How RAAY Facilitates Zero-Based Budgeting

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.

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!

Blockchain Kills The Middleman? To The Contrary!

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!

Basic Principles For Governance In Decentralized Systems

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.

XSC Wallet Driven Crypto Payments Available at the FI-Forum

The success story of the XSC Wallet continues as Datarella, for the second conference this year, offered visitors of the FI-Forum the possibility to use the XSC Wallet. This builds upon the our XSC Wallet deployment at the the DAHO.AM conference last July.

The Fi-Forum is the trade fair of Finanz Informatik, the IT service provider of the Sparkassen-Finanzgruppe. IT solutions, innovations and new services are presented there each year. There were also more than 90 speeches and a parallel hackathon with interesting topics to be addressed. 

At the fair, visitors got XSC Coins in their own private event-wallet which they could spend on merchandising products such as powerbanks, bags and notebooks, generously provided by partner ZEB (zeb.rolfes.schierenbeck.associates GmbH). To do so, the visitors only had to download the wallet from the App Store or from Google Play. They were instantly rewarded with XSC Coins which they could spend on the goodies. The ease of use and rapid transaction execution often opened a new and more positive view on crypto payment. Moreover people who didn’t spend all of their XSC were regularly asked by others to send them the unused XSC to their wallet in order to buy extra goodies. 

Together with ZEB, we held many discussions with prospects about topics such as blockchain-based financial systems, crypto payments and the future challenges of this technology.

A big thank you to the Finanz Informatik and ZEB for making it possible to help visitors explore the world of crypto payments by using the XSC Wallet on the Fi-Forum.

Krypto AG acquires stake in Blockchain Solutions Provider Datarella GmbH

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Munich/Berlin, 07 September, 2018

Today, Datarella is welcoming a new shareholder, Krypto AG (www.krypto.ag).

Krypto AG is a listed company in Germany which has its registered office in Berlin. The company is a reputable and leading infrastructure provider in the field of blockchain technology.

The combined goal of Krypto AG and Datarella is to support its customers in leveraging the technological benefits of blockchain as well as investors in investing in the new asset class cryptocurrency.

“The Krypto AG team adds valuable expertise in the field of cryptocurrencies and ICOs to the existing blockchain business of Datarella, especially in our strategic key areas, the mobility and finance industries.”, says Michael Reuter, CEO of Datarella. Tobias Schröder, Board Member of Krypto AG: “We are very happy to join Datarella with its unparalleled track record in real-life blockchain projects in order to strengthen our portfolio.“

Customers of Datarella and Krypto AG will immediately benefit from this unique combination of sound technological blockchain expertise and an in-depth knowledge of cryptocurrencies. With offices in Munich and Berlin, Datarella is present in Germany’s crypto hot spots and  addresses both, the vivid Berlin community and the powerful Munich area corporate business.

About Datarella:

Datarella develops bespoke blockchain-based innovations for and together with its clients, providing full service consulting, development and implementation for business applications based on blockchain technology. Datarella’s new operating system for banking, RAAY, enables players of the financial industry to create new financial products profiting from benefits of blockchain technology. RAAY is inspired by designing, building and deploying the blockchain-based accounting and payment system Building Blocks for the United Nations World Food Programme.

About Krypto AG:

Krypto AG is an investment group focusing on blockchain technologies and investments in the areas Technology & Development (Datarella GmbH, Helix Cognitive Computing GmbH), Advisory & Consulting (Krypto Management Consulting GmbH) as well as Education & Communities (KryptoEducation GmbH). The Berlin-based company invests in a broad portfolio and strategically develops its investments. Krypto AG creates value for its investors and contributes to the growth of the blockchain ecosystem.

Team Evan Network – Blockchained Mobility Hackathon

Mobility-As-A Service Platform

Q: Your project in 1 sentence?

A: Mobility as a service (MaaS) through connecting Ethereum smart contracts with Datastreams on IOTA.

Q: What problem does your project solve?

A: We wanted to develop a case in the field of autonomous urban air mobility, better known for example as the concept of air taxis. In order to implement such an autonomous mobility concept, you have to bring together different partners. Making an air taxi fly is actually a bit more complicated than sending an autonomous car into traffic. Because you need some very important permission before you are allowed to start.

