Regulatory Compliance

Originally written by Michael Holdman, Founder & CEO of Prasaga

Imagine a life of anonymity while legally participating globally in any transaction you have right to.

Imagine, a life in which all interactions requiring personal identity was a simple scan of a UID verifying the necessary rights to participate without giving any personal information to the other party, just verification you can legally transact and do it anywhere in the world and in compliance with any regulations geographically.

The Crypto community has created a method for anonymity of transactions, focused on transferring cryptocurrencies between accounts and avoiding detection of assets until withdrawn via an exchange. What has not been successful yet? Create personal accounts on the blockchain where all your state data resides including all necessary credentials (certs) for any type of interaction you may desire on a daily basis anywhere in the world regardless of the sovereign nation regulations.

https://medium.com/datadriveninvestor/rethinking-the-blockchain-account-concept-e974382e291f?source=friends_link&sk=1c6078ad04b1b0caa1ab4176e29a396a

For this to happen efficiently and securely, it cannot be an implementation of multiple smart contracts (SC), where all state data resides inside the SC which have proven to be hackable and non-shardable. Such deployments can be complicated to set up depending on process flow and need updating whenever a certificate expires, changes info, or the regulations for a specific transaction is changed by an entity.

https://medium.com/swlh/rethinking-sharding-and-smart-contracts-for-maximizing-blockchain-throughput-acb7f5d32063?source=friends_link&sk=c93fce7eaf69444b679c15e858730e93

Instead, it needs to be a system that integrates all data, dynamically updatable into your individual account on the blockchain. This is not about moving crypto from one account to another without detection to avoid fees of intermediaries’ or from countries of origin for purpose of tax evasion or government interventions. This is for the other 99.999% of the world that may want and cherish privacy, however don’t fear regulations that in most cases protect both purchaser and seller in a transaction. Such a systems allows us to move into Individual Sovereignty, having full control of all assets and personal data including who gets access to specific information or validation that the proper information exists.

An account in a “systemic” eXtensible Blockchain Object Model architecture (XBOM) holds all objects instances, whether they be a physical titled or digital property, certificates or identification (badges, licenses, etc.). The account owner shares keys for any specific object which will satisfy the requirements necessary to complete a transaction. https://medium.com/@michael_11858/smart-object-assets-visualizing-the-next-evolution-beyond-smart-contracts-8af0fa530b75?source=friends_link&sk=f1f4425fd9f6623e842f96d71d9f13ba

Let’s look at two types of deployments and a blockchain business opportunity, Decentralized Exchange (DEX).

1) Professional Identity on private/permissioned/trusted in an Enterprise where an entity desires all its team members to have necessary credentials on blockchain for physical entry, applications access, etc.

2) Personal Identity on an open/permissionless/trustless public chain and how to validate your right to transact without giving personal data to random strangers.

3) The Decentralized Exchange (DEX), how an object model creates a more open, and inclusive marketplace. Don’t just exchange crypto assets, when all asset, stocks, bonds, commodities, real estate etc. can be posted, searched and interaction between parties is within the DEX or Decentralized- Multisided Marketplace (D-MSM) and final settlement and transfer of asset is between the two parties with full autonomous adherence to regulations.

Professional Identity

How can we have access to all necessary physical and digital space to perform our duties while protecting both our identity and the security of an entity’s property?

The ability to have multiple certificates, identifiers, etc. intrinsic to an account on the blockchain which gives levels of clearance and access to which ever physical boundaries and systems are necessary for team members to execute their duties seamlessly is essential for adoption.

https://medium.com/@michael_11858/what-if-kyc-aml-rules-and-regulations-could-be-intrinsically-enforced-without-specially-c5ed7088987f?source=friends_link&sk=b9721a0502abec2823334ed6325b4cad

If team members professional identities are accessed via a UID, creating an immutable record of events, it must also be ensured that only the data any specific endpoint needs to verify is delivered for validation. The capability of every object intrinsic to individual accounts achieves this as the request for validation from the requestor will be directed only to the object or objects in your account that need to be identified, not the entire state data of your account.

https://medium.com/@michael_11858/extensible-multiple-signatures-xsig-with-the-extensible-blockchain-object-model-xbom-ad87194c04d4?source=friends_link&sk=d6f0b06c57c2fa93e4d37f23933a2c2d

This protects all parties in a professional relationship, Employer, Employee, Partners and Regulators. For the employer, it protects the proprietary assets of the company from illegal access and use. For employee, it protects from false accusation or “fall guy” scenarios etc. For partners it ensures trust between all parties. For government, it protects against illicit/illegal activity by all parties as the tracking and immutability of any transaction. Transaction can be turning on a machine, creating, accessing, deleting a document will be forever memorialized and accessible if judicial interaction is necessary.

