The Global Block Chain Ledger, as a Payment System for the Digital World

While we originally developed the "Block Chain Ledger" technologies to secure our cognition private Triple Entry Accounting systems; the growing interest in bitcoin type blockchains has lead to a focus on the opportunities that distributed Block Chain Ledgers in general could create; not in the crypto-currency world but in the existing world of “real” payments.

Having recently spent 4 months in London, where these activities are beginning to be taken seriously by the "big end of town", this blog looks at how a practical payments system might be created from our Global Block Chain Ledger "eco system". While the existing payments system examples are taken from the UK, they are essentially the same or similar enough to the Australian and most other counties environments. The UK is simply way ahead of Australia, in this area, across both Government and Private Industry, as demonstrated by the level of "real" investments being made each month in London alone. France is also vary active in this area, but will stick to UK examples.

The United Kingdom
At present in the UK, payments operate on separate ledger mechanisms which echo the past in terms of their structure. All existing core Payment Systems in the UK operate by settling the obligations from one of their Direct Participants to another across settlement accounts held at the Bank of England.   For those institutions that are Direct Participants in the Payment Systems, their settlement accounts at the Bank of England are normally directly linked to their Reserve Accounts (thus enabling them to participate in the Bank of England’s “Sterling Monetary Framework”).   At present, over 150 institutions hold Reserve Accounts at the Bank of England.

As such, it could be argued that these form the Central Ledger for £ Sterling and the account structures held within each of the participating Banks to keep track of their customers’ balances form separate “nodal” sub-ledgers.   A customer’s “nodal entry” balance may be positive or negative depending upon whether they are in credit, overdrawn or have authorised loans with that institution that exceeds their credit balance.
Collectively, it could then be stated that the daily payments between Banks on behalf of either themselves or their customers takes place within a Closed Network Group of authorised institutions.   Unless the Central Bank has released “new money”; it remains a “sealed” Group operating within the total value of £ Sterling in existence.   As such, all daily transaction flows between those participating in the “eco-system” therefore net out at the end of the day.   At its widest level, this eco-system encompasses all entities and systems which require the movement of £ Sterling to operate.

Payment Systems are currently the means by which the instructions to move monies from Banking Institution A to Banking Institution B (on behalf of their respective customers) are securely transmitted and processed. The UK currently have several, which reflect the differing means of money transmission; CHAPS for real-time guaranteed High Value Payments and Cheque and Credit Clearing (for when a paper instrument (the Cheque) is used by a customer as their instruction to credit funds to another party who banks elsewhere in the UK Banking System) are two examples.

These payment systems therefore act as the interface between the “Central Ledger” and the “Nodal Ledgers” held at the Banks and other Financial Institutions who participate in the UK payment “eco-system”.  They need to be secure, trusted and resilient. Erroneous or illegal transfer instructions purporting to represent the wishes of a customer to transfer funds elsewhere cannot and must not exist.

The collective needs and wants of the various players participating in the existing UK Payments arena therefore mirror closely the underlying aspirational attributes of a distributed ledger system; a single, secure, trusted ledger mechanism where authenticated transfers between Financial Institutions and their customers take place legitimately and without impediment. Basally identical to the Australian Payments System.

A lot of work and thinking is taking place within the UK Payments Industry at present to determine its future shape and strategy for the next 10 years. The core objective of any new Payment Systems are around innovation and the aspiration within the payments industry to look to consolidate a number of the payment systems and to operate to common data and message standards.

The question is whether any aspect of the logic backing the distributed ledger process could be brought into use as part of the forward looking payment system design.

Actually the solution is pretty straight forward when triple entry accounting and commercial Block Chain Ledgers are applied to the scenario above..

What if full Distributed Ledgers were held at the institutions that held authorised Banking Licenses with legal authority for Settlement Finality still vested with the Bank of England as the repository of the Public Block Chain Ledger?  The two banking parties in a transaction on behalf of their respective customers would provide the authenticated bi-lateral adjustment on there own distributed Private Block Chain Ledgers, the transfers between the various Private Block Chain ledgers would then be applied to each Private Block Chain Ledger, and also on the common Public Block Chain Ledger operated by the Bank Of England. The Public Block Chain Ledger would be atomic and operate in real-time or in netted blocks thereby representing the Deferred Net Settlement status currently present within existing Payment Systems.

The identical arrangements can be applied to two parties transferring funds between each party, where the Public Block Chain Ledger is now maintained by any entity with an Banking Licence.
As can be seen each transfer is fully sealed by each party and the Public Block chain Ledger, and ultimately by the Bank of England. The third leg of each triple entry accounting system ( the Public Block Chain Ledger) is publicly available and hence can be verified by anyone anywhere at any time.
Of course the system could be adjusted to also support P2P transfers and also transfer anything of value, but lets stick with our payments system example for now.

Finality
What parties on either side of a payment transaction (Private Block Chain Ledgers) want above all else is certainty around the payment successfully taking place. In particular, that the payment will not be revoked. Whilst this is an obvious concern for the end beneficiary, at a systemic and commercial level, the risks go deeper than the simple question of whether the Payee has sufficient liquid funds for the payment to be successful and centre on whether multiple payments can be revoked owing to the Financial Institutions handling the payments becoming insolvent.

For the main UK Payment and Settlement systems, the means of protecting payments “in transit” is provided via their designation under the Settlement Finality Regulations. Specifically, payment and settlement systems that are designated may apply for protection against the operation of insolvency law for instructions entered into their system.

In the proposed payments system above, the triple entry accounting system (the Public Block Chain Ledger) operates on an atomic, and instantaneous basis, the transaction once sealed in the Block Chain Ledgers, cannot be modified or removed. As it is a Public Block Chain Ledger, anyone can validate this. By virtue of the application of the regulations, payments then effectively become final and irrevocable at the point in the system’s processes where settlement is deemed to have taken effect.

You may notice there is no mention of "mining" or any "crypto currencies" anywhere in the above description, it is all simple extensions to existing double entry accounting, and application of secure crypto based technologies to form a Block Chain Ledger.

