The Market BitBounce, BitBounce Ads, Credo, & CredoEx

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1 The Market BitBounce, BitBounce Ads, Credo, & CredoEx Blockchain Based Spam Solution & Attention Market Stewart Dennis Nishant Jacob Marty Bauer Turing Technology, Inc. November 15, 2018 Abstract is broken. Spam costs the global economy $20 billion per year and still accounts for 70% of all . Existing regulatory and technological solutions have failed to eliminate the significant monetary cost and negative externalities of unsolicited and spam. Additionally, marketing is one of the most effective conversion channels yet advertisers and other senders have difficulty targeting the right individuals and ensuring their s are received and opened. Advertisers and other senders also have no way to directly incentivize consumers to open and read their advertising s and no way to avoid their s being automatically routed to folders like promotions or social in popular services like Gmail. Consumers have no incentive to open and read advertiser s s as they are sent for free. Consumers receive irrelevant marketing due to the lack of incentives for advertisers to target their marketing s due to access being close to free. Consumers are not compensated for their valuable attention when opening and reading marketing s. These problems with present significant negative externalities and an inefficient mechanism of exchange for access and marketing. The solution is to establish a new market for access and marketing in which senders contacting unknown recipients pay a fee for the to be sent to the recipient, paid either when it is received or responded to. The fee prices in and compensates recipients for the attention they provide the , improving senders likelihood of obtaining the attention. The solution is implemented in five components: BitBounce, BitBounce Ads, credo, CredoEx, and the Credo Blockchain. BitBounce implements filtering of s from unknown contacts and the payment mechanisms for receipt.

2 BitBounce Ads implements the sending of paid marketing campaigns from advertisers to BitBounce users. The credo token is the primary unit of exchange that recipients are compensated with. CredoEx is a cryptocurrency exchange through which users can easily realize the value of their tokens by converting them into other forms of value. CredoEx also serves as the platform through which those wanting to conduct paid marketing campaigns via BitBounce Ads may purchase more credo.

3 Contents 1. Value Proposition 2. State Change 2.1 Starting State between known contacts Cold/unsolicited 2.2 Goal State 2.3 Path Overview Components Justification Timing BitBounce, BitBounce Ads, & credo Spam Filter Use Case Autopilot Use Case Paid Campaign Use Case via BitBounce Ads Existing Accounts Plugins Mobile Apps BitBounce Ads Scaling Success CredoEx Motivation Vision Goals Current Product Roadmap Credo Blockchain Motivation Vision Goals Development Phases Migration Mining Consensus System Transaction Fees and Expected Risk-Adjusted Returns from Mining Applications of the Credo Blockchain Implementation details of the Credo Blockchain 3. Economy 4. Distribution 4.1 Psychology Behind Adoption 4.2 Viral Marketing Effect

4 4.3 Growth in Fundamentals 4.4 Transaction Volume 4.5 Reward Mechanisms 4.6 A New Standard 4.7 A New Tradition-Based Norm 5. Token Dynamics 5.1 Blockchain Implementation 5.2 Total Supply 5.3 Non-inflation 5.4 Division of Tokens 5.6 Pricing 5.7 Team 5.8 Community 5.9 Compliance 5.10 Risks 5.11 Smart Contract 5.12 Token Sales 5.13 Use of Proceeds 6. Credonomics 6.1 Market 6.2 Exchange 6.3 Participants 6.4 Tradable item 6.5 Value of Access Goal-directed interpretation of value Value relativity Value fluctuating based on changing economic context 6.6 Pricing of Access Credo-denominated Threshold price Prioritizing price Price-value differential problem Price-value differential solution Pareto distribution for price threshold hypothesis 6.7 Medium of Exchange Credo Credo ownership Credo supply Credo demand Credo pricing Credo liquidity Credo necessity Credo as a digital commodity 6.8 Early Adoption and Market participation 6.9 Ensuring effective participation in the market

5 1. Value Proposition We propose the credo (pl. credos) as a token of exchange in a market for access that seamlessly integrates with existing accounts and infrastructure. The credo plus BitBounce[1] and BitBounce Ads solution provides: Recipients: reduced spam in inbox, restored productivity, compensation for engagement with s from unknown senders. Senders: more reliable acquisition of recipient attention, improved access to recipients who are currently difficult and valuable to contact, greater ability to target relevant recipients,ability to route s to user s primary inbox for services like Gmail that automatically separate s into promotions, and social folders, pricing information on the value of a recipient's inbox, (see 3.1 for discussion of the value of access corresponding to sender-recipient pairings). CredoEx strengthens this value proposition by allowing recipients to immediately realize the value of their tokens, and enabling senders to easily purchase tokens for paid campaigns. The Credo Blockchain provides the scalable transaction infrastructure on which the BitBounce, BitBounce Ads, credo, and CredoEx systems operate. 2. State Change The purpose of credo, BitBounce, BitBounce Ads, CredoEx, and the Credo Blockchain is to establish a global market for that solves the problems of spam and access. Given that usage is fast becoming global with 3.8 billion users already[2], solving these problems would create tremendous good through positively impacting a large number of people. Once we achieve this, we intend to expand beyond and solve the problem of compensating people for their attention no matter where they spend it. 2.1 Starting State The starting state is a world with free and many negative externalities. We can discretize free access into three separate classes, and then assess each class in turn: between known contacts between known contacts is generally fine. This case only becomes problematic if a known sender abuses access to a recipient (e.g. sending an excessively long series of s until a response is received).

