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all
right uh thank you uh Jesse and Matt um
very excited to be here um me and
Christian to my right um famous for
uport and a lot of other contributions
to things that we're building in
consensus and for the ethereum
ecosystem uh is working with me on uh
balance the smart contract power triple
entry accounting system uh it's mostly a
proof of concept uh but I think the
implications are pretty powerful so
let's uh Dive Right In oh yeah but a
little bit of History uh Christian used
to be a Quant at Bloomberg and has a PHD
in algebraic geometry I used to work at
the New York Stock Exchange and a
Bitcoin trading firm and do a lot of the
uh evangelism for uh front end and the
web 3.0
ecosystem and I'll let Christian talk a
little bit more specifically about
accounting thank you Jeff so um there is
okay so balance is about triple entry
accounting and in order to understand
that we first have to look at what is
double entry accounting so Double Entry
accounting is a relatively recent
phenomenon in accounting it was invented
about 600 years ago uh and the idea is
you want to minimize the U errors on
your books so what you do is that for
each transaction you do two entries in
your books one entry is a called a debit
and one entry is called a credit so if
we see a transaction here here where
Alice purchases a hamburger from ball
she's paying 10 ether and you can see
that Alice has
an an addition to her expense account so
this is a debit of 10 ether she has a a
credit of 10 ether for for her assets
and then Bob on the other hand uh he
receives 10 ethers so that's a debit for
his cash register and he has a credit
for the income and as you see here the
debits equal the credits so the books
are
balanced um the thing here is that there
is not really any connection between
these two sets of books each firm has
their books and and it's
all H it's you know the connection is
that they did the
transaction but the books are are
themselves separate so if Bob wants to
cheat a little bit he can say that oh
maybe this transaction was only uh8
ether and he doesn't have to pay as much
taxes or
whatever okay so let's move on to Triple
entry accounting this is an even more
recent uh accounting idea and it was
proposed by Ian grig I believe in the
80s or maybe early 90s and the idea
about triple endry accounting is that
instead of each firm having their own
books you have the contract mediated by
a an ethereum or sorry the transaction
goes through a an ethereum contract a
smart contract and this contract
includes everything about the uh
transaction so what the what the product
is what's the price is who's the seller
who's the buyer it's digitally signed it
can have a an ipfs hash that links to
further documentation so here we see a
an xbrl document which Jeff is going to
talk a little bit more about later and
we see instead of having the double
entries in their books they now just
have a link to this uh the address of
this ethereum contract and you see they
both have their same link and so their
books are now linked together via this
this third entry the triple entry so so
this is the main idea to connect the
firm's uh accounting books via a smart
contract and uh yeah a little bit more
about xbrl uh I did some digging
recently and found that there is in fact
a kocal universal standard for uh
accounting practices um so you can
imagine not having to reinvent every
Excel spreadsheet for or reinterpret one
for every organization that you're
looking at so what is it it's the
extensible business reporting standard
or language um which is based on XML um
close go into HTML which makes it uh
machine readable so the obvious uh uh
benefits would be that you don't have to
create your own schema you can just uh
leverage right off of the specs that are
provided to you there's lots of
companies out there that um have some
translation tools to help you with that
and uh Auditors um can get uh data and
ingest it uh easily um uh which is
obviously a big win and as you can see
um the SEC even requires this um uh
outright for large institutions uh to
provide um transparency where they can
and uh with 15-second block times for
ethereum uh you now have sort of an
endtoend
data machine readable uh distributed
storage and um cryptographic signoff uh
Allin one with 15sec block times so
something actually that just popped up
on my Newsfeed just uh this morning
actually um is that the SEC um
commissioner Caris Stein is now taking a
look at this or not specifically our
balance application but the blockchain
in general and uh given the relationship
uh to xbrl and and the SEC uh I would uh
kindly request maybe that we could uh
talk some more um but uh moving towards
uh the technical imple uh imple
implementation uh you can think of this
as a business process assembly line so
for every little change that you make
whether it's um uh a spreadsheet or it's
like within the interface that um it's
standards compliance that you're
committing it to uh a distributed uh
system uh so the the UNS siloing of data
uh which sort of maybe equates to a One
World Financial um auditing repository
and uh as Christian was demoing the uh
security and sign off of uh uh different
counterparty
signatures so uh yes this is a demo time
and if anyone's interested the
