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Basic Principles For Governance In Decentralized Systems

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Decentralized systems, such as blockchain networks, come with some major challenges regarding their governance frameworks. Whereas centralized systems, such as typical enterprises, are typically organised as hierarchical structures with top-down processes, blockchains lack a central authority that sets the rules and acts as the ultimate policymaker. In a blockchain network, all participants (full nodes) decide upon the architecture and the processes in a decentralized way, defined by a governance model, set-up by the participants themselves.

Whereas public blockchains are open to the public, i.e. everybody can download a client and participate in the network, the members of private networks decide who can join as a new member. The consensus mechanisms are the rules that define how information is added and how the network’s participants can work together in the network. Many public networks rely on Proof-of-Work (PoW) that requires some work from the nodes, usually meaning processing time, in order to prove that effort has been invested to qualify for the right to decide what is the truth. In most private networks, other consensus mechanisms, such as Proof-of-Authority (PoA), or Proof-of-Stake (PoS) are used. In these cases, the network’s participants agree upon a governance model defining the processes within the networks. PoA and PoS don’t depend on nodes solving arbitrarily difficult mathematical problems, but instead use a set of authorities – nodes that are explicitly allowed to create new blocks and secure the blockchain (in the case of PoA), or the creator of the next block is chosen via various combinations of random selection and wealth or age – the stake (in case of PoS).

Governance of decentralized systems is a matter of hot debate on conferences and in technological, as well as political and sociological circles. Without claiming to discuss this topic in its entirety in this post, based on our practical experiences creating and working with blockchain networks, we want to point out three basic principles for governance models for decentralized systems:

1. Ability of self-regulation

Every decentralized system starts in a centralized way: an individual or a group of people have the idea to create the network and start by designing its architecture and processes. Given the human nature, even in the best case, this network will be designed based on the beliefs and convictions of its founding members – but not necessarily matching the requirements of its future members, let alone future challenges caused by social-technological change.

In order to design the network in a resilient, future-proof way, its most important design principle is an inherent self-regulation ability: based on the to-be-defined rules the network‘s members can re-define their rule set, beginning with the elementary governance principles. As important as the general ability to self-regulate, is the process that defines the conditions under which this self-regulation takes place. As in any democratic process, a major challenge lies in motivating the system‘s members to actively participate in the formation of opinion.

2. Based on accepted regulatory frameworks

Blockchain technology itself is quite new: with the advent of Ethereum‘s smart contracts, these distributed ledgers could be applied to industrial use cases. However, the basic functionalities of a database and a ledger are well known and are also provided by traditional software offerings.

When blockchains are introduced in enterprises, they come across their legacy forefathers – and – the legal and regulatory frameworks the legacy systems are embedded in. Some of these frameworks, such as the open source modelling framework Eclipse (EMF), are well known and accepted in their respective industries. Often, enterprises have invested significant resources to check which framework works best – in a functional, and in a legal sense.

For a wider acceptance of new breed of decentralized ledger technologies, it makes sense to adopt basic elements of existing and already accepted legacy frameworks. If a blockchain solution comes with a governance model based on an accepted model, they are easier to handle by the company‘s legal department. As so often, it‘s easier to sell innovation if it comes with a pinch of familiarity.

3. Integrated incentive scheme

Whereas the above-mentioned self-regulation and familiarity aspects are necessary conditions of decentralized governance models, a frictionless integrated incentive scheme is the sufficient condition: any decentralized system will exclusively work if a sufficient number of network participants feel permanently motivated to add their inputs to the system. In other words: each individual member must be incentivized to constantly add value to the network.

The essence of any efficient incentive scheme is a monetary incentive that is positively correlated with the respective participant‘s efforts: the more value I add, the more value I get. Ideally, the incentive evolves in parallel to the system; i.e. depending on the network’s development the incentive adapts, accordingly.

Of course, there are many other elements of efficient decentralized governance models. However, we regard the above mentioned as key aspects. In cooperation with a team of the European Blockchain Association, we have developed a blockchain-based governance model that inherits these elements. In our first 2019 Blockchain Meetup, on 22 January, we will present and discuss this model in public. Afterwards, the first clients can plug themselves in and make use of this model in a Governance-as-a-Service scheme.


Blockchain Kills The Middleman? To The Contrary!

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Blockchain is said to eliminate middlemen – just search for the purpose of distributed ledger technologies DLT, and you will end up with numerous predictions what kinds of middlemen will leave the playing field when blockchain arrives – disintermediation at its best. Although we have been developing blockchain solutions since 2015, we‘re somewhat sceptic about that disruption variant.

First – what is a middleman, and why does he actually exist, at all? Of course, there are many different kinds of middlemen in various industries, and their efforts are not necessarily compatible with each other. However, the common denominator of middlemen purposes is to facilitate relationships between two or more contracting partners. Be it a travel agent who connects a future traveler with hotels, airlines and other travel product suppliers, be it an auditor who audits financial processes of a company in order to prove the client’s correct and compliant behavior towards its shareholders – apparently there has been sufficient economic room for parties in between contracting partners.

Comes in blockchain and kills these middlemen? In theory: yes: blockchain technology provides a decentralized secure database and ledger that allows for individual access of all contracting partners without the formerly known risks and challenges of data sharing. In practice, we are sceptic. Sure, as a so-called trustless system, blockchain provides a decentralized notary function and therefore no external trust agent is needed any more. However, killing the trust agent results in a responsibility of each individual for everything the agent was responsible before.

Middlemen facilitators

Let‘s assume you are in the crypto trading business and you buy and sell your coins via a centralized crypto currency exchange. In this case, the exchange might help you recover your lost passwords that give you access to your account. If, alternatively, you trade via a decentralized crypto currency exchange, you are completely responsible for your passwords yourself – nobody will support you in case you lost access to your account. Same with any financial transaction on a blockchain: if you sent your Ether to your friend‘s wallet address, but unfortunately, you entered some transposed numbers into your transaction – your digital money is gone – unless the surprised unknown recipient sends it back to an account he doesn’t know himself. There is no bank (middleman) that could help to correct or withdraw your transaction.

These two examples alone show that predictions of fully occupied graveyards of middleman are exaggerated, if not simply wrong.

Let‘s look at a more differentiated case: in supply chains, there is a business run by middlemen that certify a product’s authenticity and provenance. With a blockchain system including a token that transports the product memory beside acting as a means of payment, theoretically there is no need for this kind of selective checks of materials or production processes. Since all network particpants have realtime access to the blockchain – and therefore to the complete product memory – everybody can be sure about correctness and consistency of the data in the supply chain.