6 2.1.2 Cold/unsolicited Cold s take up time and cause loss of productivity. Specifically, they cause a number of negative externalities including but not limited to: lost attention and productivity, overload, difficulty finding the right information, lost time spent on archiving and deleting cold s, and other general negative effects associated with spam and unsolicited . These negative externalities have been estimated to cost the global economy $20 billion per year[3] and US businesses $712 per employee each year in lost worker productivity[4]. There is an additional societal cost of scam s, such as the infamous Nigerian prince scams and phishing scams through which theft of information and assets can occur. Cold s constitute a significant portion of s, with research finding 66 percent of reaching user inboxes is spam despite aggressive spam filters[4]. Other recent estimates from experts at Microsoft and Google indicate that 70% of all global is still spam[3]. Existing regulations, such as the CAN-SPAM Act, and technology solutions such as spam filters have been found to be largely ineffective at solving the problem[5]. Advertisers and marketers are incentivized to and do send a high volume of cold s because the cost of sending an is near-zero and they lack effective targeting and engagement increasing mechanisms. 2.2 Goal State The goal state is a world in which a market for access has been established and participation in the market for access is pervasive and global. With that market established, recipients will be sufficiently compensated for any cold/unsolicited s they receive. Advertisers and other senders will have the ability and incentive to target the right recipients and incentivize them to engage with relevant offers. 2.3 Path Overview Components There are currently five components to the path between the starting and goal states: 1. BitBounce is the software that facilitates the market. It includes user interfaces for managing a whitelist, configuring settings such as the fee amount to reach an inbox, and viewing analytics, as well as a soon to be released mechanism to

7 automatically update a user s fee to reflect the demand for their inbox, facilitating market transactions. It also includes the background services for conditional routing, whitelist synchronization, and blockchain transaction handling. This component is closed source and three patents have been filed to cover inventions involved in its implementation. 2. BitBounce Ads is the software that facilitates paid marketing campaigns sent from senders to BitBounce users. It includes user interfaces for companies and organizations to compose and edit s, target which BitBounce users the campaigns will be sent to, set the maximum paywall price the sender is willing to pay, set how much the sender is willing to pay for the campaign, whether it is a one time or daily campaign, and allows the sender to pay for their campaign. This component is closed source and a patent has been filed to cover inventions involved in its implementation. 3. Credo is the means of exchange, unit of account, and store of value in the market. It is primarily used to pay for s to be received or responded to, maintain accounting for transactions, and stockpile future access to attention. It also allows entities to speculate on the valuable digital commodity[18] of attention, creating a market for this commodity. Lastly, it is used to incentivize the adoption and continued use of BitBounce and CredoEx, and drive future investment for these technologies. 4. CredoEx is a cryptocurrency exchange that facilitates liquidity for credo and the market. It includes trading pairs primarily between credo and other currencies, tokens, and digital assets; currency pair categories for BTC, ETH, and miscellaneous pairs are also offered. Transactions in the BitBounce market are immediately performed through or recognized into CredoEx wallets, so that earned credos are available for trading, storage or transfer right away. This component is closed source and a patent has been filed to cover inventions involved in its implementation. 5. Credo Blockchain is the transaction infrastructure that will support BitBounce, BitBounce Ads, credo, CredoEx, and, in the future, many third party projects and tokens. It is a Proof of Stake blockchain designed to allow for large transaction throughput with minimal energy use, provide greater scalability, and facilitate lower transaction cost than most existing blockchains. This component will be open source. These components constitute a comprehensive, vertically integrated solution for an market that rewards attention Justification

8 There are two choices that require justification: 1) using a cryptographic token, and 2) creating and using the credo token. For 1: 1. The primary justifying reason to use a cryptographic token rather than a conventional currency is that token transactions can be confirmed in seconds or minutes rather than days and are irreversible which is necessary for timely authorization and delivery of s to untrusted recipients. 2. Tokens can also facilitate global micropayments at a fraction of the cost of traditional payment networks especially as scaling protocols continue to be developed for the underlying blockchains. Furthermore, tokens allow users who do not want to or cannot place their trust in centralized institutions (due to lack of access, expense, or institutional integrity) to receive decentralized payments for receipt and the ability to withdraw these payments to their own software, hardware, or paper wallets at any time and avoid any issues with their funds being confiscated, misused, discreetly reinvested, frozen, or stolen while being stored with a centralized entity. 3. Using a cryptographic token allows us to easily create and trade digital commodities representing access to attention, allowing us to create digital commodities markets to reflect physical commodities markets, a vital step towards a more comprehensive digital economy. 4. Aside from their enhanced security characteristics, cryptographic tokens also offer potential privacy enhancements as well and advantages for overcoming financial censorship. There is a secondary, non-technological reason: the marketing benefit of using cryptographic tokens. For 2: 1. The justifying reason for creating the credo token is the need for more control over the dissemination of tokens, which incentivizes user and community engagement and growth. Redistributing Bitcoin or some other token to correspond to use of BitBounce seems infeasible. By creating a new token, we can distribute a much larger portion of the token s total supply in a way that corresponds to usage of BitBounce (see 3.4). 2. Another justifying reason to create our own token is that we can raise funds for BitBounce through selling a portion of the tokens.

