The system provides:
1. An implementation of the Creditcoin transaction family—a group of

operations or transaction types allowed on the ledger—which supports all
required operations.
2. An implementation of a consensus algorithm to support the requirements.
3. An implementation of a generic gateway to interconnect with other
cryptocurrency networks, such as Bitcoin, Ethereum, etc.
A family of client applications was developed for testing and use by end users, which
includes a command-line client, a UI client and simulation and load testing clients.

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Processes

Each validator node runs a validator, Creditcoin Transaction Family Processor,

Settings Transaction Family Processor (stock, not shown in the diagram), and
Creditcoin consensus plugin. A gateway process runs to allow communication with
other cryptocurrency networks.
Client applications sends requests to a validator to perform operations on data for a
given transaction family; the validator then dispatches the request to a relevant
processor. The processor submits the transaction to the ledger. Clients reads the
current state of data that has been made persistent by recording it on the ledger.

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Deployment

In the final distributed system, client applications can connect with validators across
local or global TCP networks. Any validator accepts transactions from one or more
clients and clients sends transactions to one or more validators.
Implementation Notes
The initial validator network operates on Ubuntu boxes running in Azure. The
transaction families were developed and tested on Windows 10, but also runs on
Ubuntu. The development language for Creditcoin transaction family is C++; clients
are implemented in C#, while the consensus is implemented in Python.
Configuration Notes
The initial setup runs with a temporary transaction family processor that sets up the
Creditcoin components on the ledger. The system is configured to run a predefined
set of transaction family processors.

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4. Creditcoin Workflow
This document covers a step-by-step guide on how you can use the Creditcoin
network and Creditcoin through a command-line client. Refer to the User Flow
section to understand the what role each command plays in a loan-cycle.
Gluwa Creditcoin is the official implementation of the Creditcoin protocol by Gluwa,
a member of the Creditcoin Foundation. The implementation includes a
command-line client for Creditcoin users to interact with the network.
Note that you need to pay a transaction fee in Creditcoin per each command.
Exchange G-CRE to CTC

To start participating in Creditcoin network users need to register their Ethereum
addresses and exchange their G-CRE (Gluwa Creditcoin Vesting Token) to
Creditcoin (CTC). G-CRE is an ERC20 token used for initial distribution to token sale
buyers, Gluwa, and the foundation.
Register Ethereum Address

G-CRE is transferred from ERC20 by running the ‘exchange()’ method on the
Creditcoin smart contract and collecting the coins on the Creditcoin network.
In the following command:
$ creditcoin RegisterAddress ethereum address main
‘ethereum’ is the blockchain, ‘address’ is a user’s ethereum address, and ‘main’ is the

network id.
Show Address ID of the Registered Address

To find out the address id for the registered address a user can run the following
command:
$ show Address 0 ethereum address main
Where 0 is the sighash that identifies the interactive user and other parameters are
the same as provided for registration.

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Exchange G-CRE to CTC

Using the Registered Ethereum Address
Now the user can run the following command:
$ ethereum CollectCoins addressId amount
Where ‘addressId’ is the result of the previous show command and ‘amount’ is the
amount not exceeding the amount of ERC20 tokens on Ethereum.
Using the Exchange() Transaction On G-CRE Smart Contract
Alternatively, the user can manually call ‘exchange()’ on Creditcoin Ethereum smart
contract, write down the transaction id and call the following command:
$ creditcoin CollectCoins addressId amount transactionId
Review the Updated CTC Balance
Now the user can display the Creditcoin balance with the following command:
$ show Balance 0
Where 0 identifies the interactive user.
Alternatively, if the user knows a sighash of another user, the user can run the
following command:
$ show Balance eccd3cc374e641b8fabf12eff4d5e3506e...
Create Investment Orders

Create an Ask Order
An investor can add an AskOrder with the following command:
$ creditcoin AddAskOrder addressId amount interest maturity fee expiration
Where ‘addressId’ is an id of an address record registered by using ‘creditcoin
RegisterAddress’ command, ‘amount’ is the amount for investing in the blockchain
identified by the ‘addressId’, ‘interest’ is the interest rate, ‘maturity’ - is a number of
blocks to calculate the resulting interest, ‘fee’ is a loan fee and ‘expiration’ is a
number of blocks the order is valid for.
Create a Bid Order
A fundraiser can add a BidOrder with the following command:
$ creditcoin AddBidOrder addressId amount interest maturity fee expiration