There is, for example, the flight control that has to check all the details of your flight to make sure that there is no other vehicle on the same route. Or the weather forecast service telling you if the conditions are okay for your flight. In addition to the permits, there are also other stakeholders, who should be integrated into the process. What about the insurance company offering real time insurance conditions depending on how much passengers you have and how long your flight will take? Or the booking platform where everybody can book easily his flight in an air taxi? So, at the end, it just makes sense to involve all parties in smart contracts on blockchain to automate as much processes as possible. And this is what we did.

Q: What expertise and roles do your team members have?

A: In our team we were one designer and two backend developers with numerous experiences in blockchain projects.

Q: Which technologies do you use for which purposes?

A: Mainly we used all kind of Ethereum based smart contracts, to bring the different participants together on a decentralized network. To get real time data of the air taxi we used the data streaming technology of IOTA. In our case, we created a process that opens a new data stream automatically in the moment in which the air taxi starts. From this point on we push the data stream in our Ethereum based smart contracts. To show the connection between IOTA and Ethereum, we used the data of the battery of the air taxi. The battery will be a very critical point for every autonomous process in the future. Because, while the air taxi is flying, the partners around, like for example the market places where you can book your air taxi, need the information when the air taxi will be available again for the next flight. And that is highly depended on the current status of the battery. So, to know in advance how long the air taxi has to charge after the flight before it can go back in the air, you need real time information about the battery condition.

Q: How do you plan to proceed with your project?

A: We will use the developed demo to show, what type of use cases you can implement at evan.network.

European Mobility Players Are Getting Serious – Compete & Collaborate At BlockchainedMobility Hackathon

Blockchained Mobility Hackathon

Over the weekend of 20-22 July, heavy rain poured on the streets of Munich. Which did not prevent 20,000 people to demonstrate against xenophobia at Königsplatz, also went more or less unnotced by the 150 participants of the BlockchainedMobility hackathon who met to create blockchain-based mobility solutions. 

Hacker teams of leading European mobility players, such as BMW, Volkswagen Group, Bosch, Deutsche Bahn, Deutsche Telekom, Amadeus, and others mixed with freelance developers, designers and business experts to work on IOTA and Ethereum. On Sunday afternoon, the jury saw 18 project teams presenting a broad variety of mobility solutions, from specific applications, such as a EV charging station finder, to more generic solutions like a mobility API to match offerings of mobility providers with the needs of the end user.

Georg Eisenreich, Minister of the State of Bavaria

The hackathon started on Friday with a keynote by the Minister of State for Digital, Media and Europe, Georg Eisenreich, who highlighted the importance for collaboration of the State of Bavaria with on the one hand corporations, such as the hackathon‘s sponsors, on the other hand with the technology – or more specifically – the blockchain community. Minister Eisenreich emphasised the role of the State of Bavaria in providing a sound economical framework for blockchain startups and projects. He encouraged the participants to be creative and dare to found companies in order to foster Bavaria‘s and Europe‘s competitive advantage in the area of blockchain.

Michael Reuter (Datarella), Peter Busch (Bosch), Dominik Pietsch (BMW) Alisa Maas (IOTA) Klaus Schaaf (Volkswagen Group), Herbert Mangesius (Vito Ventures)

After the keynote, the representatives of the main sponsors Dominik Pietsch (BMW), Klaus Schaaf (Volkswagen Group), Peter Busch (Bosch), and Alisa Maas (IOTA) discussed the state of mobility and the expectations of the mobility players for the hackathon with Herbert Mangesius (Vito Ventures) and Michael Reuter (Datarella). At BMW, Volkswagen Group and Bosch, blockchain has obtained an important role within the areas of technology to work on. Dominik Pietsch, Klaus Schaaf and Peter Busch all agreed upon the importance their companies put in blockchain as a foundational layer for mobility solutions. Particularly in regard to the complex regulatory requirements for large corporations in any case of collaboration, blockchain serves as a neutral technological layer that allows for a joint use of mobility data provided by different players within the ecosystem.

Deutsche Telekom. Breakout Session

During Saturday and Sunday, hackers worked highly concentrated and steadily to create their applications they had to present towards the jury. Breakout sessions by the sponsor teams and Yoga interludes gave variety in the workflows. Some teams, e.g. Bosch and Deutsche Telekom, provided not only APIs but sensor-driven hardware the hackers could integrate into their projects.