9 Timing The idea of using payments to solve spam has been around for a while[7], but it has only recently become feasible through the innovation of faster transaction confirmation times found in cryptographic tokens. That innovation combined with the emergence of blockchain technology to facilitate token creation makes now the right time to finally solve the spam and access problems using this approach BitBounce, Credo, & BitBounce Ads Spam Filter Use Case The first use case for BitBounce is to act as a more effective spam filter, which solves the spam problem. This works as follows: 1. A new user signs up and adds an account. 2. The user then syncs and/or manually adds contacts to a whitelist. 3. Incoming s received from addresses that are not on the whitelist are filtered to an folder called unpaid, and an auto-response is then sent to the original sender as illustrated in Figure The auto-response asks the sender to do one of the following: 1. Request to be on the whitelist, which puts their address on the recipient s whitelist with a button to approve their membership. 2. Enter a recipient-generated promo code that will allow the to go through for free. 3. Pay the user s fee for the to go through. 5. If the sender does nothing, the remains in the unpaid folder.

10 Figure 1. Auto-response Autopilot Use Case The second use case for BitBounce is to automatically pay in credo for s to go through to recipients. This reduces payment friction and still ensures the problems are solved because the inbox only contains s from people you know or those you ve been paid in credo to receive. We have developed proof of concept consumer and enterprise versions of BitBounce Autopilot. The enterprise version works by checking the from-address of incoming s against the company s domain and then sending a credo to the recipient user when there s a match Paid Campaign Use Case via BitBounce Ads

11 The third use case operates via BitBounce Ads and allows marketers and advertisers such as event organizers, newsletter writers, entrepreneurs, political campaigns and other organizations to compose and send paid campaigns. These are s sent to a large number of recipients with credo incentives attached to each . These campaigns can be sent to BitBounce active users. We allow campaign senders to release incentives upon delivery, and plan to allow incentives to be released when an action has been performed by the recipient. This user interface for composing and sending such campaigns is available via BitBounce Ads which was launched in Q (see Figure 2). Figure 2: BitBounce Ads Dashboard Existing Accounts One of our primary design goals is to improve the state of with minimal disruption to users existing experience. Users already have significant data in and habits formed around specific services, and so we want them to be able to continue using their setup of choice. This goal is accomplished through seamless integration of BitBounce with existing accounts. As soon as a user adds an account, BitBounce can sync their contacts to their whitelist and begin filtering spam (see 3.3 for early usage data). The user can then continue using their existing client (e.g. Gmail, Outlook, etc.) with BitBounce operating in the background. In fact, we expect that many users will only rarely directly access the BitBounce dashboard (see Figure 3), especially as the plugins mature.

12 Figure 3. BitBounce Dashboard Plugins In order to further accomplish the goal of improving users experience with what they are currently using, we have developed plugins for Gmail (see Figure 3 for design) and will do for Outlook that allow for the attaching of credos to an message (as per 2.3.4). These plugins also facilitate easier adding of addresses to a whitelist via an Add to BitBounce Whitelist button. Plugins for these services have already been developed for Turing Cloud[8], and the experience from developing them has been be applied to BitBounce plugins.

13 Figure 4. Design: BitBounce plugin for Gmail Mobile Apps ios[19] and Android[20] apps for BitBounce have been developed. These apps facilitate viewing a wallet balance, managing a whitelist, and configuring BitBounce. Our Android app now has 300,000+ installs with a rating of 4.36 out of 5 from reviews. Our ios app now has 1,000+ downloads with a 4.9 out of 5 rating from 15 reviews BitBounce Ads The initial BitBounce products were largely developed for consumers every day users who receive too much cold and would like to get compensated for it. In Q3 2018, we brought to market an enterprise edition of BitBounce that focuses on the Paid Marketing Campaign use case.