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Search for Matching Orders
An investor can search for matching orders with the following command:
$ show MatchingOrders 0
Where 0 is a 0-sighash
For each matching pair of orders, the output will be a list of pairs of the respective
order ids:
askOrderId bidOrderId
Review Credit History of the Fundraiser
An investor can check the fundraiser’s credit history with the following command:
$ show CreditHistory sighash
Where ‘sighash’ is the identifier of the fundraiser.
Create Investment Offers

Create an Offer
An investor can create an offer with the following command:
$ creditcoin AddOffer askOrderId bidOrderId expiration
Where ‘askOrderId’ and ‘bidOrderId’ are the output of the previous ‘show
MatchingOrders’ command and ‘expiration’ is the number of blocks the offer is valid
for.
Search for Offers
A fundraiser can check for current offers with the following command:
$ show CurrentOffers 0
Where 0 is a 0-sighash. The output is a list of offer ids.
Create Deals
Create a Deal Order
A fundraiser can add a DealOrder with the following command:

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$ creditcoin AddDealOrder offerId expiration
Where ‘offerId’ is an id of an offer previously displayed by ‘show CurrentOffers’
command.
Search for Deals
An investor can check for new deals with the following command:
$ show NewDeals 0
Which displays a list of dealIds for the investor.
Register an Investment Transfer
To complete a deal Investor has to register a transfer with the following command:
$ ethereum RegisterTransfer 0 orderId
Where ‘orderId’ is an id of a deal previously displayed by ‘show NewDeals’
command.
This command will create an Ethereum transaction sending the amount of Ether
specified in the BidOrder to the address specified in the BidOrder from the address
specified in the AskOrder.
Note that the actual transfer can happen elsewhere as soon as it satisfies the
requirements, but it still has to be registered with Creditcoin, there is a special form
of RegisterTransfer for that - creditcoin RegisterTransfer gain orderId txId (note it's
not etherium but creditcoin command and takes additional parameter txid).
Complete a Deal
An investor can complete a deal with the following command:
$ creditcoin CompleteDealOrder dealOrderId transferId
Where ‘dealOrderId’ is the deal being completed and ‘transferId’ is the loan transfer.
Lock a Deal
To close a deal Fundraiser has to lock the deal first with the following command:
$ creditcoin LockDealOrder dealOrderId
Where ‘dealOrderId’ is the deal being closed.
Close a Deal
A fundraiser can close a deal with the following command:
$ creditcoin CloseDealOrder dealOrderId transferId

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Where ‘dealOrderId’ is the deal being closed and ‘transferId’ is the repayment
transfer.
Exempt Loans
An investor can exempt a loan with the following command:
$ creditcoin Exempt dealOrderId transferId
Where ‘dealOrderId’ is the deal being exempted and ‘transferId’ is a partial
repayment transfer.
Transfer Loans
A third party (collector) may offer to transfer the loan ownership by creating a
“RepaymentOrder” using the following command:
$ creditcoin AddRepaymentOrder dealId collectorAddressId amount

expiration
Where ‘dealId’ is the id of the deal order, ‘collectorAddressId’ is the address of the
new owner, ‘amount’ is the amount offered for transferring the loan.
Repay Loans
Search for Repayment Orders
An investor can check for new RepaymentOrders using the following command:
$ show NewRepaymentOrders 0
The output is a list of ids.
Accept Repayment Orders
An investor can accept a RepaymentOrder using the following command:
$ creditcoin CompleteRepaymentOrder repaymentOrderId
Search for Accepted Repayment Orders
A collector can check for accepted RepaymentOrders using the following command:
$ show CurrentRepaymentOrders 0

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Close Repayment Orders
A collector can close the RepaymentOrder by registering a transfer and using the
following command:
$ creditcoin CloseRepaymentOrder repaymentOrderId transferId
Demonstration
https://www.youtube.com/watch?v=qpvVrChDzZE
Please refer to the live demonstration of the Creditcoin command-line client above
for more information.

