Mano Thanabalan: Simplifying Incorporation Automating Corporate Governance with Otonomos (Ep. 180)

Transcript

[Music] [Music] hi welcome to epicenter the show it's talks about the technologies projects start of starving decentralization and the global blocking revolution my name is domestic we chill man Maharaj today we are talking to autonomous which is one of the leading crypto legal plays in our space it's a company that allows want to make a digital representation of a company's Constitution specifically we will be talking to mano tanha bahas who

is the CTO this mono is great to have you on the show thank you very much for having me guys so before we start talking about autonomous and what that project is doing tell us a bit about your background and how you came to be involved in the drug scene space sure maybe I'll start from the very start I've got a computer science bachelors unfortunately I didn't go down the route of typical software engineer instead I went to the back side and worked with major car manufacturer in the corporate Treasury Department and there I did financial risk management FX raise interest rate risk and so on after adding my financial engineering masters

that's when I started decided that I'm going to move on from the risk management world's the investment finance well if you would and quickly realized that the investment finance world was earth was as well as everybody seated today not the place you want to be was a quad chair there for a small hedge fund in Singapore that unfortunately closed down we didn't even get to launch the quad fund and then when I came out of that I was looking for so I had researched a bunch of quant models trading strategies and I came out of there thinking okay I'm just going to start my own fund or implement my own strategies for for personal use right I

had to build a trading system I built that trading system to time the Builder cheering system then realized I knew a test a trading system and that's sort of when i came across Bitcoin exchanges effect okay this be easy way to test my training system start the interfacing with a bunch of these exchanges running some of my complex strategies which were a little bit too complex for for these exchanges because they're not that mature yet and then quickly realize you could just run simple arbitrage trading strategies and these exchanges and make some money did that and that sort of when my interest piqued on the topic by researching and i found out i officially introduced to become even a year two years before that

by a friend from college but unfortunately i didn't take him seriously at that time I kind of regretted it now the way so I started researching into into the technology and there is also when sort of helium was being spoken about so it's very interesting what's happening to space I worked for the XC of etherium for a bit helping him out with a project and that was again before athyrium was launched and yeah worked there for two months then I looking for opportunities in the space unfortunately every opportunity i came across was either a payment or remittance play which was small where i saw the best use case for blockchain

technology if you would or smart contracts and on top of that i came across hung on angeles and I really was not a co-founder from day one I applied in saying that I was very interested in the very interesting the use case I will help want to help you out and see if we can figure out something who was also looking for somebody to build a platform so that's basically how we met this was 2015 October before we knew it three months later we had very early POC and we already had people who heard about what we were doing wanted to use our service so that's when we came to the

realization that the POC could become a viable business plan a model so that's basically my background and how I autonomous cool and so you mentioned that you are a traitor before and that's interesting and I think we'll get to talk a little bit about your experience there and you know sort of you know the financial system and how we can revel you know we how we can digitize some of the processes and the sort of traditional financial system with smart contracts but I'm interested in knowing you know with regards to your experience as a traitor what has that and what lessons have you learned there that have ported over now to what you're doing at autonomous so there's several parts of it first is the main reason I find the

autonomous use case very interesting was also because i was involved in a setup of fun that i was working for before so i mentioned that we didn't like the launch but we still had set up the fund and that process setting up a fun process in cayman islands is a 50,000 US dollar process very laborious takes you three months to generate a very standard set of documents before you can start approaching investors to invest in your company right firing you the friction behind what it meant to this case was a hedge fund which is just a special type of a private about the company what friction they existed to set up a company in the real world and let the thing that helps me a lot at autonomous

is also the fact that bridge in theory and practice and practical implementation is what's a big challenge when I was building my trading strategies you could bat test your quantitative models all you want then they will show you amazing results but when you actually try to implement some of these results and run them in a managed account as we did then you start figuring out that hey markets don't work like how your back tests work and while this was relevant for the transplant forum was because when we build a platform the initial idea was yes let's represent a value of the company shares using a suit of smart contracts but hang on this also has to be bridge to the