14 Scaling There are two main systems to scale: BitBounce processing and credo transactions. 1. Scaling BitBounce processing: much of the initial scaling of BitBounce can be done using experience the team gained from developing Turing Cloud and our other Elixir-based services. At some point, BitBounce can be switched to a new architecture that shards accounts across multiple databases, which would facilitate near infinite scalability. 2. Scaling credo transactions: We currently conduct some portion of transactions off the blockchain that will be settled when a wallet owner wants to withdraw credo; this has helped us avoid disproportionately large transaction fees for micropayments on the Ethereum blockchain. We intend to port all our products over to our own Credo Blockchain, which utilizes a Proof of Stake consensus mechanism allowing us to run all our transactions on chain with low fees and high throughput Success We will measure the success of our solution to the spam problem by the percentage of all accounts that have BitBounce active on them. We will consider our solution to the spam problem to be more successful as this percentage increases. We will measure the success of our solution to the access problem by the volume of paid s sent via BitBounce Ads, which will indicate the level of activity within the market for access that we have established. We will consider our solution to the access problem to be more successful as the number of paid s increases and the amount that BitBounce users earn increases CredoEx Motivation There are several factors that motivated the development of CredoEx, including: 1. Community priorities: Following the credo token sale, our community of owners frequently expressed that exchange support and token liquidity were among their top priorities. Moreover, new BitBounce users would frequently inquire about how to convert their credo tokens into another currency such as dollars or bitcoins. 2. Significant pain points when dealing with existing exchanges: While endeavoring to meet these community priorities, our team had significant challenges

15 dealing with existing exchanges. One leading US exchange that we d integrated BitBounce with suddenly cut off our API access without warning, froze our account, was unresponsive to our attempts to resolve the situation, and wouldn t even accept a meeting with us. Another exchange would only list credo if we agreed to unreasonable, one-sided terms. Other exchanges charged exorbitant listing fees that went into the 6 and 7 figure range, and one exchange never listed our token after receiving a substantial listing fee payment. 3. Significant deficiencies in existing exchanges: Moreover, we noticed various problems with existing exchanges including technological unreliability and unavailability, bad user experience, poor customer service, usage of questionable practices, weak information security, pandering to speculators rather than focusing on real utility, and sluggish market-leadership that hinders progress. 4. Improving status quo for customers: Our team believed that we could improve upon the deficiencies of the status quo and provide customers with improved liquidity, product reliability, UX, etc. By doing so, our users and customers will receive more value from our service and our market solution becomes more effective. We built CredoEx from the ground up using the highly scalable Elixir programming language implemented on the Erlang virtual machine. These technologies are designed for performance and throughput, providing CredoEx with a reliable architecture to optimize for availability and avoid technical downtime. 5. Opportunity to make credo a top cryptocurrency: By creating an exchange centered around credo with many trading pairs established between credo and other currencies, we will reinforce the value proposition for the token and help propel it to become a top cryptocurrency within the blockchain ecosystem. 6. Facilitate large credo purchases for use on BitBounce Ads: since we rolled out BitBounce Ads, CredoEx has allowed our team and our enterprise partners to facilitate purchases of substantial quantities of credo at market prices rather than relying on buying direct from our company. 7. Create an efficient marketplace for the digital commodity[18] of access: CredoEx has allowed buyers and sellers to efficiently trade credo as a digital commodity for access. Physical commodities have advanced trading market places and infrastructure helping to facilitate the physical economy. For the digital economy to continue to grow, it is essential that we create advanced trading infrastructure to trade digital commodities of which access is a valuable type that allows organizations and individuals to better leverage a key communication tool to drive growth of their digital products. Given the above factors, our team decided to take this area into our own hands and build CredoEx.

16 Vision Our vision for CredoEx is to create the world's premier cryptocurrency exchange that solves the major deficiencies in the product category. Additionally, this exchange provides the primary source of liquidity for consumers using BitBounce and enterprises using BitBounce Ads; consumers are able to easily sell credo they earn by receiving paid s via BitBounce, and enterprises can easily purchase substantial quantities of credo from the market to fuel their paid marketing campaigns on BitBounce Ads. Additionally, users can aquire credo to use a store of value or speculate on the future value of the communication power unlocked by credo Goals Our specific goals for CredoEx included the following: Accept new users immediately Be lightning fast to get setup on Be extremely easy to use for beginners and experts Be extremely reliable and ready to scale from day one Have transparent, low fees and no hidden withdrawal/deposit fees Have powerful functionality for price analysis and advanced trading features Have a responsive and easy to use interface Have nearly no downtime, not lock users out and not prevent new users from signing up. Comply with AML, KYC, GLBA and other applicable regulations. List and provide liquidity for other tokens using a token-project-friendly approach Current Product The current version of CredoEx is beautiful, fast, reliable, featuring a great user experience, and currently available at credoex.com. It supports four types of order: market buy, market sell, limit buy, and limit sell. It currently has fifteen trading pairs including credo / ETH, credo / BTC, credo / LTC, and a number of utility tokens serving as a gateway to the crypto-economy with more coming soon Roadmap Our roadmap includes fiat support once we ve confirmed a banking partner, additional trading pairs with many currencies and digital assets, support for stop orders, additional advanced trading features, and native mobile support. We are additionally researching and developing some potential innovations for CredoEx that we re not ready to disclose at this time.

