We are proud to announce that Datarella, WERTGRUND and Hammer have established the Munich-based PropTech Joint Venture RAAY Real Estate. Our objective is to develop and sell blockchain-based products and services to the real estate industry.
RAAY Real Estate, a 33/33/33 Joint Venture between Datarella, WERTGRUND and Hammer is headquartered in Munich, Germany. Through this partnership, the three partners deliver innovative solutions for the European real estate market. Both WERTGRUND and Hammer are well-established and Munich-based real estate companies with strong financial backgrounds. We are starting the venture off with a tokenization product for one of our Joint Venture partners. RAAY Real Estate will design the token, build a platform for the sale of the tokens and add other products and services, allowing for new business models and streamlining complex inefficient processes in the real estate industry. RAAY Real Estate is legally supported by CMS, one of the leading commercial law firms in Germany.
We are very excited and proud to be part of this Joint Venture. We will keep you updated about the progress. Stay tuned!
About Wertgrund: WERTGRUND Immobilien AG is an investment and management company for residential real estate in Germany. WERTGRUND offers its institutional and private clients the entire range of services in the field of residential real estate – from investments through the accompanying of transactions and project development to asset management, property management, leasing, as well as privatization.
About Hammer: Hammer AG is a family-run property business based in Munich. Since 1951 the company is an active player in the development and management of commercial real estate within their own portfolio and for third party investors. As of to date, Hammer AG has ongoing developments with an investment volume of 1.2 billion euros and currently 220.000 m2 under management.
We are happy to announce that Datarella is part of a pan-European study initiated by the European Commission. The European Commission wants to understand blockchain developments and its impact on society and the economy. Our study will provide evidence and suggestions for possible policy measures concerning blockchain. Our consortium is led by Spark Legal Network in partnership with tech4i2 Limited and consists of a total of 10 experts. Datarella has been mandated as the technical blockchain expert.
In October 2017, the European Council asked the European Commission to work on an European approach to evaluate the impact of blockchain on different aspects for Europe on society and economy. In the following year 2018, the European Commission formally underlined its commitment to blockchain in the FinTech Action Plan. This action plan outlines 23 steps to enable innovative business models to scale up, support the uptake of new technologies, and to enhance cybersecurity and the integrity of the financial system. Blockchain is a major part of this initiative.
Our study enquires for legal and regulatory aspects related to blockchain-based technologies and their business applications as well as for socio-economic impacts of the blockchain technology. The results of our study should enable mobilizing ad-hoc expertise and to collect facts and figures in a flexible way to support the EU blockchain initiative. To achieve this, our study will address:
A comprehensive assessment of the legislative framework for Blockchain use, responsibilities and liabilities
Policy choices and analyze their socio-economic impacts
Experience sharing and validation of policy choices
Timeline for the development of legal or non-legal EU initiatives
Together with our international partners, we will work on these tasks for the next 6 months. Our results will be summarized in a formal report, which will be issued to the European Commission and presented at the Commission’s premises in Brussels, Belgium.
We are very excited and proud to be part of this study. We will keep you updated about the progress. Stay tuned!
We want to use the event of the 50th anniversary of the moon landing to give some updates on the KOSMoS project we are currently working on. Together with partners from the industry, university institutions and software development, we are continuously making one step after another to reach our goal, to deliver a blockchain-based solution which allows manufacturing companies to make use of dynamic leasing contracts with their customers, to get a valid and tamperproof maintenance documentation for their machines and to control the quality of the products based on predefined requirements.
In the beginning of July, teams from inovex, Ondics, University of Furtwangen and Datarella met at a workshop hosted and moderated by the Institute for Control Engineering of Machine Tools and Manufacturing Units (ISW) from the University Stuttgart. Once there, we discussed possible interfaces between the machines, the edge gateway, the analysis tool, the global KOSMoS platform, and the blockchain. We were able to agree on a basic infrastructure plan. Going into greater detail, we also agreed upon how data to be transferred from one instance to the next one. Based on this infrastructure we are currently planning to develop a pilot that demonstrates a data workflow from an oil-pressure sensor of a machine over the blockchain to the cloud platform. This pilot should be finished within a few weeks.
