CodeLegit Conducts First Blockchain-based Smart Contract Arbitration Proceeding

No, code is not law. We discussed that before. But, code is used everywhere and somehow it must allude to law. But how, given that no software is bug-free? With our Datarella project CodeLegit, we have been working on a solution bridging the gap between code and law: Today we announce the successful conduct of the worldwide first arbitration proceeding using Smart Contracts on a Blockchain.

For this showcase we used a very simple setting: Two parties agree on doing business that is defined in a Smart Contract. This Smart Contract includes our Arbitration Library. In parallel, both parties conclude a legal contract which includes a arbitration clause referencing the Blockchain Arbitration Rules.

Arbitration Library
Our Smart Contract Arbitration Library allows to pause, resume, modify and end a Smart Contract. Additionally, the Arbitration Library connects the software with human beings acting as Arbitrators. Most of the process is automated, which maximizes the efficiency of a dispute.
Blockchain Arbitration Rules

The Blockchain Arbitration Rules are rules the parties have agreed upon in their legal contract. They shall apply in case of a dispute. Those rules are based on the UNCITRAL Arbitration Rules and have been developed by us in cooperation with IT lawyer and Blockchain expert Dr. Markus Kaulartz. The advantages of the rules are, on one hand, speed, because they are tailored to working together with the Arbitration Library and all communication is done via e-mail or any other form of electronic communication and secured via hashes written in the Bitcoin and the public Ethereum Blockchain. On the other hand, the Blockchain Arbitration Rules shall attract arbitrators who are specialists both in legal and technical questions.

Mock arbitral proceeding
In our example, one party which considers the other party to be in a breach of the legal contract pauses the execution of the Smart Contract by triggering a function pauseAndSendToArbitrator in the Arbitration Library. This function automatically notifies a so-called Appointing Authority defined in the Blockchain Arbitration Rules. The Appointing Authority then proposes an Arbitrator who reviews the statements of claim and defence, decides upon the case and finally delivers his arbiter award to the parties. According to the award, the Appointing Authority either resumes the Smart Contract, modifies its execution or ends it permanently, depending on the resolution. The arbitrator is paid with funds available in the Smart Contract in dispute.
Advantages

The integration of decisions by human beings – the arbitration, known from the offline world – transforms a false performance based on an erroneous piece of software – the Smart Contract – into a legally correct performance. At the same time, this kind of arbitration preserves all the advantages of Smart Contracts, because a dispute does not have to be brought before a state court, but can be solved by an expert arbitrator by modifying the performance.

With this arbitration solution, CodeLegit demonstrates a feasible way how to reach compliance in case of erroneous software (do not forget: the more complex software is, the more bugs it contains). The next step will be to implement this solution into industrial Blockchain environments in order to establish the CodeLegit Arbitration Library on a broad basis in the technical compliance sphere.

You can only win by including the Arbitration Library and the Arbitration Rules, because both only apply in case of a dispute, and you will be glad having used them, avoiding going to a state court, but having reached a decision in accordance with applicable laws and through a legitimated court. Give our regards to TheDAO…

CodeLegit Blockchain Arbitration White Paper

The State Of The Initial Coin Offering ICO

In our upcoming Ethereum Meetup we will discuss one of the hottest topics you can read about in the tech space: Initial Coin Offerings ICO, sometimes referred to as Initial Token Offerings ITOs or, more simply, as Token Sales.

In June 2017, blockchain project teams have raised more money through ICOs than through traditional venture capital firms. Has one of the key aspects of applied blockchains – the elimination of the middle-man – unexpectedly come upon the venture capital industry?

It might be too early to confirm this assumption but some VCs have supposedly decided not to wait any longer but to start using ICOs as an instrument to leverage their traditional businesses. Over at CrowdstartCapital, we have compiled a list of the world’s largest ICOs.

Jamie Burke, Dr. Nina Luise Siedler, Dr. Markus Kaulartz

In our meetup, we will approach the ICO from different perspectives, trying to get hold of this phenomenon:

  • Is an ICO the right moneyraising tool for your project?
  • What are the pitfalls of an ICO?