17 2.3.4 Credo Blockchain Motivation: There are several factors motivating the development of the Credo Blockchain, including; 1. Increase scalability and throughput while lowering cost: Current blockchain infrastructure is too slow and expensive resulting in many transactions for BitBounce, BitBounce Ads, and CredoEx needing to occur off-chain. This results in more centralization than is desirable. 2. Re-democratize and decentralize mining: Current blockchain infrastructure is susceptible to mining centralization due to the use of Proof of Work consensus algorithms that, in order to effectively participate, require ASICs (specialized mining equipment) operated in areas with easy access to cheap electricity. This results in geographic centralization of mining, impacting the decentralized properties of blockchains. 3. Develop domain-optimized infrastructure: Current blockchain infrastructure is not optimized for the and advertising use cases. 4. Expand economy: Creating a Credo Blockchain allows BitBounce to build a larger platform and economy for use cases beyond and attention, allowing greater value to be built. This can also drive more advertisers on BitBounce Ads and earnings for BitBounce users from third-party token developers looking to grow adoption for their project Vision: Blockchain and cryptocurrencies have tremendous potential, but industry progress has been slower than many hoped for, primarily, due to limitations in blockchain infrastructure. We intend to develop the Credo Blockchain to fulfill crypto s potential. Our vision for the Credo Blockchain is to create the world s premier blockchain that is architected to overcome the scalability, cost, and throughput issues of existing blockchains. The Credo Blockchain will be seamlessly integrated with our other services including BitBounce, BitBounce Ads, CredoEx, and, in time, other third-party projects Goals: We intend to launch a testnet in 2018 and a mainnet in After sufficient testing, the mainnet will launch with all ownership positions in the credo ERC20 token ported 1-to-1 in the

18 genesis block of the Credo Blockchain. We will then integrate BitBounce, BitBounce Ad, and CredoEx with the Credo Blockchain. Following the launch of our mainnet, we will work on adding third-party token support as well as smart contracts implemented via one or more Turing Complete programming languages Development Phases Phases 1: Create a Bitcoin-like blockchain with a scalable PoS system allowing for greater throughput with lower transaction cost and lower energy use. This phase will be rolled out as a testnet and then a mainnet. This phase will also involve integrating the mainnet blockchain with BitBounce, BitBounce Ads, and CredoEx. Phase 2: Build out third-party token support allowing other tokens and projects to launch on the platform, greatly increasing transaction volume. Phase 3: Create full Turing Complete smart contract functionality to facilitate decentralized applications, and decentralized organizations, and various other forms of smart contract to be built on the blockchain. Phase 4: Implement features such as sharding to further improve scalability Migration: All ownership positions in the ERC20 credo token will be migrated to the Credo Blockchain in the genesis block based on a snapshot of credo address, balance pairs on the Ethereum blockchain. The snapshot will be taken at a date and time close to the launch of the mainnet; any transactions made with the ERC20 token after the snapshot is taken will not be migrated to the Credo Blockchain Mining: The Credo Blockchain will operate on a Proof of Stake model, re-democratizing crypto mining, allowing anyone to own and operate a credo mine without having to buy expensive hardware. Miners will participate in validating blocks, not by solving computation puzzles like with Proof of Work systems used in blockchains like Bitcoin (and the current implementation of Ethereum) which requires large amounts of energy and specialized equipment, but instead by staking or depositing a certain amount of credo and then voting on which block should be next along with other miners who ve staked or deposited credo to be able to participate in voting. Miners are rewarded for staking some of their credo and participating in the voting process to help select the next block in the blockchain, but they are penalized if they abuse this voting power to attack the system, such as by attempting a double-spend attack.

19 Consensus System One of the most critical components of any blockchain is the consensus algorithm. This algorithm dictates how the next block, which contains a set of transactions, in the blockchain is added and which blockchain is the valid chain. Deciding which block is next in the blockchain and which is the valid chain is a very powerful function. If one entity is able to add multiple blocks to the blockchain unilaterally or unilaterally claim which chain is the valid chain, this gives them incredible power as they now could carry out various types of attacks including double spend attacks that allow them to trick merchants into accepting payments that they didn t actually make and perhaps even the ability to rewrite the history of the chain. Blockchains like Bitcoin and the current implementation of Ethereum use Proof of Work as a consensus system. Miners across the world compete to solve a computationally intensive puzzle which requires brute force random guessing of solutions and the first miner that solves this problem is given the right to add the next block to the blockchain. Since solving the computational puzzle is essentially random, though proportional to a miner s computational power, the miner who gets to decide the next block in the blockchain is effectively selected randomly (though due to the concentration of mining power in areas with access to cheap electricity, certain miners can solve the computational puzzle more often, leading to potentially centralizing effects), ensuring no one entity has the ability to unilaterally decide which blocks will be included in the blockchain. The other miners are able to easily test if the miner who has claimed to solve the puzzle and thus the right to include the next block has actually solved the puzzle, allowing for system wide consensus on who gets to include the next block. The valid chain is determined by which chain is the heaviest or has had the most computations run on it (i.e. the longest chain). The Proof of Work system described above is extremely energy intensive as it results in many miners trying to solve the same computation puzzles which get increasingly difficult over time. Proof of Stake systems have been developed to offer the same benefits of Proof of Work systems, namely that one entity cannot unilaterally decide which blocks are attached to the blockchain and which chain is the primary chain, but while consuming much less energy. Rather than solving computation puzzles to determine who gets to add the next block, Proof of Stake systems work by having miners lock up a certain amount of the currency in a security deposit which then gives them the ability to vote on a block that is proposed by another miner that was selected randomly and has also locked up a certain amount of their currency in a security deposit. If either the miner proposing the block or the miners voting on the block attempt to attack the chain by carrying out a double spend attack, the attacking miners security deposits are slashed as a penalty.