Sunday evening, the jury announced 3 winners out of 18 projects, who received IOTA’s in worth of USD 5,000 (#1), USD 2,000 (#2) and USD 1,000 (#3) as well as 50,000 XSC (#1), 30,000 XSC (#2) and 15,000 XSC (#3). Additionally, Lewis Freiberg of the IOTA Foundation announced a special prize: the opportunity to receive USD 50,000 in IOTA tokens provided by the IOTA ecosystem fund for the best open-source project.  The hackathon‘s winners were:

#1
OMS – Open Mobility API: USD 5,000  + 50,000 XSC + the opportunity to receive USD 50,000 from the IOTA ecosystem fund

OMS – Open Mobility API

#2
AgentFinder – EV Charging Station Finder USD 2,000 + 30,000 XSC

AgentFinder – EV Charging Station Finder

#3
Pac-Man On Wheels – Crowdsourced Incentive Scheme For Privately Collected Driving Data USD 1,000 + 15,000 XSC

Pac-Man On Wheels

We will publish short interviews with each project team over the next few days.

After the jury‘s decision, the hacker crowd gathered for a few more hours to get themselves the last drinks and discuss next steps: since everybody enjoyed this weekend and we received so much positive feedback from the community, we have already started thinking about how to build upon the success of the BlockchainedMobility hackathon. Hopefully we – and new sponsors and participants  – will meet again, soon!

Tokenisation Of German Real Estate Fund – The First RAAY OS Application

Blockchain is a foundational technology, an underlying technology layer for applications built on top of it, allowing them to share a joint database and a ledger. It provides realtime access to an immutable and consistent data set. Based on our experiences launching the Building Blocks project on behalf of the United Nation’s World Food Programme (WFP) in May 2017, we launched its RAAY project in early 2018. 

RAAY’s goal is to become a new operating system for banking. Since the finance industry hasn’t changed much during the last decades, and financial crises followed by new stern regulatory frameworks have made banking even harder, banks are faced with a multitude of challenges, from a degenerated trust to inflexible and overcharged IT infrastructures and processes. For the RAAY team, blockchain provides the ideal basis for renewing trust and making IT more efficient for banking. Therefore, RAAY has been working on a new operating system to enable players of the finance industry with a blockchain-based technology layer to build lean, efficient, trust-less applications on top of it.

RAAY is partnering with a German bank to create a blockchain-based token representing the ownership of a German real estate fund. The token is part of an immutable, trust-less and decentralised system built specifically for the new RAAY operating system for banking. The token and the auxiliary system achieves an improved model for ownership of real estate by applying blockchain technology, secure and scalable identification solutions and tried-and-tested account management software. 

The token is characterised by a smart contract defining key functionality (transfers, rights, etc.) and listing properties (ownership, price, fund information, etc.). The token smart contract is linked to another smart contract which manages the different tokens and allows users to interact with various tokens in a simple way. Ownership of a token is proven by the possession of a private key. The corresponding public key is publicly listed in the smart contract. Building on the immutability and security of blockchain technology allows any token holder to prove ownership to anyone, in real-time, without doubt. 

The auxiliary system contains three main components: 

  • Identification, 
  • Application for Tokens and 
  • Fund-Connection. 

The Identification takes place according to applicable KYC-regulations with the addition of the creation of a blockchain identity, in effect a public-private key pair. The secret private key is much like a password and can be either downloaded to a secure offline-storage by the client or can be stored in a so-called cold wallet managed by a future RAAY-bank entity. If investment amounts exceed a certain limit, tokens are stored in a multi-signature wallet for additional security. 

The Application for Tokens is a protocol for converting any type of funds (fiat or cryptocurrency) into tangible asset tokens. It requires an account with a depository bank for fiat currencies. 

The Fund-Connection is the direct correspondence between existing tokens and shares of the fund in question. This ensures the validity of each claim that a token holder may have, on any ownership/access to dividends from the fund. 

This is the first step in RAAY’s strategy to create the new operating system for banking. It is a needed use case that will be operational and reduce costs for the fund deploying it. By going stepwise from one application area to another, RAAY will build a modular and configurable OS for banking that removes inefficiencies regardless whether the partner is a fund, a bank or a fintech-company.