Of course one requires a complete "eco system" solution similar to the existing payments system for this to all be real, and this exists today. This includes  mandatory security policy that all keys must be protected and stored inside HSM's.

Simple, cheap and deploy able, based upon incremental technologies for the Digital World, which could be used as the first truly Global Block Chain Ledger based payments system.

As I said at the beginning of this blog, we already operate a simpler form of discrete double entry Accounting Ledger already.  The big step is to secure these with Block Chain Technologies and create the Public Block Chain Ledger. The Payment System would then become the network and rules mechanism by which the transactions would take place. The cryptographically secure audit trail of transactions conducted through the network, and made public ally available via the Public Block Chain Ledger would represent the Payment System and would become, by default, the UK Payment Transaction Repository (PBCL) which could then be utilised as required by Government and law enforcement agencies, or in fact anyone in terms of the data that it would hold.

Completeness, using industry standard web services for payments protocols using Turning Complete specification (BPEL4WS), to ensure integrity of payments system protocols.

This blog provides the insight of how Australia, and the existing payment system participants could leap-frog one or more interim steps to the next level of evolution, and become part of a truly Global Block Chain Ledger, for the benefit of all of society, all based upon Australian developed technologies.

Also see
Secure Global Digital Identity, for the Digital World
Identity Theft and Digital World
Free hardware generated and protected Bitcoin/BlockAuth ECDSA Private keys.
Decentralized Authentication
Global Public Block Chain Ledger Navigation

Sample Payment Block Chain Ledger

[{"BlockNo":"ac829616-d093-44d9-92f1-8d44e9ef1453",
"BlockSin":"20014dc33d149ef0335226a0ce3afb18dfc2be6c1abd23c8c0b9",

"BlockParent":"00000000-0000-0000-0000-000000000000",

"BlockSignature":"MHECIQDOMvt89PxftUyE1sxn074sO1ruClqVntsTw9CbHQKTowIga8oqg0A9ztEPUCDSREEN+mBJgXEKo1G3CL8guFsc6FUCARQCBFX8fj0EIQMHRLPlFdxfpbGDgSLog4tk3Gk94Sm03BWQwGseyMfrtw==","BlockVersion":1,

"Trandate":"20150918T00:00:00",

"Currency":"AUD",

"BaseCurrency":"AUD",

"FxRate":1.000000,

"Debit":15.0000,

"DebitRefNo":"ac829616-d093-44d9-92f18d44e9ef1453",

"DebitSin":"2001211faeb505284fd79d04cf5fd012b42ec79411632b97f075",

"DebitSignature":"MHECIQDpREZEPVbYiaashbkT6FgpRRAzhnPYZUfkfDdTrpLL+AIgcfd2bJtsS38hTdguVvzniB4vSh6WFuX9rWzdaz6s4tICARQCBFX8fj0EIQJIs2HIbbv85aP8lOnA4APvwOXwD2781fT5mR+xftQz4A==",

"Credit":15.0000,

"CreditRefNo":"ac829616-d093-44d9-92f1-8d44e9ef1453",

"CreditSin":"2001a8562a2393f2f9cf1f794844fdcd83d5d4cadfd0cce65bf9",

"CreditSignature":"MHICIQCmHEqQ1GbOdD3en5Pq73CYaq6x3cVLWX8jqLwCub87YgIhAPQLjPZds49boBSXCyqZnti3ICF1gLG0xwHzLI1V6OISAgEUAgRV/H49BCEDneGerUuk/Jb1OEurOXAw1MlWB6M5XjG51g9Ceg2ncug=",

"AuditSin":null,"AuditSignature":null},

{"BlockNo":"a4ae7977-07b8-4b02-b1b0-9eddbc2eadf5",

"BlockSin":"20014dc33d149ef0335226a0ce3afb18dfc2be6c1abd23c8c0b9",

"BlockParent":"ac829616-d093-44d9-92f1-8d44e9ef1453",

"BlockSignature":"MHICIQCfl3iIYF5zsk48e0lct0Rq7PRpNK0R95l5P3IU6RuohgIhAOFnE8ol9CR0lHuHLS/mFdoQv9OHpk6fJvo/EF0R+SWGAgEUAgRV/H4+BCEDB0Sz5RXcX6Wxg4Ei6IOLZNxpPeEptNwVkMBrHsjH67c=",

"BlockVersion":1,

"Trandate":"2015-09-18T00:00:00",

"Currency":"AUD",

"BaseCurrency":"AUD",

"FxRate":1.000000,

"Debit":10.0000,

"DebitRefNo":"97eefa29-00b6-4b15-a914-19dc05cc8b12",

"DebitSin":"2001211faeb505284fd79d04cf5fd012b42ec79411632b97f075",

"DebitSignature":"MHECIHCt7wQquk4xGEhgZHv4ZvxzJ6PODVuQSCjcEsgRaxYOAiEA6uTpQfrxcZwbLYpLqh0zyv2XQr5LEe1kTfG9ozx6+7wCARQCBFX8fj4EIQJIs2HIbbv85aP8lOnA4APvwOXwD2781fT5mR+xftQz4A==",

"Credit":10.0000,

"CreditRefNo":"b32b66ee-a46f-46fe-a293-302f106936c7",

"CreditSin":"2001a8562a2393f2f9cf1f794844fdcd83d5d4cadfd0cce65bf9",

"CreditSignature":"MHACIDlsBZI+NlG46z38okOLPLBERCOg8admBBwaDzP1YcN9AiBn+ex7efF/tnh6T8oGMzqI4eiKuxrEbr/xCWbEoSc+egIBFAIEVfx+PgQhA53hnq1LpPyW9ThLqzlwMNTJVgejOV4xudYPQnoNp3Lo",

"AuditSin":"20018d8cf3eaa3e5303209bea96aadf52cb11bda668f191e035b",

"AuditSignature":"MHICIQCZfz42LWmZU2YTBNNogMIEZ0+LdcJGSVDnTJzvdyTUXgIhAIFr+9BY0OUL4fHLneJK0uB6GjdSS0ikaw5PFXEvp5DEAgEUAgRV/H4+BCED++O40gs13qplV0IZG4RfMrLvK/Qn96B5tMEzIC0p8GY="}]

Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

The Unbanked, in the Digital World...

