Information Embargos in an Open Ledger Based Society - Jason Meyers (Auditchain Labs AG)

hello everyone how is everybody end of the conference huh i um i got to tell you i'm i'm so happy to be back in london because i have such a deep spiritual connection with this city i have a lot of friends a lot of moved a lot of them moved up north but i got a chance to meet a lot of them it was really good to be back i also want to thank the people who run token 2049 and the organizers they did an incredible job right give him a round of applause right back of the house front of the house these are incredible people really so um i had a big speech that i usually do for these things but being that it's five o'clock and it's the end of the conference i thought i would take i thought i'd take you in a different direction so uh just briefly uh as uh my name is jason myers and i am the inventor and the lead architect for audit chain so what is autochain it is a an accounting reporting audit and analysis virtual machine and before i explain a little bit about what that means i'd like to instead kind of go through an exercise and the exercise i want to go through is this i want you if you can to imagine the world's business and financial information and while you're thinking about that picture how a blockchain operates right the majority of that information comes out of 50 main jurisdictions who relies on that information investors rely on that information certified financial analysts rely on that information other businesses rely on that information governments rely on that information and yes central banks rely on that information and it plays a significant role in monetary policy so while you're imagining the world's business information i want you to imagine that there are four validators that tentatively conditionally and fractionally validate all that information can you imagine that would you trust a blockchain with four validators on it i wouldn't so that's traditional assurance and financial reporting anybody know what the difference between faith and trust is i'll tell you if you've ever been to the circus you know the guy that climbs the ladder and he walks the tight rope with the wheelbarrow you have faith he's gonna make he's done it a thousand times he'll make it across trust you're gonna get in the wheelbarrow and that's what you do every day that's what governments do every day that's what businesses do every day that's what investment managers do every single day when they rely on the world's business and financial information as tentatively validated by four validators we have a little bit of a different idea by applying blockchain style validation to an enterprise as it articulates its financial state now unlike a blockchain an enterprise undergoes very complex changes in state so if a penny hits the balance sheet logically causes a reaction to change all of the other line items on a financial state p l balance sheet equity cash flow so what if we applied blockchain style validation to the world's business and financial information this is what it would look like right now this is what it looks like would you trust that i don't i started this project because i had a fight with a regulator over an accounting changed the course of my career and i went home very angry very confused when i fell down the rabbit hole the ethereum rabbit hole when i hit bottom this is what i saw so if you now imagine blockchain style validation on the world's business and financial information it'd be a lot more reliable wouldn't it so if i sent you one bitcoin and there was one off-chain validator that tentatively validated a fair presentation of the transaction would you trust bitcoin would you raise your hand if you would trust bitcoin if that was the case no so why would you trust the financial state of apple amazon microsoft and every other publicly traded company because that's what you're doing for validators validating the world's business and financial information so if you imagine for a minute applying blockchain style validation this is what it would look like so what our project does is it recruits accountants to run nodes and we have help from an association which we have 80 members they're members of the accounting audit and financial reporting and blockchain communities they're actors on our protocol the top layer of our software our node architecture is based upon a standard syntax in 50 jurisdictions which is where the majority of the world's business and financial information comes from it enables you to turn data into information information into knowledge and knowledge into wisdom and it's backwards compatible so any economic entity that submits to it is one click away from filing with one or more regulators in those 50 jurisdictions so if you imagine again for a moment how certified financial analysts who work for investment managers like a blackrock or calpers or any of the large institutional money managers they have to aggregate this data and they have to rely on it so the question is are they relying on flawed data we know that they are our alliance which is made up of accountants auditors technology companies blockchain developers standard setters participates in the development sets standards and promotes open source development and engineering we're here because we're going to announce on monday that we're launching the protocol on a test net it took five years to develop it's not an easy project what we hope to get out of it and what we hope society will get out of it is the ability ultimately for governments to rely on that information and for central banks to rely on information that's accurate and maybe maybe it might stop monetary debasement because if you think about it every federal bailout maybe with the exception of this past coveted money printing spree but every federal bailout can be traced back to a failure of an auditor to act so i'm going to leave you with a question and the question is this how many disagreements were filed with regulators by auditors in the periods leading up to the financial crisis zero that's how many they knew what was happening so very auditors that ordered the companies are paid by the companies that they audit which sets the audit profession up into a conflict but on our network it's rewarded bitcoin style validation blockchain so an enterprise might pay but an auditor is not reliant only on the payment from the enterprise because they also earn rewards on the network they also share subscription rate revenue the first service we're going to launch is going to allow anybody to take a financial report that's filed already with regulators and get an analysis back to see where all the defects are about half the financial reports filed with regulators contain defects it's not up to us whether