real world great because if you say that these tokens represent private limited company shares how do you prove this in the real world so you actually have to build a bridge between theory and limitation and that is sort of how we approach anything that we do at onymous is basically to look at it from a theoretical point of view all our research from a theoretical point of view and then in the implementation phase figure out how we can make this work with existing processes without trying to go to people telling them that they need to change existing processes just yet so tell us like give us an overview of autonomous what problem is it's trying to solve the big problem is trying to solve is the factor which we

need to incorporate a company today if you want to govern a company today you still can't even do that like you would check out as Han would not like to say a pizza you still can't electronically check out a company especially in common law jurisdictions like Singapore Hong Kong where we operate so that's the Festa and ham credit to him he did an amazing job in the only way he's not a developer like me he used weeks to just generate a website that will allow you to check out such a company and then process the order so that affair forced the innovative path right and then the second aspect was okay great that we're able to check these companies out but we also need to provide a platform for them to manage this company so essentially we

are a corporate actions corporate governance play on l'objet and that comes the fundamental basis for a whole bunch of other features like accounting like doing a funding round that sebastian i discussed earlier and if you look at all these traditional process flows and how cumbersome and laborious they are where Thomas platform in one word is essentially mission of these processes specifically corporate loan and even more specifically because the company's constitutional documents so so the idea LLC it is your initial product or the MVP is in something that allows

founders to create companies very easily well and have these companies also recognized in the jurisdiction in the jurisdiction that they will see right but this sort of product gives you an entryway into slowly offering other services to the founders and managers of the company this could be like voting governance accounting and so slowly you're kind of products tagged expands into all of these other functions and you basically make money on sort of monthly licenses or monthly usage fees software-as-a-service exactly okay all

right so so so tell us um tell us what's innovative about the way you are enable founders to incorporate companies or maybe even before why hasn't this problem being solved by some other company satisfactorily because it seems quite an obvious thing right I've never discover vyas but you must you must do a tour of some of these companies that do this business the traditional in corporations agents of the world you must actually visit the office to understand this problem I revisited one of them when you're back in green carpet brass lamps google books in a book shelves and the most advanced thing in

the entire place was still a CRT monitor so this profession as I mentioned earlier so one of the professions that nobody has attempted to automate standardized patra I think it's always been a big challenge why because you could send lies legal documents but you still always need to go over to a little person for execution right you cannot just stand back documents yourself executed yourself and acted yourself and we weren't able to do this as well before until we have the ability to build smart contracts on an immutable database like the blockchain all right so now instead of you having to go to a lawyer and depend on processes that are

at this law firm to validate your contracts you can deploy your own based on certain templates and the network bears witness to this car so so in in decrypter space as you as you know this is big debate that are smart contracts really useful lowlife what is the utility of smart contracts I'd like yeah and there'll be these endless debates on Twitter or how smart contact is essentially useless less useful and so on so like walk us through one process and pick one processing company incorporation let's say that without smart contracts what it would what it is and like with smart contract

what it can be or is through autonomous and why it is better like let's try to sell smart contracts technology and like why is it important here at all sure so I will not use in corporations example I'm doing this a specific copper action that you do typically in a Paralympic company transferring of shares so say if I were to transfer some shares from me to you what process do we need to follow in the real world in common law jurisdictions I Singapore and Hong Kong the UK first the both of us will need to sign a share transfer form basically me saying I agree to transfer you X number of shares for animal our money and you saying you accept this transfer after has been done a board resolution that is

fine by the director of the company and we might not be directly sir company we could be but we might not be direct with the company's board resolution is to be deployed by the copper secretary for the director of the company to sign and after this board resolution signed only then can a transfer the shares actually be the share transfer can actually be enacted right so in the real world what does your copper secretary do she will tabulate or she will draft that church has to form the both of us have to sign make sure that's accurate she will see us executing it after that goes the director of the company give them the board resolution to sign again make sure everything's pre fields sign there and then use the bottle resolution to file with the local regulators the share transfer the second place between the