For most Australians, not having access to banking, credit and debit cards is almost unthinkable.
Yet most citizens in Asia, Africa, Latin America and the Middle East continue to transact with cash and coins, the closest to banking services is Western Union.

They are the world’s unbanked who have minimal contact with banks and financial services. Though the unbanked make up about half of the world’s adult populace today, emerging financial technology like Public Block Chain Ledgers and associated payments technologies are leading the way to to bring financial inclusion to the unbanked, right on their "Mobile Phone".

Today the unbanked stand at 2.5 billion people. Across the regions from Africa to Asia, rural farmers, women, the poor and the youth make up the largest pie of the unbanked. They grapple with the lack of access to proper banking infrastructure, tedious documentation and paperwork requirements, resulting in financial exclusion from the global financial economy.

All that is about to change, according to Managing Director at VillageMall, Charles Moore the pioneer of Block Chain Ledgers and infrastructure.With the global investment in the burgeoning fintech sector showing significant growth of $1,273 million to $4.1 billion from 2008 to 2014, digital payments for the unbanked have increasingly become a focal point for traditional banks and fintech startups to approach the money economy in a different light.

The objective is for the unbanked to remit, save, transfer, loan and purchase goods and services using mobile technologies, not new currencies, developing a new currency and all the political and social acceptance simply takes too long, the urgent need is today.
Many startups dont understand that money, credit, banking and finance are ultimately tied to trust, there is no point in a disruptive technology that does not address social "trust".
The solution requires a secure global ecosystem, which includes services for secure Global Identity,which still works, when there are no traditional forms of identification. The solution must allow participation in the global payments framework, including meeting the AML requirements when they apply. To drive down the costs this solution cannot be, yet another orphan solution, but must part of a single global ecosystem, with fit for purpose social trust mechanisms. This si no easy task, which traditional banks have not achieved in the last century.

The Unbanked and Mobile Money
In Australia's closest region, Southeast Asia, there are 270 million unbanked citizens many already have access to mobile phones. The Philippines, high in mobile penetration and known to be the third largest remittance market. Several telcos and banks in Asia, having anticipated the dawn of mobile banking for the unbanked, introduced traditional mobile wallets for daily transactions to citizens early on. Yet the only inovation is via start-ups experimenting with crypto-currencies like bitcoins for mobile financial services without the need of banks or other established financial platforms. These approaches have significant risks, while the traditional banking and credit card companies simply protect their momoplies.

The first observation, is that a new currency is simply, not required, to enpower the unbanked of the world, as noted by Charles Moore.

What is required is a Global Payments system based upon a Global Secure Public Block Chain Ledger, with the integrated secure Global Identification system which does not disadvantage the unbanked of the world.

Today, transaction, operation and processing fees are charged upon consumers and merchants for the financial services. Low-income earners, whose annual salaries can usually be counted in hundreds of dollars, grapple with the high cost of bricks-and-mortar transaction and remittance fees

Fintech start-ups are thought to be more robust and flexible with their operations and thus business models. As a result, the unbanked – consumers and local merchants alike – save on costs. Consumers are able to carry out mobile banking at a fraction of a fee, in many cases these can be totally free. In turn, merchants save on transaction charges, monthly or annual rental fees on top of installation and set up terminal fees.

Unlike fintech start-ups, traditional western banks have expanded through acquisitions over the years. Banks have tended to bolt new systems on to existing ones, rather than undertake the more disruptive and costly process of fully integrating them. Hence responding to these challenges is hard for banks, many of which have vast IT systems dating back to the 1960s and 1970s that are prone to problems (see almost monthly bank system outages, some lasting for days!) and expensive to maintain. Furthermore, as people check their accounts more regularly on tablets and smartphones, it puts additional strain on those systems. The fundamental issue remains, commercial banks still find it hard to offer banking services to poor people and still turn a profit.

Yet many fintech start-ups misunderstand that banks still play a dominant role in the global payments, and that a significant part of the fee structures are imposed from regulatory frameworks which are also outdated.

What is needed is a "fit for purpose" Global Solution for everyone.
Without disruptive technologies like the Public Block Chain Ledger, the unbanked will continue to grapple with remittance and conversion fees charged by transfer agents like Western Union, which can cost up to 8.5 to 10 per cent of funds transferred. Banks and credit card providers typically take from 3 per cent for all FX transaction, plus merchant fees, this is out of place even in First World countries. The the true incremental transactional cost is close to zero in a Digital World, with instant, atomic, transactions and zero settlement risk, all typical of modern Block Chain Ledger technologies.

It is simply immoral to take the person’s entire income for the cost of implementing and the transaction process; merchants selling by the roadsides cannot afford to pay for such technological payment, said Charles Moore.

Financial inclusion for the unbanked is said to have a potential to plough in as much as $23 billion to $73 billion into the Asian economy by 2030.

With mobile phone penetration increasing yearly and the number of Internet users increasing at 16 per cent annually, certainly there is much hope for Asia’s unbanked.

The only question is weather Australia will play any part in this opportunity on our door step, or we will continue to only invest in "property" which produces zero national wealth, for anyone other than speculators.

The opportunity is now, with the release of  the world first Global Block Chain Ledger technologies and infrastructure in Australian today. The only FinTech solution, exclusively protected by Hardware generated and protected next generation Elliptic Curve technologies,and yes, Hardware backed keys are provided free to the unbanked citizens, who wish to participate in the Public Block Chain Ledger.

Contact us, to be part of this exciting pathway, and help build a future for Australia, within the Global Digital World.

Get your secure Global Digital Identity, with Australian AML support today, and start to change the world for the better.