We are very happy to have one of the most prolific experts in the field of blockchain investing to present his perspective on ICOs: Jamie Burke, Founder and CEO of Outlier Ventures and Convergence VC. Jamie and bis team have analysed over 1,000 blockchain-related startups. He is quite critical when it comes to ICOs, That’s the reason we are very much looking forward to meeting Jamie on 25 July.

Right after Jamie introduced us to the actual ICO sphere, we are happy to have Dr. Nina Luise Siedler and Dr. Markus Kaulartz with their interactive take on the legal aspects of ICOs. Everybody has heard of Bitcoin and other crypographic coins or tokens, and most of us know what those are from a technical perspective. Markus and Nina will go beyond that and will explain what tokens are under applicable laws. They will give some practical insights to explain that there are different kinds of tokens which can be used for various business purposes. Depending on the kind of token, different regulatory frameworks apply to ICOs. Markus and Nina will share insights of what companies have to consider when running their own ICO.

We are very much looking forward to having exciting discussions! See you at our partner Deloitte’s  Munich offices on July, 25!

Building Blocks – How the World Food Programme is harnessing Blockchain technology to deliver humanitarian assistance

What started with a Proof-of-Concept in Pakistan in early January this year, has been transformed in a fully functional Blockchain pilot being rolled out in Jordan in May, 2017. The Building Blocks project not only demonstrates the power and the impact of blockchain technology and its potential to enhance the lives of millions  but it is proof of the technology’s potential for efficiency gains for a humanitarian agency, such as WFP.

Based on the early, however robust prototype field tested in Pakistan, the Building Blocks pilot in Jordan now serves thousands of households in a Jordanian refugee camp Tazweed village. The inhabitants receive food vouchers that can be used in the village’s supermarket. The seamless integration of the existing iris scan identification technology into Building Blocks system allows the  existing processes to stay in place without any need for changes for the beneficiaries,  the supermarket nor WFP personnel. The only visible differences are a higher transparency of aid accounts for beneficiaries and easier bookkeeping for supermarket managers. The biggest, however invisible, advantage is a minimized risk of fraud or data mismanagement.

The economic benefits of harnessing Blockchain technology can amount to several million US-Dollars for the Jordanien refugee camp population, alone. The goal of the Building Blocks pilot is to demonstrate a fully-functional Blockchain solution that can serve as a role model and architecture for similar humanitarian projects worldwide and a base to develop other use cases.

The Datarella team wants to thank the WFP team, the IrisGuard team and our partners over at Parity Technologies for the great cooperation: from the beginning, we felt being one big team with everybody helping the others out when they needed it. Other than with this collaborative effort a project like Building Blocks would not have succeeded: Blockchain technology still is in its infancy and basic conditions in the field have proven to be challenging. Again: thank you very much for the opportunity to demonstrate the power and the real impact of Blockchain.

If you are interested in the Building Blocks project you might consider visiting our Ethereum Meetup on May, 16 .Here we will present more details and especially share our experiences gained in Tazweed village, Jordan

Find some more information on Coindesk or you contact us directly.

Foto by Houman Haddad, WFP:  Opening scene, 1 May, 9:00 am, in the Tazweed Village supermarket, Jordan

The Blockchain Killer App

At yesterday’s Blockshow Europe , a one day blockchain conference by Cointelegraph, I’ve seen the blockchain killer app. At least, these were the words on the first slide of a startup pitch. Oh Lord, won’t you build me a blockchain killer app? My friends all build features, I must make amends. Really?

Man wants to populate Mars, to live forever and to create unicorned products. That’s true especially in the field of blockchain: a modern wild west scenario enabling anyone with either a computer becoming a blockchain node or using some change money to participate in the latest ICO to make a fortune. Some do and bet on the right horse, most don’t. And that’s perfectly fine – no new foundational technolgy ever came without some supersized creativity at the beginning.