However, who sets-up, runs, and maintains the blockchain? Who creates the governance model and acts as a contact entity for the network‘s participants? Who cares for the integration of the supply blockchain into legal and regulatory frameworks? If one of the participants would take that role – would everybody else trust the network? Would not the certification agent – the former middleman – be the best suited entity for this role? Isn‘t it the certification agent who already knows many, if not all, of the participants and therefore would be the one who could facilitate the blockchain in the best possible way?

Re-Intermediation

We at Datarella never have endorsed revolutionary disruption models that are based on 100% changes within industries. We think that gradual, evolutionary developments serve the needs of stakeholders in an industry better. Insofar, we expect blockchain technology to eliminate unnecessary and overpriced middlemen services, but at the same time blockchain can prove to be the ideal technology for all sorts of middlemen to re-invent themselves and bring their service offerings to the next level. This development would be then called re-intermediation, instead of dis-intermediation. No worries, middlemen: Blockchain might prove to be a proper business opportunity for you!

Blockchain In 2018-2019

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At Datarella, we had an extremely interesting year 2018: Our Building Blocks project that we have set-up on 1 May 2017 (and that we develop further), has received lots of credit, internationally. Since Building Blocks is one of the few global live blockchain solutions with apparent economic and social impact, has not only helped us to shape our profile as the Enterprise Blockchain solution company, but has motivated us to invest internal resources to develop RAAY, the new Operating System For Banking.

In 2019, we will leverage RAAY’s first applications, the RAAY Wallet and a real-estate backed security token to demonstrate the power and the variability of the RAAY OS. Together with partners, such as Wirecard and zeb, we will provide RAAY OS functionality to players in the finance industry helping them to streamline their processes, bring down informational and transactional costs and develop new business. 

Supply Chain, Security, Mobility

On the level of our Datarella core business, we’ve made great progress in the fields of Supply Chain, Security, and Mobility. With our partner Wirecard, we co-developed the blockchain-based supply chain solution Raw Coin that is supposed to play a major role in some upcoming projects in early 2019. We invested a significant amount if time and resources in research around blockchain security, namely in the field of multi-party computation. Here, our learnings will help us to provide our clients with solutions that fully comply with GDPR and regulations, and make blockchain technology future-proof.

With our Blockchained Mobility Hackathon in July 2018 with BMW, VW, Bosch, Deutsche Telekom, Deutsche Bahn, Amadeus, IOTA and others, we demonstrated that the event‘s motto – Compete & Collaborate – isn‘t just a buzzy catchword, but a lived experience, if participants are strongly committed. The hackathon‘s results have not only demonstrated the power of hybrid teams – formed by different mobility players – but have triggered some concrete blockchain mobility projects and far-reaching cooperations.

Crowdstartcoin XSC

Our decision not to launch an ICO based out of Germany in late 2017, proved to be a wise one – regarding the emerging challenges of then apparently successful ICOs, with even the Ethereum ICO of 2016 becoming subject to scrutiny by regulators

After having decided not to ICO, we agreed upon distributing CrowdstartCoins XSC to developers in the blockchain community who add value to the ecosystem. In early 2018, we developed an automated process that enabled us to distribute free XSC to legitimate recipients with little effort. However, we had to abandon our original plan to develop Crowdvote, a community driven decision making model to compensate blockchain developers, due to its high complexity and scarce resources in our development team. Alternatively, we decided to donate a large chunk of CrowdstartCoins XSC to the newly founded European Blockchain Association EBA thta itself distributes XSC to its members, albeit in a broader sense: every new member gets a welcome bonus of 2,000 XSC, and XSC have generally been defined as the internal means of payment and rewards for transactions within the EBA member network.

Governance As A Service GaaS

The Datarella team has supported the European Blockchain Association EBA in creating its Governance Model that sits at the core of its decentralised semi-autonomous organisation DSAO. Many of the above mentioned actual and upcoming failures of ICOs and other decentralised models can be ascribed to flawed governance models. In some cases, there was a complete lack of any proper governance. There is a general difference between governance of decentralised and centralised systems: in decentralised systems there is no central authority that oversees, controls or manages the system. All this has to be done by the imdividual participants, or nodes, by themselves. Thus, there has to be a proper incentive system in place that incentivises participants to act in ways according to the governance model.

We at Datarella will leverage on the experiences of co-creating the EBA governance by offering a Governance-As-A-Service GaaS model to our clients that aren’t interested in developing a governance model on their own. They can plug’n’play with the Datarella GaaS!

From our perspective, 2019 will be the first really big year for blockchain: we will see more live solutions with significant impact and we will see more blockchain-based Compete & Collaborate – that in turn results in great economic and social impact!

Happy New Year!

How RAAY Facilitates Zero-Based Budgeting

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Zero-based budgeting ZBB isn’t the first thing you learn at the university, not even when specialising in controlling. However, developed by a practitioner in the 1970s, ZBB has evolved into a budgetary process that lives up to the promise of modern controlling: it supports not only cost-cutting, but also prepares the ground within an organisation for a profitable growth strategy.

Originally, ZBB was a process only large enterprises could implement, die to high initial investment and administrative costs. But digital transformation has allowed ZBB to be used for more organisations in a more efficient way. Blockchain technology, finally, may help ZBB to conquer at least the world of controlling. Below you find an article that was published first on our RAAY website. It explains how distributed ledger technologies could ba adapted for many more enterprises, and even SMBs.

Zero-based budgeting ZBB is a method of budgeting in which all expenses must be justified and approved for each new period. It was created in the 1970s by former TI controller and advisor to  then Georgia’s governor Jimmy Carter, Peter Pyrrh, to embed top-level strategic objectives into the budgeting process by tying them to specific functional areas within the enterprise. 

ZBB starts from a “zero base” at the beginning of every budget period, analysing needs and costs of every function within an organisation and allocating funds accordingly, regardless of how much money has previously been budgeted to any given line item. Costs are grouped and measured against previous results and current expectations, enabling management to allocate funds by current need instead of by historical expenditures.

Cost-cutting and profitable growth

ZBB is a very useful budgetary process, especially in economically challenging times, when enterprises need to make reductions, and when there are significant and rapid technological changes. Its extremely detailed approach to budgeting as an opportunity to capture operational efficiencies, stimulate growth, and boost performance. In other words, ZBB is fundamentally different from typical budgeting because it switches the burden of proof for spending from those managers tasked with driving cost reductions to the business leaders, who must contribute to both identifying unproductive costs and eliminating them in practice: targets aren’t debated until they disappear,, but business leaders ask: “What does it take to hit the target?”