20 The Credo Blockchain uses a Proof of Stake system that requires miners to set aside some credo as a security deposit by sending a transaction of type security deposit. The security deposit must be maintained for a certain lockup period. As miners submit their security deposit transactions, all of the nodes keep track of the miners that have done so. If a mining node that has submitted a security deposit goes offline, it will quickly be no longer included in the mining process through use of a participation rate; this participation rate is time-bounded so that a miner can participate again after coming online for a period. If a mining node changes to a new IP address, it can submit an IP update transaction signed by the private key associated with its security deposit address in order to prove to and inform the other miners that they should be communicated with at the new IP address. In order to determine the next block in the blockchain a miner who has contributed a security deposit is selected pseudo-randomly to propose a block; this pseudo-random selection is deposit-weighted, participation-rate-weighted and deterministic so that all nodes will reach the same conclusion about which miner should propose the next block. If a miner does not propose a block before a specified timeout, another miner will be selected to propose it. The other miners then vote on the proposed block by broadcasting vote messages to other miners, counting the votes, and check whether a 2/3rds majority is reached for a given block. If a node detects that a miner votes on multiple blocks for a given block height and voting round, then a slashing transaction can be submitted and if it is verified then the miner that proposed the block or voted for the block would have their deposits slashed. If a withdrawal is attempted before the lock up period for the security deposit, the transaction is not processed. The miner that proposes the block earns the transaction fees of all the transactions contained in the block Transaction Fees and Expected Risk-Adjusted Returns from Mining As part of the consensus mechanism, the miner that proposes a block that is successfully voted for and including in the blockchain earns all the transaction fees of the transactions contained in the block. Based on our models, miners may be able to earn $1,601.6 a week to $15,815.8 dollars a week depending on their relative stake even when transaction fees are as low as $ (which is a ten times cheaper than the current average Ethereum transaction fee), network capacity is as low as 0.05%, and the miner loses some amount due to deposit slashing (risk adjustment factor of 0.95X). Our model assumes there are 50 casual miners with a constant 5,000 credo stake and a constant participation rate of 50%, and 50 professional miners with five times the staked amount at a constant 25,000 credo stake and a constant participation rate of 100%. It also assumes blocks are validated every second, and blocks contain 2,000 transactions each. The casual miners stand to earn $1,601.6 a week and the professional miners stand to earn $15,815.8 a week. These earning amounts are estimates based on our models and are not guaranteed or necessarily accurate and they can change based on a number

21 of factors including relative stake size, participation rate, number of miners, transaction volume, transaction fees, network capacity and block size. To illustrate this, if this a greater difference in stake size between the casual and the professional miners, let s say the casual miner stakes 5,000 credo with a 50% participation rate while the professional miner stakes 50,000 credo (at ten times rather than five times the amount the casual miner staked) at a 100% participation rate, than the casual miner stands to earn $800 a week while the professional miner stans to earn $16,416.4 a week. If this disparity increases further to the casual miner staking 5,000 credo at a 50% participation rate and the professional miner staking 400,000 credo (the professional miner staking 80 times the casual miner) at a 100% participation rate we would have the casual miner earn $200 a week and the professional miner earn $17,217 a week. In future releases of the Credo Blockchain we may include a dampening function to decelerate the returns of staking a higher amount after a certain point in order to reduce centralizing effects. The function used to calculate these earning amounts is based on the algorithm we use to determine the probability of a miner being chosen as the next block proposer (block proposers earn all the transaction fees of the transactions included in the block). This algorithm is a psuedo-random, deterministic, security deposit/stake amount weighted, participation rate weighted function. The probability of a miner being selected to propose the next block is; P ( miner A) = Stake of miner A x participation rate of miner A!""!"#$%& Stake of miner x participation rate of miner Applications of the Credo Blockchain Since the Credo Blockchain was developed to be scalable, have low transaction fees and redemocratize mining, it opens up a host of opportunities for miners, transaction senders, and applications. In fact, even with the network operating at less than 1% of its total capacity and an average transaction fee ten times lower than the Ethereum blockchain, miners can stand to earn hundreds or even thousands of dollars a week, proportional to their stake size, with no need for specialized mining equipment. The initial version of the Credo Blockchain opens up opportunities for miners to start earning immediately by validating transactions. Transaction volume will initially be driven by BitBounce, BitBounce Ads, and CredoEx, applications with millions of existing users and requirements for a large number of transactions. This will ensure that miners will have a large volume of transaction to validate and earn from straight out of the gate. Over time, aside from