Investing in crypto currencies seems to be a relatively sure bet these days, since the crypto market has been steadily growing in its entirety. Just check the numbers from time to time and you will see an amazing growth of the crypto market capitalization of $10bn in the last 6 months alone.. Still: you easily lose all your money due to a very high volatility even of the Top 10 currencies adding or losing billions of value from one week to another.

However, the currency aspect of digital tokens is just one perspective of the field of blockchain, and a quite non-technological one. Another aspect is the use of the blockchain as a foundational technology layer on top of the internet. Most experts agree that blockchain will significantly change conventional transactions. And nearly everybody is looking for the holy blockchain grail – the killer app, or – as we should say – the killer Dapp – since it would be a distributed app. Quibbling aside, my feeling is that there won’t be a killer dapp. I’m totally with Benedict Evans of A16Z, who stated:

Looking at a strategy doc I worked on in 2006. All the ’next big things‘ weren’t. Then they came back as check-box features in every app

Having worked in the blockchain space with industrial, financial services and media clients for two years now, I’d suggest not to look for or believe someone telling you that she had built a killer app. What the market really needs isn’t the fancy disruption but rather the boring evolutionary approach: hundreds, thousands, if not hundreds of thousands of incremental optimizations. Sure, these little improvements are based on a completely different technology, that means you do have a certain disruptive aspect here: the „getting rid of the middleman“ stories could be sold as some kind of disruption – but middlemen have been an endangered species for a long time already – that’s not to be credited to blockchain.

Most people don’t like changes. Most managers don’t like changes. So, why not throwing away the sword of Damocles like disruption talk and start collaborating, inventing and creating useful products and services that are relevant to many more people than to founding team of a startup only? The old world, the not-yet-familiar-with-blockchain world, is ready for blockchain. Most companies are more open and willing to embrace this new technology than the typical crypto nerd might imagine. The thing is – nobody wants to be laughed at, because he isn’t familiar with the game theory assumptions of PoW. There is plenty of room for collaboration between the crypto blockchain nerds and the old world.

In 2017, corporations are ready to embrace blockchain. And that’s why, in my opinion, clever startups analyze the needs of the market, come up with blockchain solutions for the real world and will then be rewared with great collaboration opportunities. We see that already happening and i hope we’ll see even more startups jumping on that train.

That’s it.

The biggest thing in tech 2015-2025?

From time to time we contemplate about which developments, movements or innovations are those that really matter, and that make this frequently mentioned difference. The results of these intellectual games must be subjective and are generated from a uniquely individual perspective. Things get fascinating, though, if you’re convinced that a specific development not only qualifies as your personal No 1 but should be on many people’s A-list. 

Speaking of technology, my personal No 1 which back in 2009 was ‚Apps’, since 2015 is „Blockchain“. Beside developments such as VR and AR that certainly will honour their promises, the blockchain will fundamentally change the way we use the internet. You can regard it as a layer on top of the internet which allows a completely different approach to transactions – i.e. the end-user perspective – and supply chains – i.e. B2B perspective.

Without summing up and repeating all aspects of a blockchain, let’s focus on just one aspect (which, by the way, is the only reason for using  a blockchain, anyway) – the automated consensus made possible by smart contracts. A smart contract is an algorithm defining and executing a set of rules, i.e. without an additional notary service deciding upon whether all contracting parties comply with all rules. Now, without knowing the technical details behind smart contracts, just ask yourself: how many manually executed processes immediately pop up in your mind that could be substituted by an automated process that minimizes time and costs.

VR and AR have been around for years now. Many companies have been founded, many have been shut down. From my perspective, both, AI and AR, need new use cases and new hardware  to demonstrate their raisons d’être. That’s why it takes so long until they can really demonstrate their added value.

Don’t get me wrong – I can see the sexiness of many VR and AR prototypes. But, still, our world is heading towards automated processes; i.e. automatisations of already existing processes. And here the blockchain comes into play: it’s the great enabler of this global development. That’s why I hereby submit that in 2025, the blockchain will be regarded as the biggest development in technology of the last 10 years.

Comments?