Decision on Blockchain Technology and Consensus Algorithm
Moreover together with the Frankfurt School Blockchain Center, we decided to use Hyperledger Fabric technology as the underlying blockchain for the KOSMoS project. In addition to the fact that Hyperledger Fabric is very suitable for consortial blockchains, another big argument for using Hyperledger Fabric is channel functionality. Assuming we want only one single Blockchain for all the use cases, we need to make sure that the privacy concerns of the industrial partners are being respected. In Hyperledger Fabric, it is possible to channel connections between organizations in such a way, that the transactions are hidden from other participants on the blockchain. This protects the data from unintended sharing with others.
Another advantage of Hyperledger is the separation of the consensus in three phases ‘endorsement’, ‘ordering’ and ‘validation’. This creates more transparency about the current state of the data and also enables pluggable consensus services for all phases. We assume that there isn’t full trust among all participants in the system, so we need a consensus algorithm that tolerates faulty states. Because of this, we decided to implement the RAFT Byzantine Fault Tolerance consensus mechanism. This is practical especially for the ordering part where there is the highest probability of mixing up the order of the transactions. Raft-BFT in Hyperledger also brings an out-of-the-box Kafka as a reference implementation that makes it highly compatible with the edge gateway technology.
The next steps are actually implementing the blockchain for the project and connecting it to neighboring systems like the edge gateway and the KOSMoS platform.
In casual discussions about blockchain and DLT it’s easy to mix up anonymity with pseudonymity. People often use the one term when they mean the other. There is a small but important difference we’ll explore in this post.
On the one hand anonymity describes the situation when the identity of an acting party is completely unknown. When the acting party is truly anonymous, there is no way to link the anonymous identity to a real world person. On the other hand pseudonymity describes the situation when an acting party has a consistent identifier that is not the real name but which might be linked with the real world identity of the person behind the pseudonym. As long as the link between the two isn’t known no one knows who the real identity behind the pseudonym is. But if those two can be linked, the identity is publicly known forever. An easy to understand example is the use of pen names by artists or authors who wish to address a market segment not usually associated with works published under their own names. Stephen King for instance published many books under his pseudonym, Richard Bachmann.
What does this mean for Blockchain?
Most blockchain technologies like Bitcoin or Ethereum rely on transparency and persistency. This means that the balance of every address and every transaction is publicly visible and irreversible. The addresses are the identifiers of the identities, and are anonymous until used. When used, the address takes on more pseudonymous characteristics. When a public / private key pair is created, the public address, is the pseudonym of the identity. But if the pseudonym got linked with the transacting party’s real world identity, all transactions will be linked to that identity.
Some blockchains have much more limited transparency and higher anonymity. Monero and ZCash are both examples of such chains. The identities used in those systems are mathematically non-identifiable, unreachable and untraceable due to the use of zero-knowledge proofs. These proofs only prove information about the fact that a transaction occurred without leaking any information about which actors or addresses took part.
Moreover blockchains can be implemented as either public or private chains. In contrast to public blockchains where information is publicly visible, private blockchains open the transactions only to parties authorised to use and see the information. This option is mostly used for blockchains operated between industry partners.
In the end analysis, most blockchains aren’t anonymous but rather pseudonymous. Addresses represent an identity that isn’t publicly known by default but theoretically could be linked. Despite this, zero-knowledge proofs offer a chance to keep the maximum level of anonymity possible in open blockchain ecosystems.
If you have more questions about anonymity and pseudonymity in blockchains, feel free to contact us.
The number of and capital raised through ICOs have been in steep decline since mid-2018. Non-existing regulatory frameworks, fraud, and the decline of cryptocurrency prices were among the reasons. So called security token offerings promise to fill the gap approaches to compliant offerings based on actual assets. Will asset-backed STOs initiate a second wave of token offerings? How do typical STO projects look like, and where will security tokens be traded? For this meetup, we invited Richard Olsen, Founder, and CEO of Lykke as well as Dr. Markus Kaulartz, Senior Attorney at CMS Hasche Sigle to talk about the impact of security tokens on financial assets markets and regulatory aspects of STOs, respectively.