Advantage Digitalisation

However, ZBB come with some serious challenges: When Peter Pyrrh developed ZBB in the 70s, it was regarded as a budgetary process for large enterprises exclusively, that could afford significant investments to optimise the management of myriads of separated organisational databases. Digitalisation has made ZBB less burdensome: instead of having numerous controllers coordinating thousands of spreadsheets, today data is available at the click of a mouse. Still, with mostly central databases in place, there are serious synchronisation and consistency challenges.

Enters Blockchain Technology

In a project using tools and functionality of our RAAY Operating System, we explore the impact of blockchain technology applied to a ZBB process. Leveraging blockchain-inherent features, such as immutability and consistency of data, the hypothesis of this project is to allow for a streamlined, efficient zero-based budgeting that could be used not only by large enterprises but also by SMB in order to drive profitable growth. 

The essence of using blockchain technology for ZBB is not to sell old wine in new wineskins, but to leverage features that automatically come with decentralised distributed ledgers. Instead of looking for highly innovative new business or so-called ‘killer dApps’, we apply what we have in-depth experience in to what is an accepted budgetary process – and potentially save millions of Euros.

Datarella – New Website

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Today, we have launched our new Datarella website. Over the course of several months, we discussed how to re-fresh or re-build our existing standard WordPress template which was more text-heavy than eye-catching. In some conversations, we realised that not only our grandmas had their issues with understanding what Datarella actually offers, but also some potential clients – something we ought to change if our goal is to convert website visitors into satisfied clients.

When building enterprise blockchain solutions, one very important aspect of the work is to show the actual outcome of the projects More specifically, it is key to clearly demonstrate why and which blockchain technology has been used and how it benefits the participants in the use case. The best way to bring a smile on the executive’s face is to either make her an active participant in a live demo, shoot a respective video or use photos of a real life showcase. You can’t beat the power of images and a live experience!

With these experiences in mind, we decided to strip our blockchain technology heavy content down to a minimum and use it more as an explainer of images that describe actual live use cases. In other words: we planned an image-heavy website that should induce a feeling of physical reality – visitors should easily understand the implications and benefits of Datarella’s work. In addition, we ignored side projects and focused on our three key areas of enterprise blockchain applications: Finance, Mobility and Supply Chain.

With this topical focus, a new, fresh look, with many images and symbols, we hope to make it clearer and easy to understand what our Enterprise Blockchain Solutions work is about and what our fantastic target-oriented teams in Munich and Gdansk create. Of course, we highly appreciate your feedback – either as comments, emails or in person at one of our Blockchain Meetups!

The post Datarella – New Website appeared first on DATARELLA.

Certified Blockchain & DLT Manager

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We are very happy to announce the brand new Certified Blockchain & DLT Manager program we co-developed with the TUM Executive Education Center and the European Blockchain Association.

This program is aimed at professionals in corporations who want to achieve a clearer understanding of blockchains and other distributed ledger technologies in order to provide guidance in decentralized aspects of digitization within their companies.

The Certified Blockchain & DLT Manager consists of a 5-day program, provided in 2 modules. In the first module, participants will discuss technical, economic, legal and regulatory aspects of blockchain technology. In the second module, corporate representatives present case studies that participants work on and provide new solutions for. The lecturers line-up of TUM experts with Prof. Dr. othersProf. Dr. Florian Matthes, Prof. Dr. Joachim Henkel, Prof. Dr. Jürgen Ernstberger, and Prof. Dr. Isabell Welpe on the one hand, and practitioners, such as Florian Huber of chain.de / Paradigm Ventures, Datarella CEO Michael Reuter, and other corporate representatives, looks promising.

This combination of theoretical and practical contents facilitates perfect first steps into the decentralized aspects of corporate digitization processes. The program’s first module starts on 18 September, 2019. The second module will follow right after the Oktoberfest – aka Wiesn – on 7-8 Octoberk 2019. All lectures will be held at TUM Executive Education Center in Munich.

We are looking forward to this program and encourage IT-people as well as managers in corporations to participate!

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Why Investment In Blockchain Has Never Been Higher

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Admittedly, I borrowed this title from a recently published article on Forbes. The auther‘s point why investment in blockchain technology has never been so high is because an absolute majority of enterprises are actively working on use cases and solutions in the fields of utilities, healthcare, payments, supply-chain management, government and agriculture.

What is missing here: enteprises can afford to invest in Distributed Ledgers. Because these technologies have reached a certain degree of maturity – at least, kind of. Corporations can‘t play around with technology, they have to make sure that innovative tools and functionalities are secure, stable and reliable. These are tough requirements when it comes to a technology that was made usable for a broader range of use cases in 2015.

At Datarella, we are asked from time to time to explain our company‘s claim „Building the Enterprise Blockchain“. Essentially, our claim means to provide blockchain solutions that match the above mentioned requirements – our clients and partners must be able to rely on secure, scalable and resilient solutions.

Enterprise-ready Blockchain Solutions

This enterprise-readiness requires expertise and know-how in the fields of technology, business, regulatory and legal systems, as well as governance – especially in decentralized systems. In other words, it isn‘t sufficient to know how to technically build – e.g. – a smart contract, but it makes much sense to know about the preconditions of a compliant use of smart contracts by enterprises. Then, not everything in blockchain solutions is core blockchain: if it comes to security, we develop zero-knowledge proof (ZKP) solutions – like, ‘compute on data using Homomorphic Encryption’ – that can be based on blockchain, but doesn‘t have to. Often blockchain is the basis and the precondition for applications is heavily equipped with security aspects (e.g. ZKP), or artificial intelligence AI – aka machine learning.

Learning By Doing

At Datarella, we respond to these manifold requirements by learning by doing: most of the solutions we offer we have either implemented during our work with clients or we invest resources and create exemplary solutions for in-house use cases. With our applications CodeLegit (Compliant Smart Contracts), XSC Crypto Wallet, and Raw Coin (Supply Blockchain Solution as a JV with Wirecard), we demonstrate how things work, how reliable and usable they are and provide food for thought for digital innovation at our clients’ brains.

RAAY – The OS for Digital Ecosystems

Based on our work with the United Nations World Food Programme, we created our own blockchain-based payment and ledger platform, we call RAAY – The Operating System for Digital Ecosystems. We offer plug and play with RAAY especially to those clients who aren’t interested investing in technology development, but rather want to start doing blockchain-based business right away.