two of us in our process so this is traditional traditional process flow right and we can already see with such a process flow and then this is not like that I'm making up is told to us by our in-house copper secretary so we have part of the team is a bunch of legal copper secretaries and they are the ones that do filing with the local regulators and make sure everything that we do is compliant now she tells me that in the old world with the traditional French she used to work she could manage at most 80 companies in a given year because the amount of due diligence that you actually have to do the processor I just discovered i just described which is a due diligence process its intensive

right so they can only handle maybe 80 client video now with the will rebuild the system what you do is maybe let me also not talk about the identity aspect of it which we can talk about later but assuming you've got an identity create on your platform already you would love into the platform you would initiate the share transfer the share transfer itself would trigger a creation of a smart contract that contains the chef chance of form as data and then we would say okay the shelter is happening between mano mi and therefore the two of them have to be signatories of it on that transfer form and only the two of us will be able to sign this and the moment

we've signed it I've got an automated copper secretary but a back-end process if you would she recognizes that blue sign this and automatically deploys that second board resolution does just talking about with the same details that contained in the share transfer form so when you eliminate another point of error we're in the traditional world you could have at the copper circuitry make a mistake in filling out that second form but because we've automated this process flow the second form just retrieve the information from the first form and who has to sign the second phone that is where the lead part comes in so the second formats I Manchester designed by direct is the company and guess what the directors the company are reflected in the company smart contract so your company smart contract is a

giant legal a giant court version of your legal document which says who the shareholders the company are who the director of the company are and so on and what the timing conditions of these individuals are so any all these other stuff that is typically reflected in your company's constitutional documents are also reflected in the company smart contract such that when I deployed this board resolution the board resolution asks the company smart contract and doesn't depend on any external source of information who would the directives at that point are and only those guys able to sign that what resolution once the ball resolution is signed by doing the automated back end process we'll listen to this and file the completed resolution with the

company's of our contract so the company's my contact simply will not transfer from me to you without this planet resolution without that and the resolution also at the dependency on the share transfer form so without these two documents that share transfer will not take place in a company to our country so the other day when the share transfers happened and you see this in the company smart contract you can trace right down this entire process flow i just described could do your due diligence that's very interesting and we're talking about this before the show and talking about processes digitization and how we can you know use spa chain technologies to digitize process is it you know it it turns out that you have the company that i co-founded stratum is also doing something similar to those

other perhaps or the more abstract level but it's very similar and so this example really speaks to me because for every every step of this process of the share transfer process you know you're going to want to know who did what at what time in what order and for what reason and those those are the five key questions and you know what would you get with blockchain technologies I mean broadly speaking and you with athyrium and especially the way that you've implemented it as far as far as I can understand is that you really get all you know you can answer these five questions for every step of the process indeed so you know we talked about I think we mentioned kyc or am L you know

so when you when you do a chair transfer I would it would guess that in most jurisdictions you're going to have to do some sort of KY caml at some point on on the participants and that in that transfer you're not just going to transfer to some you know anonymous party overseas is it possible to also do that process that that identity process within the autonomous platform is that something that you're applying where you're relying on third parties and how does the smart contract if it's done by outside parties how does this mark contract get the proofs or interpret the proofs from those trusted entities that would be doing a verification of ids and

things like that very good question we've said before where we first talked a billing platform we couldn't identify that okay we want to digitize assets and only way the digitized assets is to digitize the company's Constitution create about what's in the Constitution people so how do you digitize identities what's the next question right and that is also why we have our own identity smart contract design unfortunately because we started building this prefer you both existed or you put was very at that time but they did not have the specific features that we needed to build a platform so in the end we had to build our own identity solution so what happens now when I invite you so in this

process that I described earlier let them about to transfer shares to a new shareholder and I invite this new shareholder to the platform a regular email invitation that person lonesome for the first time they will need to deploy the persona smart contracts this is just an electronic version of you and this is the smart contract that holds assets that science documents and also it's a holder for your identity information as of course encrypted so when you have an adventure for the first time you deploy a personas back on track again on the front end looks like a form that you fill our first name last name all the required details that are required for each jurisdiction so if you weren't Singaporean up a different from