to say what it is it's an anomaly it could be a stupid error or it could be something a lot worse and we hope to move the institution of accountancy the institution of corporate governance possibly the institution of regulation forward so watch for our launch our token has three main segments of utility one is settlement another is staking and the other is governance see accountants love to talk about things they love standards they love to discuss and deliberate so the governance layer is enough to lock up every token in circulation for the foreseeable future but look for us next week um we're launching on testnet and then we expect a commercial launch toward the end of the year thank you all right all right jason thank you um well let's just see if we have any questions from the audience if anybody would like to ask anything um now is a good time to understand a little bit more about autochain or about your upcoming race or uh about the industry as itself anybody have any questions any accountants in the room so um we made a drinks the other night and i used to be in the real-time bookkeeping space so we had a shared dream of making all financial information instantly available rather than annual accounts or quarterly accounts um i love the idea above and beyond people spotting anomalies in the accounts once filed do you have a way of letting people sort of look inside what isn't in the books to try to you know better represent the economics of the business how how will you go one deeper is that part of the plan you so i i really appreciate the question i get asked that all the time we can't force an economic entity to open its books as you know to anybody what we have on our roadmap when we explain adoption to an enterprise who's contemplating something like this mind you forward-thinking enterprises who are open ledger based already would contemplate something like this because by default they can see all the information on a blockchain anyway but if you look at a company like microstrategy because your question speaks ex precisely to this point microstrategy is now an open ledger based company why because the majority of the value on their balance sheet is not concealed behind the firewalls of accounting information systems and bank custody environments if you know the addresses you can see it which has a whole host of implications but what they're doing is they're articulating their financial state periodically for what is essentially an open ledger based company but we can't force an economic entity to expose any more information than what they're legally required to by law unless you're a stakeholder of some sort which there are many banks regulators insurance companies and all these stakeholders do want to dive deeper into financial data other than just what's uh uh what's underneath the line items so what we're building is an ontology that allows those who are permissioned to do so to click all the way through but you can't force them to open that up to the public yeah do you ever follow one no i just um it'll be very interesting if like putting your presentation and the send refuse presentation together the sort of the the the move of more and more stuff to being open so that you know whether the d5 loan you've just issued is the first lien against the company or the 50th lien against the company i think i think those things naturally go together tokenization only works when you've got some legal framework to to know where that token stands and so it'd be very interesting to see those two things come together yeah so um what i'm about to say is very controversial and it's a very unpopular opinion but it is what it is the sec takes the position that if you offer and sell a thing and it flickers on a ticker you have an obligation to provide financial disclosure it doesn't have to be with them but you have an obligation nonetheless and there are many exemptions that allow you different levels of disclosure the otc markets is an exchange that lists freely tradable instruments who are everything from dark with the sculling crossbones all the way to full-blown accelerated filer status with the sec just to give you an example with one jurisdiction many jurisdictions have very similar frameworks so the issue of as you say uh combining or overlaying what was the comp the project you had mentioned ascend centrifuge centrifuge okay is is this um on-chain data is actually a lot easier than traditional bank fiat bank account erp data which comes from many different directions and is format and many different formats it's not standardized it's rickety the auditors of procter and gamble will tell you that that enterprise is stitched together with bobby pins and rubber bands and i quote right that's a far more difficult environment and when we started the project that's where we started and we merged those two data environments blockchain data which is easy it comes from one place and by default it's standardized and traditional data in its many forms and formats so um on-chain pure protocol is easy and with respect to your point about defy our alliance is now working on a project to trace the collateralization across d5 protocols because nobody really knows what the true basel style ltv across all d5 platforms are because i can stick value in a contract on that platform take the derivative out go somewhere else collateralize that take the value out and i can do that for 5 or 10 or 15 hops and then i can make a multi-legged market on uniswap who knows what the true loan to value is across defy so that's one of the projects that we're our membership is working on any other questions yeah that is a big project to work on good luck with them good luck with that can't wait to see what comes out of that just across collateralization and hypothecation that you're probably going to come across but it's probably no different to what we currently exist in the financial industry and if you can get core data and it's standardized then you probably have a pretty good chance of getting that nailed one of the things that i got to make clear is that there is somewhat of a compromise between the crypto world and the traditional world with what we do because of the ontology we use that is specified and mandated in 50 different jurisdictions and being backwards compatible puts you one click away from regulatory compliance that's great thank you so much for that presentation and jason how can we keep in contact with you and uh do you have any particular mode of communication that people would like to get in contact with you you can follow us on twitter telegram discord um facebook linkedin uh you can get me on twitter jasonmyersnyc all right you're on all the platforms thank you very much very insightful presentation big round of applause thank you very much