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IV. Creditcoin Distribution

Distribution of Creditcoins only occurs once Creditcoins achieved the functionalities
discussed in this whitepaper. Once Creditcoins are distributed to any user, the user
has complete control over its Creditcoins which means users can use the Creditcoin
network, exclusive of Gluwa or any other central organization or entity.
Creditcoin Sale Economics

Total Creditcoin token supply will be 2 billion coins. The token sale is capped at 200
million tokens.
1. Token Allocation
Creditcoin tokens are distributed to the four major participant groups of the
Creditcoin Network:
● 70% to Creditcoin miners (as mining block rewards) – For providing
investment funds, maintaining the blockchain, running contracts, and more.
● 15% to Gluwa, Inc. (Genesis allocation; 6-year linear vesting) – For research,
engineering, deployment, business development, marketing, distribution, and
more.
● 10% to Investors (Genesis allocation; 6-month to 3-year linear vesting) – For
funding network development, business development, partnerships, support,
and more. Any unsold coin goes to Creditcoin Foundation with a vesting
period of 6 years.
● 5% to Creditcoin Foundation (Genesis allocation; 6-year linear vesting) – For
long-term network governance, partner support, academic grants, public
works, community building, and more.
2. The Creditcoin Token Sale

Fundraising. Gluwa, Inc. requires significant funding to develop, launch, and grow
the Creditcoin Network. We must develop all of the software required, including
mining software, client software, user interfaces and apps, network infrastructure
and monitoring tools, software that third-party wallets and exchanges need to
support Creditcoin, integrations with other investment software, tooling for web
applications and dapps to use Creditcoin, and much more. We must deploy the
network, facilitate its large scale growth, market to and bring onboard miners and
clients, bring key partners into the ecosystem, and undertake many other tasks.

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Offering of Creditcoin SAFTs. To raise the necessary funds, Gluwa, Inc. is
conducting an offering of SAFTs. This offering is happening in one part:
(1) A private sale for Gluwa, Inc. and Creditcoin community
Token Sale. We hope to bring together a large and diverse group of investors from
around the world consisting of people who want to work closely with us to build the
most powerful cloud credit network. We primarily seek strategic investors who have
something high-value and unique to offer to Creditcoin. We also wish to reach as
broad of an investor base as possible; we want people and organizations from
countries all over the world, who work in many different kinds of industries. We
want our investors to represent many different groups so that Creditcoin can quickly
come to serve those users and spread across these networks.
We want investors who add value, and who will work with and for the network. We

want investors who will share their skills, their knowledge, and their networks to
achieve success. We have structured the token sale to reward a large group of
people that can help us build the network, by selling Creditcoin at what we think is a
much lower price than it will be worth someday. (Caveat: as with any risky
investment, of course, we cannot make guarantees or predictions.) We are,
unfortunately, legally restricted to involve only accredited investors (global investors
accredited to US standards or similar—see the legal section).
Caps. A soft cap is the amount received at which your crowd sale will be considered

a success. It is the minimum amount required by your project. A hard cap is defined
as the maximum amount a crowd sale will receive. This offering has a soft cap of
USD 10 million and a hard cap of USD 30 million.

Token Sale Details
● Instrument: Creditcoin SAFTs

● Increasing Price:
1. As investments are made, the price increases based on the Price
Function
● Sale Price Function:
1. Pre-sale price = min(X, Y) where:
■ X = max($0.85, amountRaised/ $4MM) USD / CTC
■ Y = max($1, amountRaised/ $40MM USD) USD / CTC
○ amountRaised is the actual USD dollar amount that is collected
■ The ETH to USD exchange rate at the time of each individual
sale should be used
● Sales Cap: 200 million Creditcoin (unknown how much this is equivalent to in
US dollars, as discounts affect the totals) Soft cap USD 10 million. Hard cap
USD 30 million.
● Sales Timeline: Private sale starts on September 1st, 2017.