from if you're in covering for Hong Kong but even at that level we've abstracted commonalities and modular I say in such a manner that if you did deploy for Singapore you don't ever have to deploy for Hong Kong and you might just need to augment the information that you've already previously entered that is extra for Hong Kong for instance and once you and we are so sure you in your private key or in our case the transfer demonic seed we show you that so that you can instruct you to copy and paste it the future will obviously the that is generated also through our mobile device like a phone for instance and you never even get to see the priority and it simply just gets caught in your city or execution environment but we're not there yet that autonomous it's already in earth could could one

user their certificate that would have been issued by a certificate authority where that certificate authority you know would have done kyc prior to issuance so that process in our system is not possible at the moment so the way we've done it is your first deploy our identity and then we've got lets you call certification authorities we call them verification entities intentionally to move away from some of this conventional lingo because in our in our context you won't have just one certification Authority you could have multiple certification authorities for different purposes so once you've deployed this person a smart contract what happens the background literally is you have created you we send a small amount of visa to your account because we ethereal mode before you can deploy a

smart contract in Ibiza right but Bruce Pavitt network so don't worry we're not spending a lot of money to do this at some point we'll go public but not yet so we send small amount of user to account and then we get the end user to deploy their persona smart contract on this account and then but that's not the end of it because you could have basically depressed persona smart contract calling yourself Mickey Mouse if you would like and uploaded garbage proof of address and proof of identity documents which we also require so you still need a person to check your identity mark contracts or your persona smart contract and that's where we have a concept of verification entities and we've got administrators who manage the

register that this verification entity holes and this register basically says who are the validated identities under the autonomous platform so that is when we login to the platform as administrators we download your proof of address and prove identity identity documents which by the way the way we've implemented the encryption of that is also a web and beyond what is traditionally done it's PGP style where it is share to the people that you need to share it with so even if i did a ssl on my website i still will not lose any types of information the encryption is actually done client-side brilliant [Laughter] we had this improvement process as well you know what every other day everything's that they came up with an

identical ocean but essentially what i believe is if we are doing it the right way we're going to converge to one solution for identity I don't think that's going to much variation of it that might be slight nuances but the overall design should be the same so we really didn't do anything interesting that we restore that encrypted and given the key right so in the reader is allowed people ask us okay so you're asking the end user to keep the key or what if they lose it what are you going to do that and we start after we had little artists questioned by a major financial situation we're like okay we have to address this we used to say that to bed but then later on we said okay no one will just apply it shama sharing algorithm and speed your key key ways

and the thinkpads get encrypted invaders by three individuals but we've cooking you learn from that realize you cannot trust your two other friends so you need to have three entities so at the moment the way it works is autonomous one entity and two other networks with whole path of your key two of these need to come together to recover your kids and that's the only way your key can get compromised it all can get retrieved if you would I'd like to stay on this on this idea that you know this is the stock transfer use case and we can come back to the technology in a minute good there was a really interesting blog post I'm not sure if it was you or perhaps the CEO hunt who wrote it talking about

value and so the idea this idea that today when we think of where does value exists you know it is it is it paper notes is it you know stocks or bonds publicly traded stock but in reality like there's a lot of value that's held in privately in private companies that are not or the stocks are not available for trade on open markets and you know some there are some secondary markets but for the most part you know if I think of like for instance my company all that values are stuck there and the process of transferring value from one part participant to another as

as you've mentioned is a very long complex process as I've learned recently through going through a funding round that involves lawyers and a lot of sort of this digital this medieval type of process what do you see as a potential you know where do you see so if you if you think 15 15 years ahead of time can we envision a world in which one can trade private stocks as you do with a privates with a publicly traded company is that a technology barrier today or is that regulatory barrier it's a

regulatory barrier but we must understand before we listed Barry across the barrier or blood at lying wyd exists it exists for consumer protection because for a prop for publicly listed company that has been due diligence there's been done other companies right so there is why you know that this company is legit you know that business is legit the financial so legit and therefore you can open them up for retail investors to take investment in but for private company that's not the case for private company there is no requirement for them to even in some cases have audited financials so that's an investor when you go into today you need to be somebody that's a creditor you need to be somebody that understands the risks of investing in such a company how so as much as I see that barrier how