22 transaction volume increasing from the growth of our products, other applications will also start using the Credo Blockchain as part of their transaction infrastructure, further fueling transaction volume for miners to earn from. The Credo Blockchain will also open up opportunities for individuals to send Credo to one another with much lower transaction fees than on the Ethereum blockchain, encouraging more activity in the Credo Economy. Applications are also able to leverage the transaction infrastructure of the Credo Blockchain by posting transactions to the blockchain. These applications can manage payments via the Credo Blockchain rather than relying on the traditional payment processor networks or more expensive and slower blockchains. Applications can also rely on the Credo blockchain as an immutable source of truth for any type of transaction by storing the hash of the transaction on the Credo Blockchain, this could include ownership deeds and titles. Future versions of the Credo Blockchain will have smart contract functionality, allowing developers to launch their own tokens and build their own decentralized applications directly on the blockchain. As we build out smart contract functionality, applications built directly on top of the Credo Blockchain will use it for far more than just their transaction infrastructure but also for their storage infrastructure, application logic infrastructure and beyond, further helping to fuel transaction volume. One of future goals is to improve the state and scalability of blockchain storage. Decentralized applications that could be built on the Credo Blockchain in the future could include decentralized marketplaces for jobs, decentralized organizations, decentralized identity management, decentralized prediction markets, decentralized file storage, decentralized computing power markets, decentralized exchanges, decentralized credit score systems, decentralized insurance systems, and decentralized asset management portfolio tools Implementation details The Credo Blockchain is built on an efficient p2p communication layer with a websocket and data streaming transport protocol. This means that a socket is maintained between peer nodes and block bodies are streamed in chunks rather than sent all at once. The Credo Blockchain has various mechanisms for managing miners participating in the Proof of Stake consensus process. Any node in the network can become a miner through issuing a security deposit of credos that will be held for a minimum period of time. Once the security deposit is validated and a given number of blocks have passed, that node can begin voting on new blocks and proposing blocks when it is selected to do so. If a mining node goes offline, other mining nodes will quickly discontinue including it in the set of miners that could be chosen to propose a block through decreasing its participation rate; that participation rate will quickly recover when the node comes back online and start voting again. If a mining nodes changes to a new IP address, it can submit an ip update transaction signed by the private key associated with its security deposit

23 address in order to prove to and inform the other miners that it should be communicated with at the new IP address. If a withdrawal is attempted before the security deposits timelock has expired, the transaction is not processed. Miners can also be removed if they are penalized for voting on multiple blocks at the same time, which can happen through another miner submitting a transaction containing a proof that the miner signed votes for multiple blocks for a given block number and voting round. These mechanisms allow for the addition and removal of miners, as well as updating their state so that they can be communicated with and included appropriately. The Credo Blockchain has a set of mechanisms for proposing and voting on blocks. In order to determine the next block in the blockchain, one miner who has contributed a security deposit is selected pseudo-randomly to propose the next block. This selection is deposit-weighted so that miners with a higher stake will get to propose more blocks, participation-rate-weighted to avoid calling on offline nodes, and deterministic so that all nodes will reach the same conclusion about which miner should propose the next block. If a miner does not propose a block before a specified timeout, another miner will be selected to propose it through updating the pseudorandom selection to be seeded by a retry count. When a miner successfully proposes a block, it is compensated with the sum of transaction fees for all transactions in the proposed block through a special transaction. Once other nodes receive the pending block, they cast and broadcast votes to other miners. When a sufficient number of votes has been received, miners count the votes and check whether a block has received a supermajority of votes weighted by stake size. If a block has a supermajority of votes, miners will broadcast it to all nodes as the confirmed block; if no block has a supermajority of votes, miners will vote again. These mechanisms allow for blocks to be proposed and voted on to achieve network consensus on the valid chain. The Credo Blockchain will also support a finality threshold after which a node will not accept a new block that has a chain excluding blocks before the finality threshold. New nodes will also receive a hash of the valid chain from seed nodes when bootstrapping to ensure they sync with the correct chain. Future phases of the Credo Blockchain will add third-party token support, Turing Complete smart contract functionality, sharding, and other innovations. 3. Economy One main goal of the products outlined above - BitBounce, BitBounce Ads, CredoEx and the Credo Blockchain - is to create a robust, synergistic, platform and economy for a number of inter-connected players, including: paywall users, advertisers, other senders,