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3. Vesting and Discounts

Each group has a different vesting schedule:
● Investors: 6 months minimum

● Gluwa, Inc: 6 years, linear vesting
● Creditcoin Foundation: 6 years, linear vesting
● Miners: Release half-life of 6 years
For investors, the following vesting periods and discounts are available:
● 6 month vesting: 0% discount

● 1 year vesting: 7.5% discount
● 2 year vesting: 15% discount
● 3 year vesting: 20% discount

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Figure 2: Creditcoin Network In Use

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V. Epilogue - Designing Creditcoin

As James Rickards, the author of Currency Wars, said, “Currency is not only used to
buy goods and services... people should be able to lend and borrow to make it a
currency.” Although cryptocurrency already has a significant portion of the market
(more than $70 billion), it is true that the capital market infrastructure it provides is
limited to payment. Cryptocurrency will eventually require a credit network.
People say, “If all you have is a hammer, everything looks like a nail.” Just like with
any other technology development project, before we get started with a blockchain
project, we have to ask ourselves whether it is the best technology for solving the
problem.
The problem we are trying to solve is the vicious cycle that unbanked people
experience. We set the unbanked as our target group because they are the stratum
that has reason to use cryptocurrency—even with some of the inconveniences
associated with the premature ecosystem.
Many people can’t get signature loans from the traditional banking system. As a
result, they borrow money using other methods, and banks cannot record these
transactions. So, credit records do not accumulate in the banks, which means that
people cannot build credit—there is no reason for banks to believe the individual files
of lenders. Eventually, the vicious cycle of receiving credit loans again in adverse
conditions repeats. To summarize, the credit history of the unbanked does not get
objectively accumulated.
The solution is to build a system that stores credit records objectively. As I said
earlier, a blockchain is a technology specialized in keeping data objectively. The
blockchain is the perfect technology to solve this problem.
Once you decide to use the blockchain, you need to make a choice: Are we using a
smart contract, or are we building our proprietary blockchain?
A smart contract is enough to store information on the blockchain. We can save
much time if we use a blockchain with a well-established ecosystem as a platform
such as Bitcoin or Ethereum. Designing and building a proprietary blockchain is very
time-consuming.
However, existing blockchain platforms are slow and expensive. A blockchain is a
system that runs the same computation repetitively. Therefore, the best performing
blockchain is always less efficient compared to a centralized server. Also,
multi-purpose systems like Ethereum are less efficient than single-purpose systems
like Bitcoin. Platform blockchains will stay relatively slow and expensive for many
years to come.
We have experienced the limitations of the existing blockchain platform.

29 / 31
After designing the Creditcoin, we first built the Creditcoin with ERC-20 standard
smart contract of Ethereum to make a proof-of-concept of Creditcoin. Something
had happened by the time we finished building the smart contract. At that time,
Cryptokitty on Ethereum was becoming popular, and transactions began to
accumulate without being processed, which caused the cost of using Ethereum to
increase considerably, making it economically impossible for the unbanked to use the
smart contract. Our partner, Aella, gets over 1,000 loan requests per hour. We
concluded that we could not operate Creditcoin as an Ethereum smart contact.
We finally decided to develop a proprietary blockchain. After reviewing the
requirements, we found that Hyperledger Sawtooth was the best for our needs. Our
blockchain architect, Vlad, will discuss the details in Session 6.
We decided to develop a blockchain with a single purpose. Creditcoin is only
intended for recording credit transactions. In the end, users who want to transact
Cryptokitty and others who wish to trade file storage space don’t have any reason to
compete with each other for limited bandwidth. Blockchains with a single purpose
will not interfere with each other's traffic since they are in different markets. User
behaviors will determine the cost and the traffic of each blockchain.
During the design process, we were confronted with endless questions (and
answers).
At first, we started by defining what a loan is. A loan is essentially a conditional
transaction. There are usually dozens of conditions you can set for a loan, and that
means there are thousands of possible types of loans. As Creditcoin is not a smart
contract platform, it should not support every kind of loan. Then, what is the most
basic loan? It is borrowing money and paying it back with more money. In short, it is
a contract saying, "I will repay $110 if you lend me $100." You will pay interest even
if you pay back earlier than the expiry date. More specifically, it is a
non-collateralized bullet loan with a prepayment penalty.
Next, we've defined the types of transactions in the order of creating a loan contract.