PS: This posts reflects my personal view which is not necessarily congruent with the Datarella team member’s

Let’s discuss all things Ethereum at our Ethereum Munich Meetup

More and more Big Data projects we with Datarella are involved in demand not only administrative or legal security layers but also state-of-the-art technical frameworks to provide the maximum security there is for business as well as petsonal data.

To provide our clients with sustainable solutions we have partnered with Ethereum and its spin-off Ethcore. The Ethereum framework enables us to build business models on top of it, using a very sophisticated blockchain approach, smart contracts and elements of the DAO concept and finally, our own product, the Datarella Data Trust.

Since the blockchain, smart contracts, DAO and especially Ethereum are quite new to the Big Data scene, we aim to make them better known to a broader audience. So we have started the Ethereum Munich Meetup as a platform for presentations, discussions and development of Ethereum-based ideas, concepts, use cases, projects, etc..

If you are interested in all things Ethereum feel invited to our regular meetups!

The Need For Encryption

With this post we do something quite unusual: we re-publish Apple’s letter to their customers. It’s not that we were such Apple fans that we would join  the company’s marketing efforts but the encryption of iPhones has been discussed for a long time. And this week, the FBI and the United States government, demanded that Apple builds a new version of iOS bypassing security and creating a backdoor. This might not be the first case of such a request a private company being asked to install a backdoor (we know that some have done it) but Apple does not retreat. Please read this letter and add your thoughts to that topic – either here at Datarella or other channels – we think that this needs to be discussed in public. And – maybe – there even are (secure) technical solutions to comply with the FBI’s requests AND privacy.

A message to our customers„, published by Apple, Inc., February 16:

February 16, 2016 

A Message to Our Customers

The United States government has demanded that Apple take an unprecedented step which threatens the security of our customers. We oppose this order, which has implications far beyond the legal case at hand.

This moment calls for public discussion, and we want our customers and people around the country to understand what is at stake.

The Need for Encryption

Smartphones, led by iPhone, have become an essential part of our lives. People use them to store an incredible amount of personal information, from our private conversations to our photos, our music, our notes, our calendars and contacts, our financial information and health data, even where we have been and where we are going.

All that information needs to be protected from hackers and criminals who want to access it, steal it, and use it without our knowledge or permission. Customers expect Apple and other technology companies to do everything in our power to protect their personal information, and at Apple we are deeply committed to safeguarding their data.

Compromising the security of our personal information can ultimately put our personal safety at risk. That is why encryption has become so important to all of us.

For many years, we have used encryption to protect our customers’ personal data because we believe it’s the only way to keep their information safe. We have even put that data out of our own reach, because we believe the contents of your iPhone are none of our business.

The San Bernardino Case

We were shocked and outraged by the deadly act of terrorism in San Bernardino last December. We mourn the loss of life and want justice for all those whose lives were affected. The FBI asked us for help in the days following the attack, and we have worked hard to support the government’s efforts to solve this horrible crime. We have no sympathy for terrorists.

When the FBI has requested data that’s in our possession, we have provided it. Apple complies with valid subpoenas and search warrants, as we have in the San Bernardino case. We have also made Apple engineers available to advise the FBI, and we’ve offered our best ideas on a number of investigative options at their disposal.

We have great respect for the professionals at the FBI, and we believe their intentions are good. Up to this point, we have done everything that is both within our power and within the law to help them. But now the U.S. government has asked us for something we simply do not have, and something we consider too dangerous to create. They have asked us to build a backdoor to the iPhone.

Specifically, the FBI wants us to make a new version of the iPhone operating system, circumventing several important security features, and install it on an iPhone recovered during the investigation. In the wrong hands, this software — which does not exist today — would have the potential to unlock any iPhone in someone’s physical possession.

The FBI may use different words to describe this tool, but make no mistake: Building a version of iOS that bypasses security in this way would undeniably create a backdoor. And while the government may argue that its use would be limited to this case, there is no way to guarantee such control.

The Threat to Data Security

Some would argue that building a backdoor for just one iPhone is a simple, clean-cut solution. But it ignores both the basics of digital security and the significance of what the government is demanding in this case.