After the hype about ICOs in 2017 with billions of dollars raised, ICOs became less popular in 2018 due to missing regulatory frameworks as well as quite a number of fraudulent projects and the decline of overall cryptocurrency prices. ICO’s were initially attractive to projects because they enabled project teams to raise relatively large amounts of capital in an unregulated environment mostly based on white papers and promises of future project/product development. This changed rapidly following the beginning of the “Crypto Winter”.
Since then, security tokens have become more popular as token-based capital markets have continued to mature. In contrast to utility tokens from “traditional” ICOs, security tokens represent real physical value, such as a share in the company who issued them or specific assets like a power plant for instance. Security Tokens are comparable to actual shares on the stock markets, which represent partial ownership, have a price and sometimes provisions for profit sharing schemes such as dividends.
Richard Olsen
The first speaker of the event was Richard Olsen, Founder, and CEO of Lykke, a Swiss-based exchange for financial assets targeting B2B and B2C clients. He presented the development of the Lykke exchange and its transformation from a ‘prototypical startup’ to a mature ‘regulated entity with global potential’.
Richard calls himself the “grandfather” of crypto both due to his age and his experience. Richard can boast of decades of experience on the leading edge of global finance. He founded the forex company, Oanda in 1985 with the goal of forecasting financial markets using computers, before moving into innovating the provision of second by second interest payments and some of the earliest frequency trading facilities.
After an “Aha” moment in 2011 where he realized that bitcoin wasn’t just bitcoin but rather the first DLT and a concept which would transform the world, Richard began planning to build the Lykke exchange. Since Oanda’s board wasn’t ready to enter the world of crypto, Richard needed to raise money. Of course, he then looked to crypto. Once the market was ripe the Lykke STO was ready to go. While most projects were offering promises of future development in exchange for money as part of their ICOs, Lykke was already doing an STO. Few people can report from first-hand experience about the benefits and risks of executing a security token offering. Richard has done this three times in as compliant a manner as possible. Lykke’s first STO was with the LKK token which promises the delivery of Lykke company equity to bearers of the token. The first STO brought in 1.8 million USD. Further rounds included LKK-1y and LKK-2y forwards which raised more than 4 million additional USD.
Licenses, Liquidity and High-Frequency Trading
Richard brought up a very important question – namely, why were they allowed to sell these security tokens? In this case, they were selling their own equity. In order to provide an exchange for third-party security tokens, they will need an Organised Trading Facility (OTF) license which Richard sees as the next logical step for the company. OTF licenses are part of the MiFID II EU financial regulations and according to the Dutch Authority for the Financial Markets (AFM), OTF’s are intended level the playing field between the various venues for the execution of orders.
Specifically, once Lykke obtains an OTF license, they will be “a multilateral trading venue in which third-party buying and selling interests in bonds, derivatives or structured products are able to interact in the system in a way which results in a contract”. OTF’s have all the compliance regulations of an investment firm. In contrast to multilateral trading facilities (MTF) however, according to AFM, the “definition of OTF is intentionally broad, so that it can contain as many (future) forms of organized execution of transactions as possible”, which leaves space for innovation by exchanges and market makers such as Lykke.
Richard also discussed the macroeconomic aspects of the current financial system, in particular pointing out that liquidity and transparency are sorely lacking in much of the system and that blockchain-based solutions can make processes faster, easier and more transparent. Richard claimed, that tokenization will get more and more popular as soon as regulation catches up with the technology Everything that can be tokenized is going to be tokenized. One of the reasons for this is that tokenization enables risk sharing. Exchanging tokens instead of cash spreads the risk on multiple parties. That’s why it’s so important that any token be exchangeable for any other token. The more liquid the market the greater the likelihood that systemic risks are shared widely and unwound quickly before they grow to massively disruptive proportions.
He also dispelled a myth about high-frequency trading or rather clarified it with a metaphor. A question came up about whether or not high-speed trading was necessary or could be healthy for a system. Richard argued essentially that while the high-speed arbitrage-based trading of the past years was quite destructive, overall, trading in a financial system is much like blood circulation in a human body. Just as blood needs to move relatively rapidly through the body to enable waste removal and homeostasis, a financial system needs deep markets with lots of high-speed trading in order to clear the gunk and keep things competitive.