First, there is a bid, offer, and deal at the stage where both users agree on the
conditions of a loan. Then, there are two transactions: an investment transaction for
a lender to send money to the borrower and a repayment transaction for a borrower
to repay the money back to a lender. At this time, if the lender and the borrower
have negotiated the reimbursement amount, the lender may receive only a portion of
the money and exempt the rest. The lender may also transfer the receivables to
another person as a creditor.
A difference between Creditcoin and Bitcoin is that Creditcoin needs to support a
variety of different types of transactions.
There has been much discussion about supporting collateral. In reality, many loans
have collateral. If security tokens mature, they will play a useful role as collateral for
Creditcoins. For example, you can borrow money with the real-estate security tokens
as collateral for loans. However, the standard for the security token does not exist
yet, and we do not see any substantial traction of security tokens. Therefore, we

30 / 31
have decided not to implement this idea until the security token establishes a mature

ecosystem.
As a public blockchain, we also had to decide on a consensus algorithm. Currently,
the industry is struggling with a variety of consensus algorithms. Proof-of-Work
represented by Bitcoin, Proof-of-Stake that Ethereum plans to adopt, and
Proof-of-Distribution that we designed were on the list. However, Proof-of-Work is
the only battle-proven consensus algorithm. We decided not to reinvent the wheel.
Some people criticize Proof-of-Work, saying that it only handles a limited number of

transactions and it is slow. If Creditcoin runs into a scalability problem, it means that
Creditcoin is very successful. We hope that we can run into such a problem. If
another agreement algorithm turns out to be better for our purposes, then we can go
for it and implement it. We need a blockchain that we can use today.
Bitcoin only supports a single type of transaction: transfer. However, Creditcoin
needs to support seven types of transactions. Each transaction will have a different
value depending on the user, and demand for transactions will also vary. What if
users ask for extra fees for certain types of transactions? If miners get the
transaction fee as Bitcoin miners do, a transaction with more transaction fee
attached to it will be a priority for miners. This might cause bottlenecks. For example,
although users have made 100 loan agreements, no investment transactions get
processed.
So, we decided to see how the market would respond to a wide range of
transactions. The initial release of Creditcoin will have a fixed transaction fee. We
will collect live usage data to make decisions for future development.
Ideally, users should be able to get a loan on any blockchain. How would Creditcoin
know if investment or repayment transactions are done correctly on other
blockchains? We use the transaction ID of other blockchains. Creditcoin node
operators run nodes of different blockchains and enter transaction IDs to look up
transaction details in other blockchains.
Creditcoin currently supports Bitcoin and Ethereum. Creditcoin can support a

blockchain as long as a Creditcoin plug-in is developed.
Now Creditcoin is completed. With Creditcoin, you can get non-collateralized bullet
loans with a prepayment penalty, and you can transfer loans as well. If you develop a
plug-in, you can connect any blockchain to Creditcoin. Creditcoin matches loan
orders in the blockchain and verifies the investment and repayment transactions in
other blockchains. Welcome to the borderless credit market.