In today’s digital world, the “key” to an encrypted system is a piece of information that unlocks the data, and it is only as secure as the protections around it. Once the information is known, or a way to bypass the code is revealed, the encryption can be defeated by anyone with that knowledge.

The government suggests this tool could only be used once, on one phone. But that’s simply not true. Once created, the technique could be used over and over again, on any number of devices. In the physical world, it would be the equivalent of a master key, capable of opening hundreds of millions of locks — from restaurants and banks to stores and homes. No reasonable person would find that acceptable.

The government is asking Apple to hack our own users and undermine decades of security advancements that protect our customers — including tens of millions of American citizens — from sophisticated hackers and cybercriminals. The same engineers who built strong encryption into the iPhone to protect our users would, ironically, be ordered to weaken those protections and make our users less safe.

We can find no precedent for an American company being forced to expose its customers to a greater risk of attack. For years, cryptologists and national security experts have been warning against weakening encryption. Doing so would hurt only the well-meaning and law-abiding citizens who rely on companies like Apple to protect their data. Criminals and bad actors will still encrypt, using tools that are readily available to them.

A Dangerous Precedent

Rather than asking for legislative action through Congress, the FBI is proposing an unprecedented use of the All Writs Act of 1789 to justify an expansion of its authority.

The government would have us remove security features and add new capabilities to the operating system, allowing a passcode to be input electronically. This would make it easier to unlock an iPhone by “brute force,” trying thousands or millions of combinations with the speed of a modern computer.

The implications of the government’s demands are chilling. If the government can use the All Writs Act to make it easier to unlock your iPhone, it would have the power to reach into anyone’s device to capture their data. The government could extend this breach of privacy and demand that Apple build surveillance software to intercept your messages, access your health records or financial data, track your location, or even access your phone’s microphone or camera without your knowledge.

Opposing this order is not something we take lightly. We feel we must speak up in the face of what we see as an overreach by the U.S. government.

We are challenging the FBI’s demands with the deepest respect for American democracy and a love of our country. We believe it would be in the best interest of everyone to step back and consider the implications.

While we believe the FBI’s intentions are good, it would be wrong for the government to force us to build a backdoor into our products. And ultimately, we fear that this demand would undermine the very freedoms and liberty our government is meant to protect.

Tim Cook

New Product Development in the Age of IoT

If you’re responsible for new product development in your company, you will be familiar with the several steps of that process. Experts mostly separate the new product development process into seven or eight steps, starting with idea generation and finishing with a post launch review. The fact that more and more things become smart; i.e. they either feature some intelligence or they are connected and controlled through the IoT, has significant implications on new product development, particularly on its very first phases.

Traditionally, ideation and screening of first product ideas have focused on research, brainstorming, SWOT analysis, market and consumer trends, and so forth. All these activities imply certain hypotheses and more or less tangible perceptions of products or product components. This works fine, as long as the final product is a one-way product; i.e. once produced and sold it won’t change (other than to age and break, ultimately). However, smart things aren’t on-directional, but bi-directional: they communicate, they change, and therefore their effects on consumers are far more complex and variable than those of their „dumb“ predecessors.

The smarter a thing, or a group of things, is, the more complex the situations they will create for their environment and their users. The much discussed self-driving cars which algorithms must decide whom to run over in case of an inevitable accoident provide a good example of the complexity future products will create.

Now – what are the implications of smarr things and the IoT on new product development? The answer is pretty easy – we just have to look at the discussions regarding the IoT: privacy, responsibility, sustainability, awareness, acceptance, relevance, and ethics. Is my data secure? Who takes responsibility of data provenance? Do I want this thing to be smart? Do I accept a thing’s decision? Do things add value? Do others accept me using my smart thing? Can I defend using my smart thing against my beliefs?

We can sort these crtical questions into three categories:

  • – philosophy (ethical aspects),
  • – sociology (responsibility/acceptance aspects) and
  • – psychology (awareness/relevance aspects).