If you are an existing Australian Bank Customer, ask them about certifying "your" Global Digital Identity, as you already have gone thought the AML process once already, its time for you to take control over your Digital Identity.

Also see
Secure Global Digital Identity, for the Digital World
Identity Theft and Digital World
Free hardware generated and protected Bitcoin/BlockAuth ECDSA Private keys.
Decentralized Authentication
public-block-chain-ledger-navigation




Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Secure Global Digital Identity, for the Digital World

What's worse than paying your taxes? Having an identity thief steal your return payment, the IRS paid out $5.8 Billion in fraudulent returns in 2015.

In Australia we don't have the same SSN issue (the failed Australia Card), which is the root cause of most of the above USA tax fraud, but the expanding use of TFN's, drivers licenses (for ID not driving a vehicle, i.e. functionality creep) is creating the same fraud opportunities here in Australia, ask any of the 770,000 Australian's who suffered from identity theft. The problem is real and no solution exists today.

Principles:
a) personal data shall be exclusively under the individuals control, b) not held in any centralised system, which does not hold a current certificate for a system evaluation to EAL3 at a minimum, this applies to all government as well as commercial systems, c) be held in fewer and more secure places and d) be global and freely available for verification subject to principle a.

Identity Theft is a Global problem, as such this article proposes a Global Solution to protect individuals and organisations, while still allowing the shared "community" objectives like AML ect to remain in place. The current Government, and private industry Identity protection practices, belong to a world which no longer exits, have consistently failed the Individual, and community, and are simply not suitable for the current Digital World. A truly Global secure solution is required which is effective in both the bricks and mortar, and Digital world, and should be publicly accessible and free. The same solution should en power "third world Individuals" to enable a truly global digital world in which everyone can participate.

Ones identity is something we take for granted (after all it is you), and expect the various organisation, including governments we deal with to protect our identity. Yet these same organisation are at the heart of the identity theft problem. All of these organisation tend to blame the "Individual" for any Identity Theft when in fact they are the root cause, and only the Individual is affected by theft of their Identity.

“Digital identity“ is the sum of all digitally available information about an individual. It is becoming increasingly complete and traceable, driven by the exponential growth of available data and the big data capabilities to process it. The issue addressed within this article is the ability to link both the Digital and physical worlds, and how a compromise within the digital world can affect the physical identity, i.e Identity Theft..

The data elements which underpin, most widely used "personal" identifying data, are birth dates, names and addressees, and drivers licence numbers. The aggregation of this data, under pins our "identity", with regard to many Digital Transactions. Many organisations routinely collect this information, some like banks, use birth date continuously.
Information collected for the purpose of AML,should only be used for the specified purposes it was collected for, not for general bank operations, this is clearly defined in the Privacy Act (Section 6.1), yet banks, and other organisations routinely violate this principle. This ongoing violation of the Privacy Act, is one source of Identify fraud, yet continues without any checks or balances.

Today the collection of personal identifying data, has become epidemic, and grows each and every day, routinely night clubs, and hotels (with zero security protection, or regulations in place), photo copy an individuals drivers licence. Banks photo copy drivers licences, birth certificates, even though not required under any legislation. With a drivers licence, a birth date and data readily available from a postbox or even available on line, almost anyone can open a bank account on-line as "you" today. On-line organisation like Google, track and scan all of your on-line and digital activities, collecting any data which lows though your emails or any site you visit, while using systems that have zero security accreditation or any stated compliance with Privacy Principle APP8 (cross boarder data transfers).

Once your Identity is lost, it can be impossible to participate within today's digital and physical world; many find it takes years to address their Identity, after being stolen, their are cases where physical properties have been sold from under their owners.

"Identity crime is now one of Australia’s most common crimes, It’s estimated to cost at least $1.6 billion each year. ID crime is one of the key tools of organised crime groups. Yet Around 20 government agencies in Australia issue more than 50 million documents or credentials used as proof of identity" from DVS transcript.

In many cases, Government departments are the root cause of the problem, by forcing the Individual to provide identifying data when in fact only authentication is required. Additional "function creep" , has become epidemic as data is collected for a specific purpose,and then used for a different purpose, in the case of DVS a unrelated revenue generation purpose. Government departments are the source of almost all Identifying documents, these MUST NOT be outside of the Individuals "control", and must not be used for any purpose other than as collected. This simple requirement is explicitly covered in the Privacy Act Section 6.1 which also applies to Government departments.

A drivers licence is solely for the purpose of authorising an Individual to dive a nominated vehicle, it is NOT an identity card, it is not an Australia Card by default. The whole DVS concept is bizarre. Check out the total absence of even the most basic security for these systems, the best you get is some waffle or links to policy documents, there is not a single Certification available on any Government or Commercial Site. DVS has recently started selling individuals verification to commercial entities, yes using an Individuals data as a means to generate Government revenue, and selling this as enhanced digital security, truly bizarre.

Identity theft is a by product of the issuance and storage of these 50 million documents and credentials within a range of in-secure centralised systems, this is just crazy.

Today there are a range of commercial providers of "Identity" systems, sometimes labelled as Green ID?, mainly to support AML requirements, and many private solutions such as used by banks, and recently Governments via DVS? All of these have fundamental security flaws, they are centralised and the control over the Identifying data is not the exclusive control of the individual but rather the centralised authority. This is is fundamentally flawed concept, as the identifying data MUST be under the control of the Individual or Entity to whom the data belongs, this is so very basic, as only the Individual is affected by Identity Theft, non of these organisation are affected at all, and take no responsibility for any Identity Theft relating to the data they collect and store.

The whole concept of storing multiple copies of ones identifying data all over the planet in in-secure repertories (could not find a single provider who has its systems accredited to ITSEC at even the most basis EAL2 or more appropriate EAL3  level). Not a single operator has published their mandatory security policy which should include as a minimum encryption in transit and storage. See D&B Green ID, VEDA, and from 2015 the Australian Government via their DVS all fail this basic test.