Fostering the Blockchain Community

Additionally, we organize one of the biggest Blockchain Meetups in Germany that takes place every eight weeks. For these meetups, we invite domain experts from all relevant blockchain solutions related areas to discuss the respective fields of expertise at a professional level. To ensure that these conversations will be continued, we co-founded the European Blockchain Association EBA, as well as the Blockchain Arbitration Forum BAF. At EBA, we support the synchronisation of blockchain-related activities throughout Europe. At BAF, we support building a database of arbitrators who can help with dispute resolution on the basis of smart contracts and other digitzed contracts.

Blockchain – A Foundational Technology That Kills Inefficiencies

From a superficial perspective, Blockchain technology has seen its hype and now enters a cooling-off phase – at least if you believe in the Gartner hype cycle. On a more practical and realistic level, we experience the opposite: key industry players have realized that Blockchain isn’t a hype at all, but rather is a foundational technology that can substitute many inefficient legacy processes and thus, save billions of Dollars. There is no need to look for specific „killer (d)apps“: if done right, blockchain kills inefficiencies all over the place.

Over the next few years, we most probably will face global economic downturns requiring cost cutting tactics. And this is the reason for large enterprises to invest in decentralized ledger technologies: blockchain kills inefficiencies, saves money, and makes business more robust against looming economic downturns.

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Datarella Joins Convergence Alliance As Founding Member

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Since the advent of the internet aka Web 1.0, internet users have been enabled to shop online and to receive information from all over the world with a few mouse clicks. Since Web 2.0, users could actively participate by producing and sharing content, information and opinions over the web, and through this build their own personal online brands. With Web 3.0, we have now approached the next evolutionary phase: users can capitalize on their online brands by executing peer-to-peer (P2P) transactions, while keeping full sovereignty of their data.

There are two key technologies that allow for a more evenly distributed value creation: Distributed Ledger Technologies – aka Blockchain – and Artificial Intelligence AI. Whereas in Web 20, there were systemic errors, such as data silos, breaches and hacks, as well as data being hoarded or not utilized at all, the promise of Web 3.0 is becoming a distributed, silo-free, open source, non-discriminating framework to allow for a full sovereignty of individuals as well as enterprises. Blockchain is the best suited foundational technology layer for this purpose. A distributed network of ledgers can be used by machines to communicate with each other, and participate as autonomous entities in the global economy.

As we have learned from the history of the Internet, a technology itself is a necessary but not a sufficient condition for becoming a non-discriminating, open source technology layer. Beside technology, there must be a governance model including smart incentive schemes that allow for a sustainable, non-discriminating behavior of participants in the system. Ideally, many participants across a variety of industries agree upon. finding and setting these rules, regulations and incentives. With Datarella, we are honored to become a founding member of the Convergence Alliance, together with Deutsche Telekom Innovation Laboratories T-Labs, Jaguar Land Rover’s InMotion Ventures, SAP, Imperial College London, Frankfurt School Blockchain Center, MOBI, Smart Dubai, the Fab City Global Initiative and Outlier Ventures. The Convergence Alliance is a unique community of open source protocols, enterprise, start-ups, government bodies and academia leading the next phase of the Web.

Our role Datarella in the Convergence Alliance is to focus on onboarding and supporting small and medium-sized businesses SMB that aim for entering the fields of blockchain amd AI. Whereas other technology pushes come with huge financial investments, to work with Blockchain and AI means pushing your company to the next level with small investments and contained risks. And, with the Convergence Alliance, teaming up with the ideal partner to invent new business models by capitalizing on thie innovative technologies blockchain and AI, it should be a no-brainer for SMBs to start working on it! Looking forward to seeing many SMBs joining the Convergence Alliance!

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Banking The Unbanked IoT

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Banking the Unbanked always refers to human beings and their enablement to participate in the global financial system by providing them with bank accounts. In this post, I argue for banking unbanked devices, i.e. machines, that are connected through the internet — the Internet of Things IoT.

Globalization has made our world a smaller place: through the internet we know everything what happens somewhere within minutes, through air travel we can personally experience the other side of the world within hours. We, in this case, means the rich world. The majority of people, however, may have access to the internet but is far from being able to travel around the world. However, there are other means of enabling them to participate in and get a fair share of globalization — by banking them; i.e. by providing people without access to the financial system with either proper bank accounts, or with alternative means of payment, such as the Libra project that Facebook has announced this summer.

This idea originates from my colleague with Bosch, Nik Scharmann, who leads the Economy of Things project, and from a Datarella project in the field of banking. As so often, evolutionary development is the result of combining ideas from different industries, – or – a “cross-sectoral” approach.

Machine-to-Machine Transactions

Having been active in the field of machine-to-machine communication (M2M) for quite a time, and working in several projects including machine-to-machine transactions, such as pricing negotiations and settlements between machines automated by smart contracts, I‘d like to point out the huge impact banking the unbanked IoT will have on the global economy. As Julian Simon claimed in his )controversial) thesis ot the „Ultimate Resource“ (The “ultimate resource” is not any particular physical object but the capacity for humans to invent and adapt), that there is no resource crisis since when a particular resource becomes more scarce, its price rises. This price rise creates an incentive for people to discover more of the resource, ration and recycle it, and eventually, develop substitutes.

Economy of Things

And as Ronald Coase defined and described transaction costs in his „The Nature of the Firm“: the lower the costs of organising and the slower these costs rise with an increase in the number of transactions, the less likely the human being is prone to erroneous behavior and the smaller the increase in human errors with an increase in the number of transactions.

The ultimate modern way of bringing down transaction costs is to have machines managing all transactions, without any interference of human error. That said, the Economy of Things EoT will most probably be the best description of our future global economy, with interconnected devices managing all economicl haggling, negotioans and settlements — even disputes will be handled by machines, supported by automated dispute resolution procedures, such as smart contract based arbitration.

The Development Of World Populations vs Connected Devices

Letting devices, machines, or things participate in economic transactions can be described as Banking the Unbanked IoT. From the perspective of the actual accessible install base and future growth, the economic impact of banking unbanked people is negligible compared with the impact of banking unbanked devices, as can be seen in the two charts above and below:

Looking at Facebook‘s Libra project and comparing its economic impact with Banking the Unbanked IoT described here, we can conclude that it makes much economic sense to work on the future Economy of Things. In our next post we will elaborate more on our plans with Datarella of being an active part of this fascinating journey together with our great partners in the field of mobility infrastructures. And I will explain, why and how the Enterprise Evolution Protocol model is a good framework for building a sustainable, ethical Economy of Things.