31 / 31
VI. Regulatory, Compliance, and Legal

Considerations Section

Currently, digital tokens are being closely and regularly scrutinized by various
regulatory bodies around the world, including but not limited to the SEC, European
Securities and Markets Authority, and each individual state in the United States. Law
regarding ICO’s is an evolving area of law, and there is no clear guidance from
regulatory agencies, courts, and laws regarding legally-compliant practices for ICO’s.
As a result, the future evolution of the law and potential consequences are too
speculative for the Gluwa to reasonably foresee and act upon. However, Gluwa has
taken good-faith measures to account for the evolving law and rules on ICO’s and in
an effort to comply with such law, but there is still substantial risk surrounding legal
compliance for any ICO in light of the little legal guidance. There is a substantial risk
that in numerous jurisdictions, including the United States, Creditcoins may be
deemed to be a security, meaning such token must be registered or comply with an
applicable exemption from registration. For example, applicable securities laws may
limit the ability to hold more than certain amounts of Creditcoins; restrict the ability
to transfer Creditcoins; require disclosure or other conditions on you in connection
with any sale of Creditcoins; and may restrict the businesses that facilitate
exchanges or effect transfers of your Creditcoins. Every user, purchaser, and holder
of a Creditcoin is required to make diligent inquiry into determine if the acquisition,
possession and transfer of Creditcoins is legal in its jurisdiction and to comply with
all applicable laws and any of Gluwa’s terms and conditions. Creditcoins and the
Creditcoin network may be eliminated by future regulation or legal actions. In
response to such action, Gluwa may take actions that adversely impact you and the
Creditcoins you hold, including: (a) ceasing operations or restricting access in certain
jurisdictions, (b) voiding, refunding or not processing token purchases, or (c) ceasing
operations entirely.
Each token holder is: (a) if in the United States, or a U.S. Person (as defined in
Regulation S under U.S. Securities Act of 1933 (the “Securities Act”)), an accredited
investor (as defined in Regulation D under the Securities Act) or (b) if outside of the
United States, a non-U.S. Person who is not purchasing for the account or benefit of
a U.S. Person (as defined under Regulation S under the Securities Act). Each token
holder of Creditcoin is sophisticated in terms of investment, business, and/or
blockchain technology, or be able to fend for themselves or have access to the
information that can allow such purchaser to fend for themselves with regard to the
subject matter of Creditcoins.


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Tae-lim Oh |​ Gluwa. Inc.

According to the IMF, global nominal GDP was $78.5 trillion in 2014. However, Aon

(2) Illustrates the Creditcoin ecosystem.

(3) Provides a detailed explanation of the Creditcoin protocol.

(4) Explains how Creditcoin gets distributed.

(5) Describes the design philosophy and history of Creditcoin.

In response to the subprime mortgage crisis, Satoshi Nakamoto invented blockchain

Although there are advantages and disadvantages to making one’s own investment

II. Creditcoin Ecosystem

A diagram of the Creditcoin network in a lending market is shown in Figure 2.

1. Direct link between investors and fundraisers: Removes intermediaries to get

When Do You Pay Creditcoin?

I. Find a Loan Offer

1. Create a Bid Order

Note that the offer is in Bitcoin, not in Creditcoin. On the Creditcoin network,

2. Find Investment Offers

If an investor likes the fundraiser’s bid order, he can create an offer. The offer

The fundraiser can retrieve a list of offers for free.

If a fundraiser likes an offer he received, he can accept the offer by sending a

II. Make a Repayment

2. Transfer the Repayment to the Investor

III. Make a Repayment with an Exemption

Optionally, a fundraiser may negotiate with the investor for an exemption.

1. Negotiate for an Exemption

Since the negotiation happens outside of the blockchain, it does not cost any

2. Send a Partial Repayment

I. Find an Investment Opportunity

1. Create an Ask Order

Note that the offer is in Bitcoin, not in Creditcoin. On the Creditcoin network,

2. Find Matching Bid Orders

3. Review a Fundraiser’s Credit History

If an investor is interested in any matching bid order, the investor can retrieve

4. Create Investment Offers

If the investor likes the credit history of the fundraiser, he can create an offer.

II. Make an Investment

1. Transfer the Investment to the Fundraiser

2. Complete the Deal

Once the investment transaction is confirmed on the blockchain, the investor

III. Collect a Repayment

1. Negotiate for an Exemption

Since the negotiation happens outside of the blockchain, it does not cost any

2. Accept a Partial Repayment

IV. Transfer a Bond

1. Searching for a Collector

2. Searching for a Repayment Order

3. Accepting a Repayment Order

1. Searching for a Bond

2. Create a Repayment Order

The collector will pay the Creditcoin transaction fee to the Creditcoin network

3. Searching for an Accepted Repayment Order

4. Close a Repayment Order

This document provides a comprehensive architectural overview of the system,

Architectural Goals and Constraints

4. The network supports matchmaking, communication between involved

User Use Cases

Investor and Fundraiser Use Cases

Subsystems and Layering

Tae-lim Oh | Gluwa. Inc.