Seriously, does no-one care less about Individuals, and theft of their Identity?

In the security world, centralised systems are known as "single point of compromise", the reason why one sees 100,000 of personal data affected,when one of these systems is compromised (credit card data is typically one such system). Centralised systems are not used for a single high assurance deployment anywhere in the world today, why is Identity data being stored in such insecure systems?

When ones "identity" data is compromised, this data cannot be put "back into the bottle" or fixed, once ones Identify is lost via compromise of identifying documents, one can be totally unable to participate in every day functions, yet the same insecure, centralised solutions are still in use today, as are the ongoing compromise of such systems systems.

Finally after 15 years of R&D and recent advances in cloud security, a solution to address both Identity Theft  and Anti Money Laundering compliance in a single secure and publicly available framework. The end of hidden or secret data storages with no transparency.

As part of the Global Block Chain Ledger network, we have deployed the worlds first totally Global Secure Identification system.

The system is based around a open standard, for a Secure Identification Number(SIN), which is derived from Elliptic Curve cryptography and keys generated and stored within cloud based Hardware Security Modules.

The solution to Identity Theft, is not complicated,
STOP:

• Collecting personal identifying data which is not required to perform the immediate activity, by the requesting entity.
• Storing any personal identifying data in any centralised system.
• Sharing or accessing any personal data without the explicit approval, on a per request basis by the Individual
• Storing aggregated personal identifying data in any System 
• Sharing personal data, outside of the initial receiving entity and system
• Routinely requiring personal identifying data as apart of an authentication process.

In order to prevent Identity theft, in all cases the Customer should be able to provide the "authentication token" to be used by any organisation when requesting authentication. This is very basic security and privacy requirement, and a part of the digital world today.

The fully decentralized, anonymous, secure identity.
Enter the Secure Identity Number(SIN), this is a totally digital identity that may be securely used for any type of transaction within the digital world, including replacement of the traditional username/password.
A SIN(s) is the unique record identifier by which this identity will be known, the key concepts are:

• there is no centralized infrastructure or entity required
• the secure identity is under the total control of the Individual
• can securely support the full range of Identity and authentication requirements

Attributes:

• Ownership can be digitally proven with high assurance, and possible non-repudiation
• Disposable
• Optionally attach sequence of key-value pairs (public proof) and hashes (private proof) to your SIN record. 
• Start out as anonymous identity, and as required, support opt out of anonymity on a per SIN basis, by attaching identifying key-value pairs (real.name = "John Smith").
• All key-value pair updates digitally signed by SIN owner (private key holder) abn=123456
• Third parties may offer digital attestations:
• Identity Verification, Inc. digitally signs a SIN as passing their 100 points check.
• Auction Provider, digitally signs a SIN as having a certain reputation score, on their website.
• Decentralized market users, digitally sign one another's SINs, building a decentralized reputation, social media.

Within the Public Block Chain Ledger, these signed  "attributes" are stored within the industry standard DNS "TXT" records for the entity identified by the SIN. This allows a totally secure, yet publicly accessible resource for any agency to securely query any AML related attributes, anywhere any-time for no cost. 

Customer identification and verification play a critical role in meeting anti-money laundering regulations and for maintaining an accurate customer database.

Address your business’s know-your-customer compliance obligations and reduce the business costs associated with outdated and inconsistent data with our Global Secure Identification Number(SIN) solution.

The World First Global, Secure Identification Number is now publicly available.
Any AML attribute verifications can be performed on-line, anywhere in the world for free.


Also see
http://villagemall-ceo.blogspot.com.au/2015/06/identity-theft-and-digital-world.html
http://villagemall-ceo.blogspot.com.au/2015/06/bitauth-decentralized-authentication.html
http://villagemall-ceo.blogspot.com.au/2015/07/public-block-chain-ledger-navigation.html

The following SIN attributes are supported in Release 1.0:
public enum attributeType
        {
            dob, // Date of birth
            adr, // Address
            bus, // Business number (abn)
            tax, // Tax number (tfn)
            drv, // Drivers licence
            pas, // Passport
            age, // Age card
            nam, // Individual name
            cpy, // Company, Trust ect name
            act, // Account, value is free form ASCII. Meaning within context of signing entity.
            bic, // Swift Code/Bank Identification Code
            lmt, // Payment Limit, value in local currency of signing entity
            rev, // Social Review of this entity, value is review scale of 1 to 10 where 10 is highest
            rat, // Social Reputation, based upon eBay rating, converted to a scale of 1 to 12
            rvk  // SIN is revoked, value is date of revocation, this makes any SIN disposable.
        }

Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Navigating the Public Block Chain Ledger

Unlike bitcoin which has a "single" duplicated block chain, the Block Chain Ledger(PBCL), has a fully distributed block chain.

As a fully decentralised Public Block Chain Ledger, there needs to be a  mechanism to support the navigation through the P2P block chain segments, which make up the Global Block Chain Ledger.
Optionally this same mechanism supports the discovery of all block chain nodes, in a similar manner to bitcoin.

Node Discovery.
The PBCL makes use of industry standard DNS.
The PBCL root is the domain blockchainledger.net

This root contains the P2P seed seed.blockchainledger.net which will operate much like bitcoin seeds. The PBCL protocol does not support hard coded seeds, only the hard coding of the seed domain.

Each node within the PBCL is identified by a Secure Identification Number (SIN), this SIN is used as the "host" within the DNS "A" record entry.
This allows navigation to any segment in the same manner as any host on the Internet, the preferred means of linking segments of the PBCL together and navigation along the PBCL.

Secure Identification Number, Attributes
In order to support a number of regulatory and business requirements for identification or other related entity attributes, the PBCL supports optional SIN attributes.