This article was originally publishes at michaelreuter.org

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Ask Datarella #4 – What Is A Consortium Blockchain?

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In its purest form, a blockchain is a public, permissionless network. Equipped with a consensus mechanism and an underlying incentive scheme that motivates participants to act in a fair and healthy way, making the network robust.

However, most so-called enterprise blockchains, i.e. DLT networks built in and for companies, are neither public, nor permissionless. Nearly all enterprise blockchains are designed as private, permissioned networks, i.e. only a specific set of participants is invited and each of them has to be permitted by the network’s operator. In case of blockchains with more than one operator or initiator, we speak of consortium blockchains.

When two or more organisations partner with the objective of operating a common blockchain, this consortium sets up rules that define the structure and processes of the network. In particular, the consensus mechanism and the underlying governance model must be defined, in order to allow for a decentralised decision making. Depending on the consortium’s specific purpose, a blockchain technology will be selected. Sometimes, you read about specific blockchain technologies as synonyms for consortium blockchains. Our understanding is that a consortium can use such diverse systems as Ethereum, Hyperledger, Corda, or Qtum, amongst others, to create consortium blockchains.

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Michael Reuter Becomes Advisor With Outlier Ventures

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Michael Reuter, CEO and Co-founder of Datarella, becomes an Advisor with Outlier Ventures, a London-based investor in technologies for an open data economy. Along with Outlier’s Senior Management, he plays a key role in developing Convergence Alliance CA, a unique community of open source protocols, enterprise, start-ups, government bodies and academia leading the next phase of the Web.

The Convergence Alliance’s mission is to accelerate and diffuse a more equitable, scalable and usable Web 3.0 to effect a New Open Data Economy based on the sovereignty of the user, countering platform monopolies and enabling a more evenly distributed value creation from AI.

Consisting of the three layers Production (IoT), Distribution (Crypto) and Consumption (AI), the Convergence stack addresses the whole Web 3 ecosystem with highly specialised, though integrated, protocols and service providers. Michael and his team at Datarella support Outlier Ventures In coordinating and integrating CA’s individual technologies and projects in order to pave the way for the next generation of smart distributed applications.

Convergence Alliance was launched by 18 enterprises and organisations in June, 2019. At its kick-off event Diffusion 2019, 19-20 October in Berlin, Convergence Alliance members work together with more than 500 developers and 20 protocols on 50m+ lines of open source code.

Please contact partnership@outlierventures.io to join the Convergence Alliance.

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The Datarella Year 2019 In Review

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Due to time constraints, and the assumed short attention span of our dear readers, we provide you with the shortest possible review of the year 2019:

Our 2019 Stories:

KOSMoS Research Project

Datarella New Website

Certified Blockchain & DLT Manager

UX In Decentralised Systems

XSC Smart Wallet – Gamify Employee Health Incentives

Code Is Not Law – European Blockchain Association

Coins For Climate

EU Commission Study

Joint Venture RAAY Estate

Convergence Alliance

Banking The Unbanked IoT

Track & Trust – Humanitarian Supply Blockchain

Pan-European Survey Of DSAOs – European Blockchain Association

Track & Trust – Space Linked Last Mile Tracking

Self-Sovereign Identity SSI

Governance In The Digital Age – European Blockchain Association

Outlier Ventures

Matchmaking With Autonomous Economic Agents

R-Wallet – Smart Crypto Wallet For The Stateless

Track & Trust – Proof Of Technology

Our 2019 Meetups:

Beside delivering digital work, we regularly organise meetups to have keynote talks by industry experts, have personal conversations and network within the larger blockchain community. At the end of 2019, our Munich Blockchain Meetup group boasts 2.690 members, a number that demonstrates blockchain’s great impact and the readiness of the community.

Blockchain As A Social Technology

Privacy By Design?

The State Of Security Token Offerings STO

Blockchain In PropTech

Blockchain in EdtTech And Recruiting

These are our stories that made it onto the website. We had more stories, some of them can only be whispered behind NDA-secured curtains, for others we did not find the time to transform them into news posts. At our X-mas party, we all agreed that 2019 was a fantastic year for Blockchain and its AI-driven apps in general, and for Datarella in particular.

Since our field of work is in its infamcy, we expect 2020 to become even better! If you, dear reader, know someone who is an exceptional dedicated individual with an affinity for an entrepreneurial way of work and without mental reservations , please refer her or him to us!

We wish you a Merry X-mas and a Happy New decade!

Michael Reuter – on behalf of the Datarella team

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How To Improve Your ESG Score With The XSC Smart Wallet

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Climate crisis has made environmental, social and governance factors a force in investing: Asset managers managing over $3 trillion of institutional assets use ESG scoring systems to track their potential investment targets’ behaviour regarding environmental, social and governance factors.

Chris Hohn, the head of hedge fund ICI, has announced to vote against the directors of companies that fail to reveal their carbon emissions. European Central Bank’s new head, Christine Lagarde, considers using monetary policy and bank supervision to actively fight climate crisis; a move that would involve assessing which firms are dirtier than others. A big challenge in using ESG scores is that, unlike credit ratings, ESG scores used by different ESG rating companies are poorly correlated with each other.

And, interestingly enough, tobacco and alcohol companies rank near the top of many ESG rankings – since it does not matter what the companies are selling, it only has to be done in a sustainable way. For instance, in FTSE Russel’s ESG rating, electric auto manufacturer Tesla performs worse than companies that produce gas-guzzlers.

In short – a standard is needed. Over the last few years, big credit ratings firms have either built their ESG ratings in-house, or acquired smaller ESG rating systems. That allows to hope that ESG scores will be usable in the near future.

With its XSC Smart Wallet, Datarella is offering a handy solution for enterprises to measure the CO2 emissions of its employees, and the CO2 savings of employees who use public transport, ride their bikes or choose another emission-friendly approach to transit to and from work. The XSC Smart Wallet can measure employees’ CO2 emissions, as well as activity data, and incentivises them to behave in a good manner by rewarding them with digital coins – hence “XSC” –  that can be exchanged with food and beverages in the company’s cafeteria. By providing both, a measurement of environmental and activity data of its workforce, a company is able to use the XSC Smart Wallet as a handy, reliable and fun-to-use instrument to improve its ESG score.

If you want to know more about the XSC Smart Wallet, where its is already in use and how you could use it for your company, please contact us!