At the exchange level, he noted, the key is liquidity, which means that there should be enough tokens available to trade. This is currently made by bots all over the exchange business but there’s a lot of inefficiency in this model. Richard argues for well-designed matching engines which efficiency earn their keep. Moreover, people should be empowered through technology and crowd intelligence while staying within the legal system. Richard pointed out the self-regulatory success of Airbnb’s reputation system as a model for this kind of feedback system. He further emphasized that the laws and regulations have to be designed to incentivize the right behavior in spite of the corrupting effect of money.
In the same vein, Richard cautioned that at the moment it is difficult to determine which actors in the STO market are legit and which may be rather dubious. Essentially many say that they are issuing an STO but due to the lack of clear standards and transparency, it’s difficult to separate the wheat from the chaff. According to Richard, investors should pay attention to the jurisdiction of the asset, the reputation of the company issuing the asset, the rigor of the regulatory structures where that company is based and finally the question of where the secondary market for the asset takes place. If these aspects aren’t all covered within a reputable regulated environment, it’s pretty clear that something may be fishy with the STO or the platform involved.
If you want to learn more about Lykke and its products, go on their website or download the Lykke wallet.
Markus Kaulartz
Following Richard’s presentation, Dr. Markus Kaulartz presented the legal implications of STOs as the second speaker of the night. He is a senior attorney at CMS Hasche Sigle and specializes in IT-Law, IT-Security, and Privacy.
Markus firstly explained that tokens generally always incorporate a connection between the token and a representation of ‘something else’, for example, a voting right, shares or licenses. In the case of security tokens, the underlying asset is generally either equity in an enterprise or debt. The only exception to this is tokens and coins which serve a pure currency function with no underlying value underlying utility or asset.
First a Slight of Hand
As a result, a critical legal issue is the separation between the token itself and the rights “granted” by the token. It may be possible that the token and the rights associated with it might be separated.
Markus illustrated this with a simple example involving his physical leather wallet. For his example he let the leather wallet stand-in in for a security token and a 5 euro bill inside illustrate an underlying security. He noted that if he as the token issuer were to sell the wallet with it’s included right to the underlying security (and thereby dividends) to someone it might be possible that they could subsequently sell the token onward to a third party (Just the empty wallet) without also passing along the underlying linked security. That would result in a situation with two potential claimants for the dividends issued by the security issuer. In such a situation, the token issuer might end up paying a dividend twice.
One legal approach is to limit the original buyer contractually and prevent them from selling the rights to the underlying token to a third party without also selling the token. There is not however currently any clear solution to this problem at a systemic level inside the German legal system. It’s currently being discussed on both the legislative and regulatory levels but is not yet solved. Essentially you can issue a security token at this time but it’s not possible to definitively link the token to the security it represents without some significant contractual acrobatics. Markus is hoping for changes to the law which would essentially make blockchain transactions equivalent legally to a written contract transaction transferring ownership of a given security.
Prospectus or No Prospectus? That is the question.
Markus also outlined the legal options available currently for organisations who wish to issue a security token. The first significant question for prospective STO issuers is whether or not they will need a prospectus for the project. This prospectus contains potential risk factors, information about the issuer and a description of the security as well as deep financial disclosures about the issuing company. Such documentation must be approved by Bundesanstalt für Finanzdienstleistungsaufsicht – BaFin (German Federal Financial Supervisory Authority).
The process is pretty much the same as for issuing any other kind of stock or blond and is very expensive. Legal costs for producing such a document are likely to exceed 100,000 Euros at a minimum and getting a prospectus approved by BaFIN often takes months of waiting and working through numerous drafts prior to approval. The idea of a prospectus is that it is a document which contains reliable information regarding the risks and benefits of an asset and serves to protect “mom and pop” investors from unknowingly spending too much money on projects they know essentially nothing about. The major advantage for issuers if they choose to issue a security with a prospectus is that it can be rapidly “passported” into all other EU jurisdictions and traded in a compliant manner without further examination by the individual member states.