Attribute:

• Sequence of key-value pairs (public proof) and hashes (private proof) to your SIN record. 
• Start out as anonymous identity, and as required, support opt out of anonymity on a per SIN basis, by attaching identifying key-value pairs (real.name = "John Smith").
• All key-value pair updates digitally signed by SIN owner (private key holder)
• Third parties may offer digital attestations:
• Identity Verification, Inc. digitally signs a SIN as passing their 100 points check.
• Auction Provider, digitally signs a SIN as having a certain reputation score, on their website.
• Decentralized market users, digitally sign one another's SINs, building a decentralized reputation, social media.

Example
Host SIN: 01ccf7bcaffbf94ce060c5ee79c2294ee992de521dac8da52e
A Record: 01ccf7bcaffbf94ce060c5ee79c2294ee992de521dac8da52e.blockchainledger.net
Attribute TXT Record:

v=sinatt;type=02;abn=19088024560;sig=0x3045022100970 CE1AD84D5E9012DE04502A67E7EDA5F9979 66C3C1497CF619199116FD27A802201E1DB 771D023A9DD827AAF1E6372FB0BA2A093D7 E3A7F1BA72BD19ACC40AC62C

Type: 01 = Attribute/Hash , 02= Attribute/Value pairs
sig: HexEncoded(DER ECDSA Signature)

Also see
1. Free hardware generated and protected Bitcoin Private key and key-chain.
2. Identity Theft and the Digital World..



Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Superanuation, Block Chain Ledgers and Digital Auditors

Following several auditing scandals, the most notable the Enron Scandal in October of 2001,for the first time in its modern history the global audit industry lost its most precious asset: public trust. Although the industry has since recovered, and the rules have changed to limit the risk of another scandal of similar proportions, the potential for auditor fraud, as uncovered in 2001, still remains.

Over the course of the evolution of financial markets, there was an obvious and increasing need for a system of public accountability. Traditional methods of accounting and bookkeeping allowed companies to record and report their financial information in a standardised format that could be more easily digested by fund members and public investors; but without adequate trust, the public was often left at the mercy of self-interested businesses.

The Auditor
An audit is quite simply an opinion provided on the financial statements of a Fund or Company based on pre-determined accounting guidelines (most commonly International Accounting Standards). The role of the auditor is to provide the trusted voice that states that opinion. On this, an enormous and lucrative industry has been built, with the majority of large players in global financial markets being audited by the “Big Four”.  Our Australian Superannuation sector has mandated yearly audits as part of the public confidence in the Superannuation system.

The evolution of bitcoin, and more recently specialist standard double entry accounting systems with integrated Block Chains, has been discussed as being potentially disruptive in the context of many major industries. In different scenarios, significant variations of block chain architectures have been suggested. Bitcoin, the most common use of a block chain, has proven to be tremendously valuable as a perceived network for broad transparency and security, where public participation and visibility is is essential element of this trust. This contrasts with the secretive nature of almost all Superannuation Funds worldwide, a similar situation applied to most investment managers,

Recently we have seen the emergence of both Public (bitcoin like) and Private Block Chain Ledgers, the latter have greater flexibility for data privacy and authorised access. In many implementations these are  based on standard double entry ledgers with block chain security applied to them, nothing radical like bitcoin, just a natural evolution of accounting systems.
Across this spectrum (from fully public to private) lies the solutions to many of the world’s centralised data problems, including financial reporting and auditing. The first commercial Private Block Chain Ledgers for the superannuation industry was released in 2015, we expect to see the first truly decentralised (bitcoin has a single distributed block chain)  Public Block Chain Ledger within the same year.

Problems and Opportunities
Those familiar with accounting will understand the concept of double-entry bookkeeping, as being an evolution “from single-entry, which just recorded what happened, to double-entry, where what happened has to be explained by reasoning with another account. So if you don’t have an explanation, you can’t have an entry”.

This is the basis of debits and credits in accounting, where one account tracks a balance and the other an event or activity. Over the course of an operating period, balances above accumulate with each additional entry. By the end of the year, Fund X may be accumulated balances for each of its members after all contributions, investment activities and payments are netted together.

This is the point in time where the auditor comes in. Because Fund X is accountable to its members, they require accurate financial statements to characterise the Fund activities and their resulting member benefits.

In essence, the auditor will test a reasonable sample of these balances, and the transactions they are comprised of, to make sure that the reporting is “close enough” to the truth (based on the materiality of the Fund). Often, the auditor’s test will include communicating with the respective parties to have them confirm the balance reported on Fund X’s financial statements.

In addition to this entire process, consider that for each customer and supplier, there could be another auditor testing the very same transactions on the other end. In terms of instances of redundancy and inefficiency, this is one of global proportions.

The Audit Premise
The audit processes involved in the scenario described above have remained relatively unchanged for decades, with slight improvements to change the nature of the information from paper to digital, but without questioning the underlying premise and the role of the auditor. The technology of a Block Chain Ledger is very well suited to address this scenario.

With the ability to compare accounting entries between two parties, while maintaining data privacy, this solution could significantly reduce the reliance on auditors for testing financial transactions. Once a match is posted to the block chain ledger, the transaction is time stamped and irreversibly recorded. each and every transaction and flows between systems can be verified from the source. You have the debit, the credit, and the confirmation by the network.

A block chain ledger solution could essentially allow for an automated third party verification by a distributed network to ensure that transactions are complete and accurate and unalterable.
As described, it is difficult to properly convey the size of this opportunity. The use of a block chain for the purpose of audit is unique from other uses as audits impact all industries and are the fundamental basis by which global financial markets are trusted by superannuation members.

The use of  private and Public Block Chain Ledgers, will revolutionise the audit process and significantly enhance the confidence in the Superannuation Industry. The rate of change in this area is truly amazing, and like all disruptive technologies there will be the inevitable winners and looses.

The future of secure Block Chain Ledgers and the next generation of digital audits is here today..

Further Reading

Triple Entry Accounting, and Secure Block Chain Ledgers.

Public Block Chain Ledger for Accounting, SMSF, and Portfolio processing.



Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

The Battle for Competitive Advantage in the Digital Economy

Latest research shows a software-driven enterprise is critical for competitive differentiation.