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Soreba Manager: Blockchain-Secured Community Payments in Dakar, Senegal

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When Macky Sall, President of the Republic of Senegal, personally launched the project ‚Cité Baraka‘ on April 27, 2017, few had thought that in March, 2018, the construction of the first six buildings would be started, and in February, 2020, the Soreba Manager, a blockchain-based payment solution, would be in place to allow for secure, traceable community fees.

Cité Baraka, a project by German-based YOU Stiftung, headed by UNESCO Special Ambassador Ute Ohoven and her daughter Claudia Jerger, is supported by its technical and financial partner Orascom Group, headed by Mr. Samih Sawiris and its subsidiary Casa Orascom, headed by Alex Calderoni and Stefan Zingerle. The Minister of Urban Renewal and Living Environment Senegal is responsible for monitoring this project in Dakar.

Anna Gueye, Finance Director United Teams (Alliance YOU Stiftung & HOPE87)

Baraka has evolved as a slum in the outskirts of Dakar. Senegal‘s capital has grown dramatically over the last decades, and Baraka’s inhabitants found themselves living in the city center, surrounded by high income neighborhoods. YOU Stiftung’s Ute Ohoven and her daughter Claudia Jerger, who have supported Baraka by building a school, planting trees and organizing social and cultural events came up with the idea of the slum‘s rehabilitation in 2016. With the support of the Senegalese government, HOPE87-Senegal, Orascom, Casa Orascom, the Association of German Architects (“Bund Deutscher Architekten”)  and the Peter Behrens School of Architecture in Düsseldorf, „Blonde Mum“ – as Ute Ohoven is called in Senegal – started the construction work of 210 apartments for 1.600 dwellers. Additionally, a training program was started for all 215 craftsmen, semi-skilled workers and service providers of Baraka to enhance their capacities in strategic management and marketing and to make them fit to stabilise or to enlarge their economic activities.

Since Datarella has closely worked with the YOU Stiftung and Casa Orascom on several projects in the past and we are fascinated by the Baraka project and the commitment of all supporters, we agreed to create a blockchain-based payment solution to allow for community fees.. In late January 2020, the operations team in Baraka was provided with the Soreba Manager, named after the organisation responsible for all administrative aspects of Cité Baraka. Starting in March, first rental payments will be processed through the Soreba Manager. Cité Baraka dwellers now have a high-tech tool that allows for safe and trusted payments. 

“We are very proud to launch another pilot in the pilot project Baraka with this Blockchain solution. Our big thanks goes to Datarella who made it possible and who supports the Baraka project on a pro-bono basis”, says Claudia Jerger of YOU Stiftung.

Stefan Zingerle, Co-CEO of Casa Orascom, adds: „As a leading developer of affordable housing communities, Casa Orascom is always searching for ways to optimize its projects and to simplify processes. We seek to leverage new technologies to increase the quality of life for residents. Datarella is a partner who continues to produce tools allowing us to achieve this mission”.   

After the first use of the Soreba Manager as a payment rental management tool, more services will be added. We at Datarella are looking forward to developing the Soreba Manager further, jointly with the Soreba staff and Cité Baraka dwellers.

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Connex Coin – A Stable, EU Compliant Crypto Investment

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This week, our partner company RAAY Real Estate GmbH, launches Connex Coin, its first security token.Connex Coin is Germany‘s first security token that qualifies as a productive investment and is fully compliant with EU regulations.

At EXPO REAL 2019, Europe’s largest real estate fair, RAAY RE presented first details of this project. In February, the token received final approval by German financial regulatory body BaFin. The very first phase of the STO, the sale of Connex Coin, to friends and family, has already begun.

The idea of Connex Coin was born in 2018. Then, we discussed digitisation projects in the field of real estate funds with Thomas Meyer, founder and CEO of Wertgrund Immobilien AG, a residential real estate fund manager. Shortly afterwards, we started a similar conversation with Hans Hammer, founder and CEO of Hammer AG, a commercial real estate developer. It became clear within weeks: we should have these conversations together, as a team.

Fast forward: In July 2019, we founded our new partner company RAAY Real Estate (RAAY RE) as a joint venture of Hammer, Wertgrund and Datarella. The purpose of RAAY RE is to offer blockchain-based products and solutions to the real estate industry, which itself is a late adopter regarding digitisation efforts. We decided to start RAAY RE with the tokenisation of a Hammer-owned property, located in central Munich. With the Connex building, we have a first class property in one of the best real estate locations in Europe, with first class tenants — in short: the best product you can imagine for the start of a product category in your company!

By tokenising this property, we provide the perfect investment opportunity — especially for retail investors — since individuals can become real estate investors starting at 10 EUR. The Connex Coin token sale will take place from March to May 2020. Connex Coin owners will receive an interest of 3% on their investments and can sell Connex Coin back to the issuer. In the first phase, there will be no public trading of Connex Coin, since at the moment there are no EU-compliant cryptocurrency exchanges that offer trading security tokens. As soon as there is approval from financial regulators, Connex Coin will be one of the first security tokens listed on exchanges in Europe.

Connex Coin is the first token issued by RAAY RE, others will follow. RAAY RE is planning to launch more token sales for self-owned real estate properties in 2020. Additionally, tokenisation will be offered as a service to players on the real estate industry. This offering comprises the complete tokenisation process, including technical, legal and regulatory elements, based on an existing long-term real estate expertise.

In addition to tokenisation services RAAY RE offers a variety of tools and products that can be used by real estate developers, owners and funds, ranging from KYC onboarding processes, to smart digital (crypto) wallets. With the launch of Connex Coin, RAAY RE proves that blockchain technology can be leveraged to make payment and transaction processes within real estate more efficient, thus paving the way to a digitised future for the real estate industry.

The acquisition of this investment involves considerable risks and can lead to the complete loss of the invested assets.

Risk Disclosure § 12 VermAnlG

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Tokenising Real Estate

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Today, our company starts the security token sale of Connex Coin, the first tokenised investment token compliant with EU regulations. In essence, Connex Coin represents a loan towards the managing entity of a fully leased, premium commercial property, named Connex, in central Munich.

Since the token qualifies as investment token (“Vermögensanlage” in german), it is not tradeable on crypto currency exchanges. Token holders receive a fixed interest of 3% and may sell the token back at nominal value.

Why Tokenisation?

Traditionally, real estate has been financed by owners, banks or external investors participating in real estate funds. The investment process in real estate is complex, takes time and effort. By using blockchain technology and crypto currencies or tokens, this process can be simplified and made much more efficient.