Personal Life

What protection you can achieve with XBOM in your personal life. In today’s world you must prove your right to participate in many venues to many strangers. Getting carded at the bar or store for alcohol, how many people do you show your address to? Showing ID (Passport/Driver License) to fly, gain entry into other nations (Visa), Purchase of startup stock (accredited investor proof), etc. Anytime you need to prove yourself legal to transact without revealing personal data i.e. residential address, Gov ID# or other personal information to potential bad actors (intermediaries).

Individual Sovereignty enabled by XBOM allows all your documents to be immutable in your account on the blockchain. This means never losing your passport, never getting caught without proper credentials. Nations could not confiscate your passport but rather would restrict by having to enter an immutable record of why and with immediate alert to your nearest Embassy or Consulate.

From Decentralized Exchange (DEX) to Decentralized-Multi-Sided Marketplaces (D-MSM)

Currently, all focus seems to be exchanging only crypto assets in exchanges and the newer decentralized exchanges (DEX). I don’t know if it is because the majority of community is made up of traders/brokers or that the ability to achieve decentralized multi-sided marketplaces is limited by the current Smart Contract architectures.

https://medium.com/@michael_11858/amazon-ebay-nasdaq-on-a-blockchain-ed56383c0626?source=friends_link&sk=a8614e427c68a6a98370e1cc4c0f458d

A Global Operating System on Blockchain (XBOM) via a First-class Object Model enables the Decentralized Multi-sided marketplace. We had a recent call with a new DEX which they were interested in offering crypto trading and how our project would help them over other blockchain protocols/design, our question to them was why only crypto on your DEX? Why are you not looking to be inclusive of any assets or products that a party may want to offer for sale?

By having the ability for a private party to have all necessary proof of transaction capability intrinsic in your account and enable the offering or purchase of an item listed in an open marketplace globally while still adhering to the legal requirements of any nation the offering may originate from.

The DEX would have a lower liability of transactions in an XBOM model. As all necessary certs allowing participation of transfer of asset ownership is intrinsic in each parties’ accounts on the blockchain, all settlement happens directly between accounts, eliminating the need for any intermediaries to be involved in the final process. DEX’s become D-MSM’s and can expand their business scope, revenue streams and communities.

Conclusion

Blockchain, not crypto is becoming more prevalent in enterprise projects, while it seems to have stalled for the general public. We have seen the overall market cap for crypto’s stay within the same range for a few years now and there is no sign that anyone outside of the +/- .00001% of the world that trades the asset class will jump in as most of the world does not know trading, how to read charts, forecasting etc. or have the financial means to handle the volatility.

The ability to create a universal capability that can satisfy all types of deployments, transactions and regulatory needs globally is absolutely necessary to bring the general public into the community. The capability must satisfy everyday needs that allow the general public to live their daily life with using a ubiquitous method of exchange (currency).

We believe the enterprise will move to utilize a cryptocurrency i.e. for transaction and settlement between supply chain partners. We do not believe it will happen with a stablecoin based on basket of asset in which asset losses negates the value of the coin. It needs a stabilized currency whose value is derived from an economy and the productivity of the economies’ participants.

This document was prepared to overview XBOM and awareness of the foundational capabilities and advantages out of the tech arena and into practical use. There are other needs to achieve the global capabilities on an open permissionless chain, which is why we have architected the DataGrid Blockchain native protocols, consensus and DataGrid Token achieving the proper scale, security and decentralization which numerous papers can be reviewed at prasaga.com.

Originally published at https://prasaga-ceo.medium.com on January 23, 2020.