A new kind of company, the software-driven enterprise, is redefining business strategy and performance. They are leaders in the accelerating application economy, where code is king and competitive differentiation depends on customer-pleasing apps and advanced development methods.

In several instances these software-driven enterprise have already disrupted and even decimated existing business models, the two most well known are AirBnB and Urber, where the existing Real estate based rental agencies have been almost totally driven out of the short term rental market, and taxi licence holders find their licences have become worthless over night. And while they reach for "old world" regulatory help the Generation Y factor makes this a pointless exercise, the horse has bolted.

Urber has social currency to spend, existing taxi companies have none.

In both of these cases software has simply reduced the supply chain, and provides a direct peer-to-peer (P2P)  relationship to more effectively, and efficiently deliver existing services.

We see a future were Software will be used to radically change whole professions, the most obvious one is property related functions, Urber has already proved this is possible for the short term rental market, the days of lawyers and real estate agents charging for what software can radically change, in the same way as AirBnB and Urber is obvious to market observers.

Imagine as P2P property sales replace the current 70% of sales which are done via simple web site on internet today, as well as the old world 30% processed via physical estate offices. Now add almost instant settlements, without the collection of people currently involved, all technically possible today.
Another area ripe for disruption is the $14 Billion bank fees (Australia alone) market, after all payments is just moving around bags of bits, something software can do for near zero cost.

Oxford Economics conducted a global survey of senior business and technology executives, and the results show that 78% of enterprises believe that the shift to becoming a software-driven business models will be a critical driver of competitive advantage.

While the application economy is growing rapidly and already having a significant impact on the way companies view their business, building a software-driven enterprise is no simple task, many (wrongly) are spending millions re-inventing the same software wheels, purely because they believe they need to have everything "in-house". They miss the fact that Software has also gone though a radical change, and has become a commodity, the future comparative advantage comes not from software alone, but by the way software is used within the market place. Within the current and future market, first to market is the "obsolete" competitive advantage. As an example there is simply no reason anyone should pay for Accounting Software today.

Urber owns no cars and employs no drivers, it simply connects customers to suppliers. Urber's software solution could easily be duplicated, but their "first to market" advantage is harder to replicate.

“Companies that don’t accept and meet disruption head on, simply won’t exist.”

Driven the future is Generation Y, social media and new ways of looking at old problem spaces, these must factor into your digital transformation strategy.

We believe one quarter of the Fortune 2000 will have changed within the next two years, with those unable to understand Generation Y buying behaviors losing out. It is essential for not only digital channels to be built, but also fundamentals to be revisited, such as business models and the way in which services are provided, and interaction with customers

The Million plus "APPs" available on Google Play, demonstrate what the future looks like, once the focus moves from games to business applications, the movement has already begun.

The future is much like the past, where synergistic "partnerships" between software and marketing companies will drive the next wave of client centric enterprises, where the client becomes one with the enterprise, much like existing social platforms such as face book, but with a commercial focus, these solutions are almost unlimited in scope.



Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.

Free, Real-time Gross Settlement system (RTGS) for everyone, with a mobile phone.

Today, "money" is a in all cases a bag of bits within a computer system, gone are the days of bank vaults, guards or burglar alarm systems. Money is today sent for close to zero incremental cost between computers. The real costs involved in monetary payments, is securing the 100+ year old double entry accounting systems, and the mass of clerks and auditors who keep  "payment systems" and decade old payment networks like SWIFT running, and manage the risks associated with any losses. To be fair there is a "significant" regulatory cost imposed on banks, and payment systems as well, but these do not match the excessive payment fees which exist today, this is what creates the opportunity. If existing financial institutions offered a free payment service, or close to costs, once they isolated or upgraded their old world insecure accounting systems, than a new global service would get wind in its sails. The system proposed herein is the next generation of Real-time Gross Settlement Systems (RTGS) where all transactions are atomic, instantaneous and irreversible, and have the ability to execute in a distributed orchestrated data and processing environment, including P2P, even if the P2P is not the most likely first commercially deployable option.

Back to reality
An observation; there is "significant" amounts of money going into bitcoin related "block chain" activities, which will never become "verbs" such as to "Google" to "Xerox". There is no truly disruptive technologies evident in this space, which is probably not surprising given the focus on banks and their involvement combined with the massive amounts of profits made from processing payments today. A free payments system is simply not on anyone's agenda, it is typical to see recent graduates as heads of Banking block chain groups, or it is a part time activity for the non executive banking staff..

Like most entrepreneurs, one looks to the "big vision" which can "change the world", and make life better for all. Making money comes as a by product of achieving the "vision" or getting as close as possible, a fundamental different view of the world from the typical banking executive.

The Bill Gates foundation has spend billions trying to solve third world health problems, such a malaria, a free payments system which creates wealth for individuals, can more effectively address third world health issues, than any cure. Poverty unpins many third world heath problems.

There is a saying "Teach a man to fish and he can feed his family forever" in this case enabling third world populations to securely participate in the global economy, we envisage will bring lasting change for the better for everyone. The "Vision"..

Hence if payments, are the focus, rather than a total "Block Chain Ledger for Everything" solution, a vision which is consistent and a subset of the Secure Block Chain Ledger Vision, is a world with a fully decentralised and totally free payments system which is available to anyone who has only a mobile phone.






If one looks at the bitcoin network, it by design drives up the cost of a each transaction, some say its sits at ~$10 per transaction today, totally the wrong approach, its this basic.

Considering the references listed below, if one combines "triple entry accounting", the Private and Public Block Chain Ledgers and Secure Identification Numbers(SIN), and lastly BlockAuth then the implementation of a secure payments system becomes very simple, especially as almost all of the technologies required exist as freely available software today. To support a wide range of eCommerce, the same protocol supports orders and invoicing as well as payments, the two should not be separated.

As all public Block Chain Ledger entries are atomic and instantaneous, and in reality have close to zero incremental cost, then all payments should also be free, this underpins the vision.
We expect the wide availability of free payments, to have the potential to increase the GDP of many third world individual and countries, and lead to an improvement in the wealth of  all.