Liquidity

First, there is the securitisation aspect of tokenisation:: by making an illiquid real estate asset completely liquid, this type of investment is made accessible for a much larger target group of potential investors. Traditionally, mainly wealthy individuals or companies could invest in real estate. With a liquid asset, such as the Connex Coin, an individual can become a real estate investor starting with a 10 EUR investment.

Beside having a bank account in an EU country and a registration, nothing else is required to buy this investment token. Since Connex Coin is a non-tradeable, stable investment token, the token holder receives 3% interest paid directly to her bank account. Information about the personal holdings are displayed in the personal account. By using tokens, securitisation is made easy and efficient.

Programmability

Tokenisation is much more than securitisation: a token can be described as programmable money. In other words: tokenisation adds programmability to an asset. This way, business logic can be introduced, reducing the need for manual settlements and smart contracts can have functions for automatic transactions, formulas for calculating asset prices and other specific features at marginal costs. So, what kind of business logic can you add? Simple answer: any. And exactly this large number of degree of freedom makes it somewhat challenging to start with.

At RAAY RE, we have started by leveraging our proprietary (Crypto) Smart Wallet by adding features that allow token holders making use of specific property-related functions, such as granting access, or allowing for the use and payment of facilities. We will elaborate more on this aspect of programmability in a next post. From our perspective, programmability of formerly static assets provides great opportunities for the real estate industry.

Immutability

A digital, integer trail of transactions proves history of ownership and eliminates data misuse and fraud, such as double-spending. Furthermore, the consistent historical record of all transactions allows for a realtime, frictionless reporting. Just ask your asset managers and CFOs about their administrative headaches that traditionally could only be healed by tremendous accounting efforts. With a guaranteed complete historic data set of all transactions, this headache can be eliminated completely. Tokenisation helps to minimise administrative efforts, time- and costwise.

For RAAY RE, the tokenisation of a share of the Connex building is the first proof of functionality in our tokenisation module, that is one part of our Digital Operating System for the real estate industry. There will be more assets tokenised – as well as in terms of securitisation, and, specifically regarding the programmability aspect of tokenisation: our tokens will come with built-in business logic that will unleash the full value of real estate assets.

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A Blockchain-Based Disbursement System For Coronavirus Aid 

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The Building Blocks payment system that Datarella has developed for the UN World Food Programme may serve as a blueprint for highly efficient distribution of financial transfers during the Corona crisis. The Building Blocks system was launched on 1 May, 2017, and since has supported several hundreds of thousands of Syrian refugees with their payments in Jordanian camp supermarkets. We at Datarella envision a similar system for disbursements of Corona-induced money transfers by governments and state agencies: Datarella can deploy a blockchain disbursement system for Coronavirus aid at short notice.

How Building Blocks Works
Donor countries provide the UN High Commission with funds for specific use in refugee aid. The UN High Commission forwards the funds to the WFP. The WFP administration in Rome is part of the Building Blocks Blockchain, through which all transactions in refugee camp supermarkets are processed. Every refugee receives a certain amount on their account each month, which they can spend for certain purposes. The refugee identifies herself at the supermarket checkout using the iris scan or ID app and has the amount incurred during his purchase debited from his account. The supermarket operator carries out a weekly transaction with the WFP administration in Rome and receives his money in local currency. Up to this point, all transactions have been carried out purely digitally in the form of blockchain transactions. With this process, savings of millions in bank and transfer fees are achieved. In addition to the highly efficient billing, there is no need for an additional audit by an auditor, since the building blocks system has been certified and blockchain technology guarantees the correctness of the transaction history.

Building Blocks for Corona Financial Transfers
A system inspired by the  Building Blocks system can be used for financial transfers in the corona crisis. The federal and state ministries of economics and finance operate system nodes and thus have full control. Other nodes could – but do not have to be – operated by process-relevant organizations such as BaFin, Landesbanken, IHK, chambers of handicrafts, auditing companies, etc..The complete set of rules, including all levels, conditions and dependencies, are programmed as smart contracts. The final payouts can also be automated.

For Citizens and Companies – For All Types of Corona Aid
Every citizen and every company downloads an app that works as a wallet and that can be used to receive and send funds. The wallet also serves as an identification tool for the citizen or the company. The user fills out the application form for Corona emergency aid, loans, basic security or protection funds provided via the wallet. She uploads the necessary documents such as ID card via the wallet and sends the complete application. The user’s identity can be determined with a high degree of certainty via an additional ID function. If the authorized transfer recipient has been determined beyond doubt and automatically, the payment will be transferred to his account – also automatically.

We at Datarella are ready and working on a Building Blocks inspired version of a Corona Aid Disbursement System to be used in Germany, and the EU, we can deploy a Blockchain disbursement system for Coronavirus aid at short notice.

Other Approaches to Corona Aid Disbursements
There are other approaches to address the urgent need for efficient distribution of Corona-based aid. We can’t evaluate them in the same way we can assess our above described own system, but in one of our next posts we will describe one of them – the project “Diggi” which was created during a hackathon organised by the German Bundeskanzleramt a week ago.

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Datarella Expands Blockchain Development Team To Macedonia

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Since 2015, Datarella has been active in building enterprise blockchain solutions in the humanitarian sector, in the fields of supply chain and mobility, and in finance and real estate. Leveraging combined resources from Munich, Germany, and its Gdansk, Poland, Baltic Data Science team, has allowed for highly agile, interdisciplinary teamwork which has been a significant success factor especially during the Coronavirus crisis. Now, Datarella expands the blockchain development team to Macedonia.

Based on rapidly increasing demand for blockchain solutions, Datarella has expanded its development resources to Macedonia, based on a stable personal German-Macedonian relationship and direct access to the Faculty of Computer Science and Engineering “Ss. Cyril and Methodius” University in Skopje.

Dimche Risteski, explains:

Blockchain and distributed ledger technology are emerging technologies that will have a significant impact on the economy and society. The implications of Blockchain technologies are expected to be industry spanning and are not restricted by geographical boundaries. To raise the awareness and potential of this technology in my home country Macedonia last year on 02 August 2019 I create the meetup group “Macedonia Blockchain Group”.The first presentation was in December at the Faculty of Computer Science and Engineering in Skopje. The Interest of the students about the topic was impressive. For the students to get practical knowledge, they need to be exposed to Blockchain projects. To do this, we were searching for industry partners that will cooperate with the group and allow the students to work on blockchain projects.