are we sort of learning the barrier we're blowing it by automating the proper governance making the company a lot more transparent and yeah you're absolutely right I'm loves to say that 80 or 85 percent of value in the world is held in private limited companies but I say it miss held its not held properly often what you realize that you look at a cat table and you see oh there's a missing shareholder or there was a chef handsome Ohio whole bunch of mistakes right so that's the part that we need to prevent from be possible in that space the way we see it and I presented a few times where I use this one chart which

talks about how we approach traditional systems design whether it's lower education a banking system we design it in one way we design a system in a way that it can be circumvented will then design a policing framework to police the people and then to police a system and then we design a punishment framework to punish the deviants and which each part of its lair each layer is additional cost right and if we end the paradigm right now through the use of technology through the use of innovative systems design that we can finally design systems in such a way that cannot be circumvent about to begin

with then Wes we can indeed unlock the value that is otherwise locked up and despair that the companies and narrow that line Blair that line between private of the companies and public Lisa companies such that the due diligence purple would be at the same level you've also been another vision and autonomous at some point once we've done this corporate governance part there's smart contracts we're also going to do the accounting part there's my contracts and once you've got covered evidence and accounting in a incorruptible fashion in a systems design then the last part is really instead of you having to loose this company in an exchange why not cook the exchange into the company so what

this an exchange in exchange is just a fancy order book and all the management features you could put that other book and the auto management features into the company smart contract and again that is also where you can blow that line between a private company in a public company now I'm curious before we maybe this is a good good time to move on to the next topic that I had in mind which was a you know regular regulation and perhaps some of the frictions that you experienced with dealing with regulars it would seem to me you know hearing this if I'm a regulator right and i've got i got this company that's building the system and where we can automate company governance and we can automate share transfer and we can reduce the the

possibility of errors with accounting and this sort of thing as a regulator I'm looking at this I'm saying this is great I want to implement this I want to work with this company I want to build my processes and the regulation my future regulation around this type of technology what is your experience been and working with or perhaps to discussing this with regulators and lawmakers and yeah that especially public schools that is beckoning that experience rather where they see this as a girl is going to gonna make my life a lot easier but I think we also have to be realistic and understand who these regulators are their lawyers themselves they are accountants themselves I think it the other day there probably are also a little bit worried that they might be

decent a mediating themselves they might disrupt themselves so I think that is a little bit of that at the moment and the extern are not technologies either right but what's happening and when we start noticing is ready senior appointments now the other guy i started to retire is great number people join the organization or these government entities and these girls a lot more tech savvy and they see the opportunities of moving towards Roger but as far with mobile with the exception of Dubai where there seems to be strong strong top-down pressure to innovate in the tradition in

the traditional jurisdictions that we operate in that's not necessarily the case just yet and also because I think the whole prop chain world and the whole lecture would have still got a bit of a negative connotation to it as a result of the Dow and a bunch of other things that have happened before that yeah that's definitely vacation you know I think if we take a step back in a bar perspective a lot of this a lot of these you know proceedings and legal documents around sort of standard things like incorporation share transfer you know raising funds a lot of the stuff is is pretty standard right i mean it is due there internationally recognized templates you if we look at them all of these are step bro bro

standardized basically and i think that i know people though if you look at for instance the research that primavera defilippis doing you know she's looking at how you can take these processes and open-source them in a way that they're made available for anyone to use right so in any case you know whether its autonomous or open source communities or whatever like these things are going to get you know much much simpler for people to to use and utilize and to build software and build applications on so you know finding that as a regulator like as you said in perhaps the younger generation coming in as much much is

it's more open to that idea than the old guard indeed indeed one of the questions I've been having when I listen to you is in all of these cases whenever you have these forms of these contracts right like are they like pure programs or how do these contracts exactly work in a way that they are also held up in court okay so let me do a bit of background in terms of say this part of copper long right this section of copper loss specific the copper governance and paralympic companies it's by nature or very very standardized so there exists a whole bunch of forms that you can use