developers um I'm uh building a new uh
react framework based on Reflux called
acid reflux um which aims to simplify um
the uh store and action and view layers
more um into almost a two-step or single
process so on to the demo I wish this
was a little bit bigger but anyways so
yeah um we have Kobe Shaq and LeBron as
personas uh in this system uh there's
supposed to be some kind of funny story
um but uh we'll just go with I guess
Kobe being uh a freelance consultant on
the side doing um
coding
so choosing between different personas
oh and LeBron's in there too yeah he's
hang it out so we would choose
Kobe uh and we were just skipping right
to the scent invoices that Kobe has um
for sake of the demo so you see the
contract ID you see the creation date
deadline receiver signature sender uh
signature date uh payment date and then
the addresses for both of the
personas uh at which point we can create
an
invoice uh and this is pretty standard
Fair um accounting software kind of
stuff um you've probably seen this done
over and over and over again it's almost
the hello world uh of accounting I guess
you could think of um we hopefully in
the future would opt to allow for
different currency choices um whether
that's a token or it's a peg or uh
whatever the case may be fill in a
little bit of text um for you know
General
invoicing and we will select sha from
the
dropdown uh some more product specific
description uh Kobe's a software
engineer so he's billing him for
software engineering a lot of
it um and a little bit of text so he'll
submit it and you will see some popup
come up so it's been created and signed
um signed being that you know Kobe is
the one submitting it so he says I you
know attest that this is cool and uh
it's uh what I want to see um in other
cases you might um have an a process
before that but here we have the invoice
ID uh or the the contract ID um and you
know Bare Bones information about the
due dates and such and the price and the
quantity and you can see that uh he's uh
shipped it to
sha uh quantity price and that he is
awaiting sign off and payment cuz he's
already given his okay so we'll head
over to sha now and you will see uh
received invoices list and you'll see
the unsigned and unpaid uh invoice
that's sitting there waiting for
him click into
that and there we go we have the same
exact invoice from Kobe um with that
contract ID and we can go ahead and sign
and say that it's all right so we get a
popup uh saying that this contract has
been signed from Shack's end then we can
just pay automatically no more T3 uh
this is pure t0 and it will say that he
has paid uh this exorbitant fee and uh
that is pretty much end to end really
simple uh proof concept for invoicing uh
and there's a screen coming up that I
will let uh Christian uh show off yeah
yeah so the idea here is that each each
of the firms have this invoicing in
between them and the invoice acts as not
just an invoice but the uh payment
mechanism as well as the digital receipt
once the invoice has been Main and so
you can imagine a an auditing firm
looking at various
businesses and and checking on the
blockchain what kind of transactions
have gone on between them and you could
take that and use data visualization
tools to have a a view of that
particular U uh segment of the economy
and maybe infer that you know everything
looks good you know maybe uh a uh maybe
a finan National regulator could look at
that and see various U systemic risks in
in the in the economy that certain
businesses have a lot of um liabilities
to each other Etc so the
uh this technology can bring a lot of uh
benefits for for uh transparency for
regulators and and for businesses
themselves which you know has this uh
basically in um you know this this data
store that that cannot be altered
so oh and also to mention uh under the
hood it uses uh eign uh the smart
contract and document management system
um so this really is um sort of uh a
conglomerate of uh abstracted uh
Technologies um like all together um
hoping to build uh something that is
accessible anywhere and by anyone uh and
uh I think that about covers it thank
you thank
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you time for one question
question so as far as I understand all
this information is uh on ipfs
unencrypted linked into the blockchain
through
hashes is that true so with or do you
have any uh privacy uh facilities
whereby for example my competitor
wouldn't see my entire supply chain so
right now since this is a pro of concept
everything is fully transparent but you
could
imagine
uh taking some of the information
putting it uh encrypted on ipfs for
instance you could also Imagine
combining it with with heos Hydra chains
so that some of the information could be
on on private
chains and uh you could kind of uh take
you know digests or hashes of
information and and map it onto the
public chain so so there there are uh
privacy is of course one
uh a big aspect and one use case that
it's is immediate is for companies that
want uh complete transparency like
nonprofits Etc and uh so that could be
one where where they want this
transparency but you're right uh more
more privacy protections need to be
built in for the general use
case great thank you guys thank you
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