Philosophy, sociology and psychology are the „new“ fields for benchmarking new product ideas. As distinct from present techniques of finding new product ideas, corporate innovation managers will have to broaden their scopes and companies will have to adapt by hiring and training their innovation departments towards these fields of expertise. Today, only very few companies seem to have inherited this new way of thinking: just look at how Apple creates and markets its products: there is no talk of product features, but of sustainable production chains, of family accounts or enhanced well-being.

Would you have thought that philosophy, sociology and psychology would play a pivotal role in new product development? Could that mean that philosophers sleeping in ceramic jars now can afford posh apartements, or formerly unemployed sociologists can choose their employers, or psychologists leave their universities to actually develop new products? And – will we see a lot mote useful, meaningful, usable and accepted products? I think so.

What you can expect from Datarella in 2016

We always take a little time in the very first days of a year to define Datarella’s main goals for this year. This time it was a pleasant task since 2015 went very well for Datarella: we achieved most of our goals and we could start without any legacy issues.

So, what to expect from Datarella in 2016? Beside our growing consulting business with fascinating projects and clients, we will focus on our product Data Trust and our project Data Coach.  Due to our tight schedule in 2015, we haven’t published much about Data Trust and Data Coach, yet.  I’d like to give a brief overview on both in this post.

Data Trust
Generally speaking, Data Trust is a secure data market model for Big Data projects. Sharing data between businesses makes much sense: Both, data processing and analytics scale with the data, and development, quality assurance, as well as support become very efficient. The problem: Many businesses are hesitant to share their data with partners for security reasons, to maintain their competitive advantage, and also obligatory compliance aspects regarding data protection.

Data Trust solves this deadlock: With it we provide a secure sharing solution for corporations. Datarella organizes each client’s original data in separate data buckets.

Data Trust enables businesses to put their data to work together with the data of their business partners with guaranteed data security and control. Without giving away their data, they can now profit from analytics, results, and predictions that are based on the joint data within their network of partners. Thus, Data Trust is a market model – it provides each participant of a market with unparalleled insights into the market.

Datarella Prediction Engine

The Datarella Prediction Engine runs on top of the separated data buckets. The Datarella Prediction Engine has been designed for gathering precise statements regarding future business success in the areas of media & advertising, eCommerce, finance, mobility and health.  Together with the Datarella Prediction Engine, Data Triust provides an absolutely trustful environment for clients to manage and analyze their company’s data.

Of course, the Datarella Data Trust can be audited.

Data Coach
Whereas Data Trust already is a product and is already creating value for our clients, Data Coach is still in an experimental phase. The user interface of Data Coach is an app that provides the user with body activity and environmental data.  The user shares this data with a closed professional graph and receives actionable insights into her health condition, behavior, training, etc. as feedback. Based in this feedback the user can react by changing her behavior.

The core of Data Coach is a blockchain environment that provides three essential elements of a professional network:

  1. Data Security
  2. Data Provenance
  3. Peer-to-Peer Architecture

Cryptographic hash functions and completely historicized data chains make data sharing absolutely secure. The user completely owns her data. And she always knows her data’s whereabouts and defines whi can use it, how and when.

An essential part of our Data Coach project is our partner Ethereum, that provides a decentralized blockchain platform we build Data Coach on.

We are running very early tests of Data Coach in the area of sports and entertainment. We are active,y looking for partners to establish a pilot project in the health sector. So, if you think Data Coach could add value to your business and customers or patients, please don’t hesitate to contact me.

If it’s smart, you can wear it!

It started with the first smart clothes in 2006, motivated luxury brands like TAG Heuer of LVMH to add some smartness to their watches and even lets farmers recognize patterns in dairy cow movements: wearables have become mainstream.

At our Wearable Data Hack this June, we partnered with Wearable Technologies, a Munich based company specialized in marketing wearables. One part of our hackathon’s prizes were tickets to the 2016 Wearable Technologies Conference, taking place in Munich, January 26-27. Looking at the impressive lineup of speakers at the conference, we’re sure that our winners will learn a lot about the near future of wearables!

If you also want to attend the conference, you might want to use this special link and our friends&family code Datarella_Friends for receiving a 15% discount. 

See you at the Wearable Technologies Conference 2016 in Munich!