best based on best practices over over over time and you don't have to have a lawyer look through the metal and they're not as amazed so if you look at the share tractor for my described earlier it has got certain essential features number of shares the type of shares how much you're paying for each share that stuff is you know it's not it's just a variable in the smart contract and it's completely abstract able so that's that essentially what we've done is we've taken all these parameters from these legal documents we've put them in the smart contract because those parameters need to be used let's say in the share transfer function or any other function of in the company's back on track

and left the rest of the legal lingo in there because they still need to be admissible in court so this this legal lingo exists is a PDF document that is hashed into the smart contract and there's not contacting us a transfer function I could use to move shares around something that career exactly so basically when let's say I am I am giving you some shares we are in essence filling out of paper form putting it as a PDF and also calling this smart contract function that allows us to move that around well yes so we will see a conventional legal form on the on the dashboard and you just type in the

details so you say number of shares whatever so you are filling in this legal form and then you assign the legal form that's also essential right you must also its I can't just show you a form that just has number of shares in the amount they are transferring and that's it I have to show you a legal document so that you're actively sort of filling this out for it illegal validity and then you use your chocolate secret phrase your mnemonic seed to then create the swap contract which that sign that's my contract as well and that resolution smart contracts we call it we can generate a PDF out of this and when doing the persona creation where I left out earlier was you also upload your signature your conventional signature

are where you use the scratch pad or you upload an image of your signature and that that encrypted again by your public key so you're the only one that's able to decrypt it and then when you sign something you decrypt it and paste it onto that document so it still has the conventional signature along with a QR code and the QR code has got details of when the transaction hash of this transaction on the bottom so for example if I create a company autonomous learn yes with autonomous in Singapore all of the smart contracts themselves are running on a private block chain that is maintained by autonomously company right and whenever let's say I'm doing a share transfer the form and the transaction

that execute their share transfer also happens on that private block chain right correct tell us why you went for the private block chain architecture the private block chain architecture only because that's my last form of Defense if something was not designed properly or there's a problem with the system we need to get because you can appreciate that this is a legal play we need to make sure we get the platform method we need to make sure the smart contracts are vetted we've done internal audits several times but that is not enough we're looking for people who are able who are capable enough in not just the original space but also in terms of

smart contracts and and and and software to order some of the stuff that we've done and once we get once you find such a person or an entity that can do this reliably then and we get it audited and everything is kosher then we will absolutely deploy this in a public chain but at the moment but we even we don't is simply just that it forms as a last line of defense just in case if we are not encrypting documents correctly also exporting some sets of information somewhere that that problem is mitigated sorry I mean I miss something what Cheney you're building a son athyrium okay prime extremities are watching oh but I vegetative instance here I see okay and curious why did you choose to

use a theorem and not some other room I would say more robust but another type of private chain system such as a hypervisor or tender mentor some like that fabric didn't exist at the time ten dimension exists to the time so actually we only had athyrium to work with in all honesty when I had before those color cars kind of party you mentioned but to do that at that level was just as good as you rewrite in counterparty it's the bitcoin locked in yeah so with regards to the confidentiality and privacy considerations that are required for these types of operations is athyrium public etherium network going to provide those those features is

that something that you look that name is now building poop of quality type of framework and yes we can well that the question are you talking about well if you're doing a share transfer on the etherium network you know that that chair transfer will be public how would you how would you consolidate the car obviously financially considerations there sure so as I mentioned earlier the only way you can identify a person on our platform is through the contract address the persona contract address and when you do when you do a get on the personal contract address you will get an encrypted ID file you cannot decrypt

the ID file unless you are a member a fellow member of the company or you are an administrator like autonomous so anybody that sees your friends share transfer just sees that set of hexadecimal numbers have transferred to another set of hexadecimal numbers but they don't know who transfer to what and what company this is for and none of those other details so the encryption is in the identity layer and not at the transaction late ok I will talk to their privacy have you have you looked into the upcoming it's called our gpd in Europe that regulate basically the privacy regulation the right to be forgotten well that's part of it that's part of the broader i forgot the acronym