I am happy to announce that we now have finalized cooperation with our industry partner Datarella from Munich, Germany. Datarella is a company that is an early adopter of the blockchain technology and already has finished successful projects in this domain. We started the cooperation this month, and the developers will work on three different projects additionally represented in the form of seminar work. We are looking forward to a successful partnership!

Datarella’s Munich and Gdansk teams have already started with the integration of the Skopje team and are delighted about this significant strengthening of our development stack. We would like to thank Dimche Risteski and his Macedonian team for entering this cooperation and look forward to a our joined journey!

 

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EBA Publishes Proof-of-Stake Infrastructure Position Paper EUPoS

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On 8 June, the Proof-of-Stake EUPos Working Group within the European Blockchain Association EBA has published its Staking Infrastructure Position Paper (PDF) over the course of a website relaunch with a new, fresh look & feel. The Position Paper aims to give policymakers the tools necessary to craft wise regulation of blockchain infrastructure that benefits the European Union and its member states.

The Position Paper’s goal is to achieve a level of regulation that incentivises blockchain infrastructure providers to choose the EU over competing jurisdictions, as in particular China, Russia, or the USA. This will allow the EU to shape the development of globally relevant blockchain networks according to its federal values. As all EBA Working Groups, the EUPoS Working Group is open for all aspiring participants, willing to comply with the general EBA Governance and respective working group requirements.

Empowering The European Blockchain Ecosystem
The European Blockchain Association aims to become a partner of choice for organisations, corporations, institutions, and policymakers working in the field of blockchain and DLT in the European Union. We combine, synchronize, and leverage blockchain-related activities of European corporations, startups, venture capitalists, and scientific institutes. We serve as a superior, neutral body to aggregate and coordinate blockchain activities throughout Europe and to provide Non-European parties access into the European blockchain ecosystem. By building bridges, s.a. by creating the EUPos Position Paper, the EBA lowers hurdles and reduces obstacles that stand in the way of innovation in the field of decentralisation.

The New EBA Website
Besides the publication of the EUPoS Position Paper, EBA has launched its new website. Great EBA features, s.a. EBA Engagements, EBAx, or EBA Tenders, have achieved higher visibility and better access for interested visitors. We at Datarella like the new look & feel very much and love to support EBA as active members in several working groups!

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Traceable Accounting – A Blockchain-Based Automated Real-Time Accounting Approach

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Faced with the imminent Wirecard accounting scandal, and an apparent lack of diligence by audit firms, regulatory bodies, and the government have realized that financial accounting must be improved significantly. However, previous improvements in financial accounting were aimed at an intensification of financial controls that, in turn, led corporations to intensify their internal bookkeeping creativity, and limited positive results. However, we need something different: We need Traceable Accounting -A blockchain-based automated real-time accounting approach.

A new approach to financial accounting is needed. An approach that eliminates fraudulent behavior from the start. Traceable, immutable financial transactions, processed on secure, transparent distributed ledgers – this is what governments should require from all publicly listed companies.

Blockchain technology may represent the next level of accounting: Instead of keeping separate records based on transaction receipts, companies can write their transactions directly into a shared ledger, creating a system of historically consistent, enduring accounting records. All entries are distributed and cryptographically sealed, therefore falsifying or destroying them to conceal activity is practically impossible. 

Benefits
Companies would benefit in many ways from this real-time traceable auditing: 

  • Automation: A high degree of standardization enables auditors to verify a large portion of the most critical data behind the financial statements automatically
  • Minimized Costs: The cost and time necessary to conduct an audit would decline considerably
  • Value Add: Companies and auditors could spend freed-up time adding value to the company’s controlling: e.g. data analysis and algorithmic predictions on the future company (and market) development
  • Inclusion: The auditor and compliance officer can be included in the entire accounting process by running a trust node

It is not feasible to start with a joint register for all accounting entries. The Blockchain, as a source of trust, can also be beneficial in today’s accounting structures. It can be gradually integrated with typical accounting procedures: starting from securing the integrity of records to completely traceable audit trails. At the end of the road, fully automated audits may be the reality.

Trust in Public and Private Blockchains
Whereas Public Blockchains are designed as truly decentralized, or ‘trust-less” systems; i.e. networks that don’t need a specific trust anchor since they come with integrated trust through algorithm-based consensus mechanisms, Private Blockchains are lacking this integral trust. Private Blockchains are mostly run as centralized networks, by companies or organizations, that have full control of the data flow. Blockchain technology provides historically consistent immutable data records – but under the sole responsibility and control of the respective company. Governance Models, in which rules and processes of the Blockchain are defined, allow for a wide acceptance of the system with all participants. However, third parties that are prevented from participating in the permissioned network, can’t falsify or verify the data output.

Step 1: Adding Trust With A Trust Node
Datarella’s Traceable Accounting concept adds trust to Private Blockchains by integrating a ‘trust node’ run by a trusted third party, s.a. an audit firm or compliance officer. Additionally to the nodes run by the company itself, an audit firm runs a node with full access to the network, therefore servicing as a notary in the first place. The auditor conducts a real-time audit to verify a large portion of the most critical data. Through smart contracts, this audit can be automated to a high degree and save time and money. The audit engagement is mapped in a Governance Model, which allows for full transparency among the network’s participants as well as towards external stakeholders, s.a. stockholders, etc..

By adding trust to a Private Blockchain system through a trust node, a key inherent weakness of a partly-decentralized system is eliminated: Through the integration of audit firms in the company’s data flow, its accounting becomes trustworthy, and innovative at the same time: Traceable Accounting allows companies to run AI-based data analyses that provide valuable data to the finance department for improved controlling capabilities.

Step 2: A Fully Trustless System
At a later stage, the Private Blockchain should be morphed into a Public Blockchain that provides all interested parties with access and audit opportunities. The architecture and mechanisms of a Public Blockchain allow for the participation of entities in the network that do not have to trust each other – a Public Blockchain is designed as a ‘trustless’ system: it works without the existence of trust between the parties. 

A Public Blockchain can be designed as a permissioned or a permissionless system. In a permissioned system, there is a regulatory body that sets-up a governance model defining the rules for access and behavior in the network. In a permissionless system, anyone can participate.

Traceable Accounting – A Blockchain-Based Automated Real-time Accounting Approach

Developing a fully trustless system must be the final goal for regulatory and legal bodies when envisioning a new framework for financial auditing. It meets all due diligence criteria, especially those that have fraudulently been bypassed in the Wirecard scandal.

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