24 administrators, credo traders, credo developers, and credo miners. We can explore how each one of these players interacts synergistically with the Credo Economy; Paywall user: These are individuals who have signed up for the BitBounce product and have authorized the BitBounce application with their account. They have either set their paywall to the default dollar amount of credo or to a custom amount. If they are using BitBounce primarily to avoid spam they are likely to set a high paywall amount and if they are using BitBounce primarily to earn additional income they are likely to set a lower paywall amount that is more likely to be met by an advertiser or other sender. Paywall users provide the synergistic value add of contributing the supply of attention, which is the commodity that those sending BitBounce Ads transactions acquire, and by providing the supply of credo, as they liquidate their earnings, on CredoEx for BitBounce Ads advertisers or Credo Blockchain stakers to purchase. Advertiser: These are individuals or organization that have signed up for the BitBounce Ads product. They use the BitBounce Ads products to compose and send paid campaigns to BitBounce users using targeting options like geography, engagement, and interest - among others. Advertisers provide the value add of contributing the demand for attention, transaction volume on the blockchain, demand for credo on CredoEx and other markets for use in paid campaigns. Core Developers & Administrators: These are individuals that own, or help operate the BitBounce products including BitBounce, BitBounce Ads, CredoEx, and the Credo Blockchain. Administrators provide the synergistic value add of maintaining the economy and building new innovations in it. They also receive 30% of all credo sent from advertisers to BitBounce users and use some portion of this to fund their activities. Credo trader: These are individuals that buy credo from BitBounce users and credo miners who are attempting to liquidate it and sell it to senders who are looking to buy it. They also help facilitate liquidity across all the credo trading pairs helping to ensure credo is easily accessible to senders and miners no matter what currency they wish to purchase it with. Credo developer: These are individuals that build applications on top of the Credo Blockchain or CredoEx. They provide the synergistic value add of bringing new use cases and tokens to the economy. Credo miner: These are individuals or organization that stake credo to participate in the Proof of Stake system of voting for the next block in the blockchain subject to penalties if they attack the system. They provide the synergistic value add of maintaining the Credo Blockchain so the other services can function effectively on top of it and the credo coin maintains its immutability, censorship resistance, and decentralization.

25 4. Distribution 4.1 Psychology Behind Adoption Here is a look at the economic rationale for each party in using BitBounce and BitBounce Ads: Recipients who sign up to use BitBounce will have to specify or accept a default price at which unknown senders can them. Given that recipients have specified or accepted such a price, they have determined a value for their attention and a corresponding price at which they are willing to receive or respond to such s. Senders will be able to see the price at which someone is willing to read or respond to their . If a sender decides to send an for a given price, then they have judged the value of the recipient s attention or response to be worth the cost. senders find great value in being able to send relevant communication to recipients who have opted in to receive this communication and be able to target higher value inboxes for more exclusive offerings. Advertisers also appreciate the ability to have their s delivered to users primary inboxes for services like Gmail where s are automatically sorted in social, promotional or spam folders and are missed. Advertisers value the ability to incentivize recipients to engage with their s and to make use of powerful psychological phenomena like reciprocity. 4.2 Viral Marketing Effect BitBounce has a viral marketing effect via auto-responses, and whitelist notifications. In data from early adoption, this effect has been non-trivial. A secondary viral effect exists in the creation of backlinks to our bitbounce.com domain, which has increased quickly according to Alexa[17] with 6,630 top sites now linking to our domain including 8 of the top 10 global domains. This effect contributes to our domain authority and organic search traffic. In fact, Alexa now ranks bitbounce.com as the 12,344th most popular domain globally. 4.3 Growth in Fundamentals We define an active user (DAU) of BitBounce to be a user account that meets the following conditions:

26 1. The user has at least one account. 2. The BitBounce spam filter is enabled on the user s account(s). 3. Access to the user s account has not been revoked. As of November 1st 2018, we can disclose that BitBounce currently has a user base of 749,008 daily active users that is growing at a rate of 18% MoM.. At current growth rates, it is not uncommon for BitBounce to add 10,000 or more new users to the economy within a 24-hour period. The metric we place highest priority on is active user growth because we expect this growth in fundamentals to be the primary cause of increased transaction volume and the success of our solution in bringing about the goal state. Figure 5. Chart and Metrics are as of November 1st, Transaction Volume Paid marketing s sent via BitBounce Ads to BitBounce users has seen growing transaction volume. As of the time of writing, over two-million paid s have been sent to BitBounce users using BitBounce Ads, this has resulted in BitBounce users earning millions of credo. These early indicators suggest that the BitBounce Ads could drive large amounts of credo transaction volume on the Credo Blockchain. 4.5 Reward Mechanisms

27 BitBounce stakeholders (contributors and shareholders in Turing Technology, Inc) were issued an allocation of credos in proportion to their contribution and/or ownership of the parent company. Participants in the token pre-sale and sale were rewarded with credos in exchange for financial contributions in ether (ETH). 4.6 A New Standard Ultimately, we aim to distribute credo by establishing the token as a new standard in . We will work to establish this new standard technologically through developing extensions to existing protocols such as SMTP and IMAP. Our non-technological standardization efforts will focus on developing global recognition and trust in credo through transparency, accountability, and continued innovation leadership. 4.7 A New Tradition-Based Norm Gift giving is an ancient, cross-cultural tradition to demonstrate respect for an elder or superior. This custom has been lost with digital relationships, but now credo is the modern revival of the honorable custom. We aim to establish a new norm grounded in ancient tradition in which you send credo to respect and honor your recipient s time. We will seek to establish this new norm through a marketing campaign that brands credo as the Token of Respect and encourages people to Send the Token of Respect [11].

28 Figure 6. Marketing graphic for the Send the Token of Respect campaign 5. Token Dynamics 5.1 Blockchain Implementation Credo is currently implemented as an Ethereum-based token[12] on the Ethereum blockchain. Credo complies with the ERC20 token standard[13]. In 2019, all ownership positions in the credo ERC20 token will be ported 1-to-1 in the genesis block of the Credo Blockchain.