Exceptions, Alternatives and SPVs
The alternative to this process is to issue the STO under one of three exceptions designed to allow funds to be raised without offering consumers the “protection” of a prospectus. The rules are designed to protect the mass of average investors and there is some flexibility for situations which don’t have a substancial impact on everyday asset consumers.
Exception 1: If the token will be sold to less that 150 people. This is intended to support startups by allowing investment by small groups of friends and family.
Exception 2: If the token is sold exclusively to investors who each invest over 100,000 euros. Individuals rich enough to invest more than 100k are deemed to be defacto professional investors who don’t require state protection and “know what they’re doing”.
Exception 3: If the token sale raises less than 8 million euro. This is the exception under which most crowd investing happens. The logic is that at this level the damage from such an issuance can’t become significant at a structural level.
Lastly, Markus described the process of buying tokens and approaches to token issuance. Classical approaches follow the simple structure that the investor buys and gets the token and the right directly from the emitter who runs the business.
One new approach to token issuances uses a Special Purpose Vehicle (SPV) which has the right from the emitter to sale the tokens. For the issuer, this guarantees that the emitter is completely disconnected from the investor in a contractual manner. Despite the fact that this strategy reduces the risks for the token issuer, it increases the risks to the investor because the investor has no legal claim on the underlying assets being securitized. Markus essentially said that the use of an SPV could be a red flag for investors especially when in conjunction with the issuance of STOs from jurisdictions with lax regulatory oversight.
Another approach is to securitize subordinated loans either with or without an SPV. This is a common approach within the crowdinvesting area but it’s rapidly being adopted for STOs as well due to the relatively lax regulations on this type of debt and to the established procedures / regulatory framework for ordinary subordinated debt. Investors should be aware however that subordinated debts are services last behind all other commercial obligations in the case of a bankruptcy.
Thank you very much to Richard and Markus for giving these interesting presentations! Also, thank you to Deloitte for hosting our Meetup. Also, a big thank you again to our community for coming and participating! We hope you enjoyed the meetup and we encourage you to give feedback over the known channels!
Our next meetup will be about Blockchain in PropTech on July 23rd and we would love to see you again there!
The successful XSC Wallet for Android and iOS just got a new pedometer function! You can now incentivise your employees to move more and stay healthier with automatic coin rewards.
Everyone knows regular physical activity is good for your health. The more a person moves on a daily basis, the healthier she tends to be. Exercise helps to reduce stress, makes you happy and promotes mental as well as physical performance.
Using the XSC-Wallet with Pedometer results in more movement, more health and more fun at work:
Integrated pedometer gives feedback on your own activity
Stay motivated by earning coins when you meet your goals
Higher health, lower absenteeism due to sick days
Staggered goals reward the employee with XSC
Office workers quickly fall into the trap of living a largely sedentary lifestyle. Everyone wants healthy innovative employees but we all easily fall into just sitting in front of the computer all day. The extra kilos pile on and employee health and innovation are slowly eroded.
With the new pedometer function of the XSC Smart Wallet employees can be motivated to be more active both at work and during their leisure time.The XSC Smart Wallet uses sensor data to determine the number of steps a user takes over the course of the day.
The great thing about this is that after a certain number of steps, rewards are given out to the employee in the form of coins, which can then, for example, be exchanged for coffee, smoothies, or other benefits in the company cafeteria.
This simple and clear incentive encourages employees to move. In addition to the benefits of improved health and wellbeing, employees enjoy trading their coins in for perks like free coffee or fruit.
Employers gain an extremely cost effective tool for improving employee morale, encouraging innovation though greater employee fitness and engagement and perhaps most importantly by reducing employee absenteeism due to sickness.
Privacy is one of most central topics of this internet connected era. People want their private data to be protected from third parties which, for instance, resell the collected information to promote personalised advertisements or worse to do things like manipulate elections with what amounts to weaponised data science. In the past it was often the case that privacy was a mere afterthought when designing an online application. That’s not the case anymore. In the wake of scandals such as Cambridge Analytica, it has become increasingly clear that system design needs to put privacy front and center if we want to avoid dystopian outcomes in our society. Thus, “Privacy by Design” was the topic of our meetup on on March 19, 2019.
