The decentralized exchange BarterDex is a fork of Iguana Core. The codebase that manages atomic swap transactions on the BarterDex is a part of Iguana Core.
One of the most important features of Iguana Core is a wallet that can store, manage and trade a number of different cryptocurrencies.
Before Komodo, most wallets would create and use a file called wallet.dat. They would store the file on a user’s local computer, making the wallet vulnerable to hackers and attacks. It is the wallet.dat file that would usually hold the private key to a wallet, which is what is necessary to access the funds. If and when hackers gain access to wallet.dat, they gain access to the funds. For this reason, one of the limitations of wallet.dat files is to allow only one application access the file at a time to prevent double-spending and attacks. While this limitation is reasonable, it also prevents users from using their funds to create orders on different exchanges, which is not the same as spending funds in several places at a time, because if one of the orders goes through, it is possible to cancel all other orders.
Komodo’s Iguana Core allows users to use their funds directly on the blockchain, without having to create, store or access wallet.dat.
Iguana Core works directly with raw data, allowing users to create and manage “smart addresses” from anywhere in the world. All a user needs is a unique passphrase that unlocks the private key. The passphrase is a set of twelve to twenty-four common dictionary words. For this reason, the passphrase can be meaningful to a user and easy to remember.
When the user enters the passphrase into a compatible app, it activates their private key and enables them to manage and use their funds in various cryptocurrencies. When a user sends funds to an address on a coin’s network, Iguana Core stores the information in a separate address that is compatible with the coin’s network. Then, it links the address on the coin’s network to the smart address of the user on Komodo network.
Because of this, users on the Komodo platform have access to a variety of coins at the same time, yet there is no conflict or compatibility issue when users send coins to external dedicated blockchains. When funds reach a smart address, they immediately become eligible for trading on the BarterDex decentralized exchange or for spending.
This functionality of Iguana Core technology gives users a number of freedoms not available with traditional cryptocurrency blockchains, wallets and exchanges. For example, because there is no wallet.dat file on a standalone computer, there is freedom in choosing the devices to use to trade and use cryptocurrencies. The absence of wallet.dat also gives users the freedom to not only use different machines but also use multiple applications at the same time.
Finally, users can have the freedom to use a standalone wallet to manage their long-term holding and to separately use a decentralized BarterDex client for trading.
Another important technology by Komodo is UTXO. UTXO is an abbreviation for the words “unspent transaction.” Komodo developers did not come up with the term. It was a part of the original Bitcoin technology. However, even many of the most advanced users of cryptocurrencies do not know how UTXO operates or why it is needed.
One of the easiest ways to explain UTXO is in terms of fiat money. When a user has fiat money in his or her wallet, the user is not typically thinking in terms of paper bills. For example, if the amount is $1,000, the user thinks “I have $1,000,” and not “I have three bills of $100, two $50 bills, twenty $20s, and ten $10 bills.” People tend to think in total amounts, not separate bills. If the person is going to need a $1 bill and spend it, the person will most likely give a clerk at a store a $10 bill and get four $1s and a $5 bill back or nine $1 bills. The remaining bills will stay intact. The person will think then: “I now have $999,” yet this doesn’t mean that the person has 999 one-dollar bills or the entire $999 in pennies, which would be equal to 99,900 penny coins. However, if we were to break the $999 into the smallest possible available denomination, it would be exactly 99,900 coins worth 1c each.