Today Cloud Accounting for sole traders, and Superannuation Funds is free, no-one needs to pay for accounting software, why not free payments as well.

This result will be truly disruptive to the existing old world, when combined with a fully decentralised Public Block Chain Ledger, and secure payment protocols, making use of the almost universally available global mobile phone platform and free software.

Key Features

• All payments less than a threshold, say $10,000 are Free
• Real-time, atomic, cryptographically secured, fully decentralised Public Block Chain Ledger, participating in a "Triple Entry" accounting ledger protocols.
• Explicit for FX transactions as required, no explicit gateways or exchanges required.
• All transactions appear instantly on the distributed distributed Public Block Chain Ledger
• Requires only a mobile device, with internet access,lightweight data usage
• Suitable for both first and third world participants, bring into the commercial world the existing disenfranchised populations.
• Supports payments to and between individuals who lack first world bank accounts or  identification
• Based upon well known double entry accounting systems, with addition of secure Block Chain Ledger technologies. Private Block Chain Ledgers do not need a single or standard technology solution set, only that they can publish and participate in supporting the global distributed Public Block Chain Ledger protocols
• Reuse of as much bitcoin technologies and available free software as possible
• No bank account required
• Saleable from micro payments though to any value, recognising there may be additional measures required to address additional risks or compliance requirements.
• Supports anonymous and non anonymous payments via SIN and SIN attributes.
• Non anonymous SIN required for all transaction amounts above $10,000.
• Support for commercial Orders and Billing within common payments protocols
• Any taxation is held within the Private Block Chain Ledgers, all payments are considered tax free as is the case today.
• Makes use of IMEI within Mobile device SIM cards.
• Practical unlimited value, is capable of being held within the distributed Public Block Chain Ledger, there is no hard protocol limits as there are no limits within the underlying double entry accounting systems. No wealth or money is created within the Public Block Chain Ledger or payments system.

What about Banks
What do financial institutions want?  Cryptographically verifiable settlement and clearing systems that are globally distributed for resiliency and compliant with various reporting requirements.

What role would banks play in a distributed free value transfer world?
Banks can continue with their existing functions, especially in the early stages, but are not a fundamental element of the solution space, especially for sub $10,000 value transactions with SMEs involved in  B2B, C2B and C2C type payments. In fact banks can use these same underlying technologies to bring their own ledgers into the modern digital world we all live in.

They also play a role in the Secure Identification Number (SIN), when there is a requirement for non-anonymous attributes being applied to the SIN, to support a range of commercial payments and regulatory frameworks, but like above this is not a mandatory element of the solution. And other providers will appear over time, like market place "ratings ect) all variations of SIN attributes are supported. One of the objectives is to support payments from people who have no bank accounts and no first world identification today, and are locked out participating in global eCommerce today.
The one palce that banks will still maintain an dominant position is the supply of "cash" most likely via ATM's for the various local communities, we don't envision the total replacement of "cash" and do not see anyone removing the dominance and convenience of ATMs, we would hope that they can be integrated into the free payments network, even if "cash" dispensing will probably never be free.

Banks also have significant risk management expertise, and in many cases this is a requirement of a successful transaction, especially as the transaction value increases.

But banks are optional parties within any payment transaction, it is the participants choice, in any decentralised solution, Opt-in is always the prim objective.

Why Mobile Phones
In many third world countries, without any banking or credit card systems the only technology that exists is a mobile phone.

Many of these countries rely almost entirely on services like "Western Union" to provide universal basic and not free money transfer and payments, western union is the practical "currency" in many countries.

Many developing countries have encouraged mobile phone companies to invest in infrastructure, the story of a home without any electricity, but with a solar charger for their mobile phone is not something unique today. Hence it is an obvious choice to base any global universally available payments system on this infrastructure.

Why the existing RTGS system is broken and cannot get anywhere close to FreeThe answer is obvious refer to the figure below, its nowhere close to KISS..

The Solution, Key Technologies

1. Hardware secured and protected ECDSA, and ECDH keys and key chain ( July 2015)
2. Secure Wallets on mobile devices (mostly available free today, just needs linkage to hardware key chain above).
3. Secure Private Block Chain Ledger (available today)
4. Secure Public Block Chain Ledger (available today)
5. Secure Identification Number(SIN) (complete infrastructure operational today)
6. SIN attributes for non anonymous  transactions (available today)
7. BYOD management for device compromise (available today)
8. BitAuth between key chain and mobile device ( available today)
9. Scaleable, algorithm agile eco-system (available today)
10. Payments protocol (in development)

A new and exciting word is almost here..

Reference Implementation

In the reference implementation, using a commercial hash keyed database, ~10,000 blocks per second could be processed. This is for each of the distributed PBCL nodes within the PBCL's; hence the total processing of the PBCL is practically unlimited. The reference implementation also supported ~ 5,000 read operations, this asymmetry is typical of commercial databases.  The performance is relatively independent of the number of transactions in the distributed PBCL up to the tested 1 Billion transactions. Due to the decentralised nature of the PBCL, this poses no technical transaction processing limitations, and should easily exceed any existing global payments system.

All transactions within the PBCL are atomic, instantaneous and irreversible.

Performance Comparison:

·         Bitcoin 7 tps

·         PayPal 115 tps

·         PBCL 10,000 tps for each BPCL node, unlimited across the global PBCL

·         Visa network <56,000 tps

Storage Comparison

·         Bitcoin, at very high transaction rates each block can be over half a gigabyte in size

·         PBCL typically less than 500 bytes per transaction

References
1. Free hardware generated and protected Bitcoin Private key and key-chain.
2. Identity Theft and the Digital World.
3. Triple Entry Accounting , and Block Chain Ledgers
4. BitAuth, Decentralized Authentication for the mobile digital world


Disclaimer The contents of this site should not be understood to be accounting, taxation or investment advice but rather as general product related educational information that may or may not meet your specific requirements.