Our audience at the meetup “Privacy by Design?”
The first person we invited to give some insights about this topic was Andrew Tobin, Managing Director of Evernym. Evernym is a US-based software company which develops decentralised, self-sovereign identity applications. Andrew talked about how Evernym developed and open sourced the Sovrin protocol to manage the secure and private issuance, holding and verification of digital credentials in a decentralised manner.
By using Sovrin, anyone can verify claims made by identity owners including the following four aspects of data validity without any contact with the credential issuer. This eliminates the risk that anyone can draw a correlation about private activities of credential holders based on the claims they make to verifiers.
Who issued the data to the holder?
Was it issued only to the holder, and not to anyone else?
Has the data been tampered with between issuance and time of claim?
Has the issuer revoked the credential?
He also pointed out that Sovrin is not limited to human credentials making highly useful for the M2M economy. It can also be used to issue and verify credentials for organisations and things empowering proofs for stuff like part numbers of machine components, company records or tax returns.
Sovrin enables the storage of verifiable credentials in a digital wallet. Compared to a physical wallet, there are a number of additional benefits. Backup- and recovery functionality, the ability to revoke credentials remotely and a selective disclosure functionality for the individual data points making up your identity are all made possible using this technology. The trouble with paper credentials is that they’re pretty stupid. Passports can get lost or stolen, if you show your drivers license to someone you have to show them the entire document, not just the relevant details, and if an issuer wants to revoke a credential they’re pretty much out of luck when using a traditional paper identity document. With self- sovereign identity all of these scenarios are no longer problematic.
If you want to learn more about Evernym, their solutions and tools behind it, check their website or Andy’s slides here and here.
Andrew Tobin presenting Sovrin, a self-sovereign identity solution
The second speaker of the event was Kevin Leuthardt the new Steward of Governance Working Group of the European Blockchain Association (EBA). He briefly presented the founding of the Working Group Governance in the EBA and explained how decentralised organisations can rely on a suitable governance model.
If you are interested in governance in decentralised organisations and have a law background we would appreciate if you could take a couple of minutes to fill out this survey. Thank you very much in advance.
Kevin Leuthard presenting an update on the EBA Working Group Governance
As the final speaker of the day, we invited Dr. Elad Verbin to the stage. Elad is a Berlin-based computer scientist specialising in blockchain technologies, algorithm engineering, and predictive modelling. In blockchain space, he works on blockchain filesystems, governance, and macro-cryptoeconomics. At this meetup Elad shared some insights about “Privacy on the Blockchain – Zero Knowledge Proofs and their Future Use”.
First of all he explained why people should care about privacy on the blockchain.
The first reason to do so is that privacy on the blockchain is broken. In the early bitcoin days people were buying pizza online with the same addresses they used to buy drugs on Silk Road. Even if it wasn’t clear to the users at the time, what is clear now is that the buyer of the pizza is also the buyer of the drugs. There’s a whole industry of players such as Chainalysis and BitCluster cropping up with products dedicated to tracing these transactions out there “in the clear”.
The second reason to care about privacy of the blockchain is that private computation is necessary for Web3. It is not desirable to for all transactions made on the blockchain to be public. That notwithstanding we still want the benefits that data availability provides. As a result we’re increasingly turning to computation on encrypted data, for example homomorphic encryption, to restore privacy while maintaining the availability of data sets for computational tasks.
The third reason is that more privacy establishes more trust in the system which automatically leads to more shared information and therefore more value all around for everyone.
The second aspect, Elad pointed out is the so called Secure Multiparty Computation (SMPC).
In SMPC, every player in the system learns only about their own input into the system and the output of the system without knowing the input of the other players so that privacy comes first. The special thing about SMPC is that it can be done for any function given enough time for computation and every task that can be computed can also be computed securely.
In an ideal world there would be a trusted middleman who could compute those functions. The middleman could collect all the input of the players and simply publish the result back to the players. We all know however that the trusted middle man approach usually fails due to the untrustworthiness of the “man in the middle”. SMPC protocols functionally simulate the trusted middleman scenario without actually requiring any trusted party.