I a note in French but I I think perhaps even with the way you described it there may be some you may have some friction there with with the regulation in Europe but the current as well as I understand it you know over the UK we look to this extensively in the event of some kind of litigation a court process or criminal investigation we need to be able to present the information about the people that are concerned right that's the application we have and we are able to do that because as I mentioned before we value by default when you're in creepy identity' you share it with the autonomous verification entity so that the only entity that has access

to the information ideally in future maybe we could further decentralize that and have some kind of a reputation based identity model or a whole bunch of kyc Oracle's which we also haven't seen I don't know why people are not working on these things yet so you've got wealth as well check you've got a whole bunch of service providers just build a kyc Oracle to the service provider so that they work automatically stamp identities when they deploy the vulture haven't seen this happening yet but that could also be one way your chief automation and minimize the risk I which is mentioned but at least for now we still need to be in control or nine control must have access to the ideia data of

our users okay if the regulation was referring to is general data protection regulation GDP are in English culture which which will be which will come into an effect in May of 2018 and I know that I'm not directly in contact with the protection officers of the companies that we work with but one of the one of the fears or some of the concerns with etherium at least for the moment with how the regulation is being interpreted and in the way the theorem is is built is that perhaps there will be some in that abilities with regards to confidentiality and data privacy and right to be forgotten even if the data

is encrypted although like not entirely sure oh yeah you're probably right we're probably right I think what we have to do is not present this as a silver bullet solution but presenters in the context of how traditional systems design is done and then show that this is still better than traditional systems design and we all know what happens to companies like target or target how do you a difference in the US look yeah target and you know know what has happened to them several times now and so that is traditional systems design for you right oh no I told I totally agree I I yeah I totally agree a traditional systems design

the way that we've been designing architecture systems architecture for the last 50 years like it's not compatible with the world of today and the world of tomorrow but we regulate this light regulators bite you know there will always be some friction there but it might in in our experience at least the way that we look at it is we really try to work with the regulator and get them involved in a conversation very early on justly so so that that so that we're working with them in order to build this new architecture I completely agree we try to do that as well but you can imagine how difficult that processes as well whenever you go to them with a specific system design and wait for them

to give your approval you might be waiting for a long time and you might be yeah you might not be solvent while you're waiting one one key question I get is as an entrepreneur if I let's say let's see I say set up a private limited company today my my sort of privacy exposures is to the government right now right like this like the government cheese see is my share registry they see you all my shareholders are what sort of resolutions we have taken things like that but in this autonomous architecture I feel that I not only expose the

government but I am also exposed to autonomously company itself so because autonomous is a copper secretarial service provider we are default by default a copper secretary in all the companies that we incorporate we in the real world we already have exposure to these companies we see them so this is also in Singapore for instance if you're not a licensed so we have to get a license to be a copper secretarial service provider you are not able to act as a couple secretary so you can imagine your comp electric knows everything about a company as well so today I would be exposed to my corporate secretary and okay the corporate secretary is being replaced sort of by autonomous no actually I'm not creating an extra party

that I am exposing all mine to correct correct okay and on on your pirate blockchain when there are like multiple companies on that same block chain then if any of my data exposed to the other companies that are on the sundeck same launching yes what data is exposed so your company's contract address you might come to know about it right so when you get the contract address what can you do you can say there are a few functions that you can run on it but the molecular motor sensory function is get me id file and when you get you ID file its again an encrypted file that can only be decrypted by the members of the company

so that's what you're exposing but when you still do a black cap table function from the company's law contract you will get a table a two-dimensional array that's got shareholders and the assets that they hold these are the hexadecimal representation so the contract address of the shareholder contract address of the efforts so that can be considered sensitive information but so far our analysis is it's not yet it's not a critical breach right this is a why we would like to think of an acceptable risk in other words the end component of the persona smart contract or the company's market rate in terms of

identity that's encrypted but the transactions themselves are not and this is also small something that we can solve the application layer this might be solved at the protocol layer at some point when they make encryption possible at the protocol layer but yeah this is how we mitigate it's over okay so so basically like when when I creating a company using autonomous um I am exposing my not semi individual identities of the people who are running the company but the transaction structure of what happened inside the company so for example in my company let's say there were two shared