As a third point he introduced applications of private computation.
Private computation has been used in a number of productive contexts already and it is starting to seep into consumer applications like such as the chat platform Telegram. The same goes for Zero Knowledge Proofs nowadays.
As a first practical example, Elad presented a case study about Sugar Beet Auctions in Denmark from 2008. The problem there was, that the participating parties in sugar beet auctions needed a secure technical means of simulating a “trusted middleman” without actually having such a party and also without revealing private bids or the demand curve of the commodities purchasers. After deploying a SMPC-protocol-based auction system, the parties only knew how much they each sold without learning anything about the overall auction results while still arriving at an efficient market clearing price at the market level.
Based on this success governments started using private computation for radio frequency spectrum auctions resulting in more efficient and more fair auctions for these public goods. Telecommunication companies didn’t have to make the prices paid for spectrum rights public and simultaneously the state received an efficient economic outcome from the auction.
Another potential use case is for private computation would be an algorithmic redistribution of wealth whereby individuals could make their finances and demographic information available in an encrypted format for algorithmic analysis. The idea here is that if the data were made available due to the advent of widespread trust in private computation, algorithmic design including reinforcement learning, control theory and optimisation theory could give us substantially better results and public policy than is available today. In the future, there will be more and more libraries available for private computation. Compared to today, the computation will also be cheaper and faster.
The last major point in Elad’s presentation was regarding practical issues in adopting this technology.
The first issue is the challenge of replacing the trusted middleman with a protocol. How is the function f defined and how to keep the privacy over time?
The second issue is the speed of SMPC. The speed of SMPC is pretty slow right now. But compared to some years ago it became significant faster.
The third issue is the current general lack of trust in SMPC. It’s a big challenge for a new innovation to gain trust of the users. It takes some time for people to trust innovations and adapt to new technology.
Dr. Elad Verbin presenting Zero Knowledge Proofs and their future use
We want to thank the speakers for their very interesting presentations at this Meetup about “Privacy by Design?”. We also want to thank Deloitte for hosting our event at their facilities and of course we want to thank our guests for coming to our meetup and asking high quality questions.
We would appreciate seeing you again at our next meetup about “The State of Secutity Token Offerings” on May 21st, 2019.
On Friday February 15th, 2019 Datarella took part at the kick-off meeting for the KOSMoS project at the headquarters of Schwäbische Werkzeugmaschinen, a consortional partner located in Waldmössingen in the Black Forest.
The representatives of the consortial partners of the KOSMoS Project
The primary goal of KOSMoS is developing a platform for the cross-company networking of production and process data using blockchain technology. The platform will be able to integrate new offerings and business models. Examples include transparent maintenance concepts, dynamic leasing and proof of quality for delivered products. Through these business models, all cooperating companies should gain an advantage. Examples of such improvements include lower prices, lower maintenance costs and easier product distribution. In summary, the project should facilitate better cooperation of several companies.
The purpose of the kick-off-meeting was the exact definition of the three use cases. Each industrial partner (Schwäbische Werkzeugmaschinen GmbH, Schütte GmbH and Asys Group GmbH) will develop exactly one use case in cooperation with the so-called “enablers” inovex GmbH, Frankfurt School Blockchain Center and Datarella. The industrial partners presented their use case and illuminated the most important aspects in the development plans as well as their individual goals. It was very interesting for Datarella to see how the partners plan to develop and cooperate in order to achieve the goals of the project.
For the next weeks and months, it will be important to define and align the different requirements of the each use case and determine how the blockchain can be leveraged to produce the most benefit for everyone. The first talks on this subject are already planned.
We from Datarella are very excited to be part of this innovative research project and can’t wait to see the first interim results. Stay tuned!
In our first Meetup of 2019, we invited people to Werk1 to listen to three presentations around the topic of “Blockchain as a Social Technology”. The special thing about this Meetup was the decentralized nature of the event. Parallel to the event in Munich there was a meetup hosted by the University of Bayreuth and Fraunhofer FIT. The two locations were linked via a live video feed. Additionally we piped in guest speakers from remote locations in Denmark and the USA. Everything was broadcast in real time via a live stream on our website. You can rewatch the video here!
The first presentation was held by Jon Hearty, Business Development Director of Origin Protocol. He gave us some insights about blockchain-based decentralized marketplaces and the many social implications of this innovation. Moreover he talked about his blockchain platform for building decentralized marketplaces ‘Origin Protocol’.
According to Jon, many of today’s marketplaces that seem to be fully P2P have central companies sitting in the middle of all transactions which hoard and swallow the data to monetize it later. With the use of a blockchain-based decentralized marketplace, problems like these can be avoided. He sees four major advantages to Origin’s approach to decentral marketplaces.
The drastic reduction of transaction costs. Companies who run the platforms often request high transaction fees for basically just matching a buyer and a seller. With the use of blockchain there is no need of an intermediary so that the transaction fees can be put back in the hands of the buyers and sellers.
Redistribute value more fairly throughout the networks. Users have a major impact on the success of the platform but hardly benefit from it compared to the platforms’ founders or directors. Cryptoeconomic incentives provided by a blockchain powered platform to distribute the value more fairly within the platform so users also benefit as a network effects set in.
Promote free and open commerce. Many marketplaces aren’t available all around the world, they are limited or banned to a special region or heavily regulated. In the face of regulation, a company who runs the platform is a single point of failure. Decentralized Platforms don’t have this characteristic which makes them able jump in where where platforms like Uber, AirBnB are banned or regulated.
Making services available to the unbanked. Billions of users worldwide don’t have access to financial services but they do have access to cheap smartphones and therefore wallets to store their values. The unbanked can leap from traditional financial system and make transactions over a blockchain-based network.
Origin Protocol itself just launched a blockchain-based marketplace as a dApp (decentralized App). As underlying technology Orgin Protocol uses the Ethereum Blockchain and IPFS (InterPlanetary File System) for identity management. Go and check it out on https://dapp.originprotocol.com/#/.
Our second speaker of the Meetup was Pablo Velasco from the University of Aarhus who focuses on the digital culture through its technical infrastructures including the political and social aspects of technology. In his research, he deals with topics such as how the development of social technology happens and how it contributes to micropolitics such as how social relationships modify the outcomes of certain technologies. As an example, technology can be used as a political tool for including or excluding relevant stakeholders in a system.
Regarding the blockchain technologies that rose up during the last years, Pablo said, that they can be merged together as a list of attempts of some sort of parallel payment system or decentralized, electronic money. In Bitcoin, for instance, the key element was the exchange of economic value using cryptography and this cryptography was a elementary need for the social integration of the technology.
He also pointed out how different technologies have impact on the social interaction. As an example, sending coins over a blockchain network requires a new and different trust paradigm and therefore builds up a new type of social interaction.
In the third presentation Anna-Laura Liebenstund and Rebecca Johnson from the European Blockchain Association presented the importance of a governance model in decentralized organizations.
They pointed out why it is important to have regulations in the use of technology and how the interaction impacts our social behaviour as well as the way we think.
A key aspect was that we have to be very careful about the inputs, design processes and implicit cultural assumptions behind our development of new technology. Artificially intelligent agents, for instance, will always be a reflection of the training sets to develop them.
Technology without principals will become antisocial sooner or later.
As a result, we need governance as a framework for techno-social interactions. Recent projects like ‘the DAO’ failed and Bitcoin and Ethereum got forked because of inconsistent governance.
Therefore it will be important for decentralized organizations to establish common principles, ethical code of conducts, membership rules and a solid basis in existing social networks to ensure the durable success of the organization.
We want to thank the speakers for their very interesting presentations on this, the opening meetup of 2019! Also, thank you to the team of Werk1 who provided the location, organized the catering as well as providing support for the A/V setup. And we thank ZD.B for supporting the meetup in general!
We also want to thank our audience in Munich and Bayreuth for attending. We hoped you enjoyed the Meetup. Feel free to give us your feedback.
Our next Meetup will take place on Tuesday March 19th, 2019 on the topic ‘Privacy by Design?’. We would be very happy to see you there again!