transfers in March followed by three in June followed by five min September's that kind of transactional structure is exposed to anyone any other company that has also set up using autonomous correctly and like this is something that is different from the current system in the current system you are not ex I'm not exposing that that information to companies across the world that I don't know so this is it this is a trade-off that an entrepreneur is making in exchange for getting easy setup indeed it is about also must be mentioned that it is also another reason why we are so heavy in the common law jurisdictions the common law jurisdictions that exist national

registries that any person can go and create so intimate all you could $35 and you could figure out that I'm a director in a certain company you could figure out that i want to set amount of shares in the company so it's not necessarily private information in fact in the legal world should you wish to make things private you do that by a game creative legal engineering like you set up a nominee shareholder ship structure which is basically a contract between you and another person and you tell this other person they hey please hold these shares on my behalf but I do not want to appear in this company so again it's not a technology problem solved this privacy method it's a legal problems or in other words if you do if you want to be kept anonymous in the company then have a

noodle structure that makes you anonymous and do not depend on the system to make your novels despite the fact that it does its best job of doing it so we we talked I think earlier before the show or no I think actually earlier we're talking about open sourcing sort of standardized contractual agreements and just having some of the parameters be configurable right for specific types of specific types of use cases so if I understand correctly so your your platform is it's built is it an interface to leave smart contracts how as a user you know of your

platform what have you put in place that would allow me to you know check these smart contracts make sure that everything in the back end is being done according to you know what the contract the legal contract describes that there are no bugs in there is there any transparency those contracts open source you know talk about that a bit so the contracts American sauce actually no part of our code is really open source the reason for us not to making soap and source is not because its proprietary or IP it's rather because it's still very early on and I think we should recognize the fact that block chain is still an experiment despite the fact that if I

the version one point something smart contracts are an experiment and the autonomous platform is another experiment so with a thirdly experiment if you would so before we release anything to the public we just want to be prudent and make sure that we've done our best to verify that everything's kosher so it's not that we don't want to make things open source we do in terms of verifying the contracts that deploy it on the blockchain all the time so this is the other thing right unfortunately a lot of our clients are not technologists are not block chain savvy even major huge majority of them are not they simply care about the fact that we're able to offer the service a

lot cheaper than the traditional incorporations agent because of the reasons I mentioned earlier but for the app you ask me this question I tell them feel free I will invite you to our block your network so i could write lists your IP address you just deploy the node that we give you we did customized a lot a little bit why because we have to remove the proof of work the very inefficient proof-of-work mechanism so that's the only thing that has been done on our customized node will provide you even if you don't invest and you say no I want to make the same customizations myself we will further this is the lines that we changed and when you change there you should have the same ending cash for that North software as our notes so they should be able to connect you can

connect to our network and pull the contracts for yourself and verified of yourself we were white list you're happy day and so okay I so I understand and so youryour sort of still in this experimental phase perhaps working with clients on on parks and not at a you know perhaps none of the production stage yet and but but once you are once you have reached maturity yeah and audited then I suppose that you know your contract should be made open source then absolutely someone can check the validity of those contracts interesting and so what you mentioned you pulled out proof of the proof of work algorithm what have you replaced it with we didn't

really pull it out all we did was just make the difficulty constant this is where the ones that lining on that work okay so at this stage there's one validator and that's correct Thomas okay great and the idea is that when you move to the public etherium chain or you know a consortium or public conservative network or depending on the use case then you would you would rely on the validation of all the miners indeed and hopefully the protocols also developed to a point where end users are able to as part of the application when they deployed replication also easily able to deploy a mode for that application so one perverted way absolutely what you

said is valid and thank you for being transparent about the fact that you're an experiment mode a lot of times and we talked about this for the show a lot of times in this space you set people say yeah we're doing this and we're doing that we've got all these great stuff but you look under the hood and you realize that it's experiment what I I think it really to have the humility to be able to say that look you know we're building this stuff we're still working on it we're still working out the kinks or we're still constructing use cases is a very honest position to have and is one today I try to have as much as possible to first it's an easy position to have also because remember everything that we do on the platform it's also backed up in the real world because we still have

the signed document they look like sign documents we have fired the copper actions with local regulators or that it also exists so if there was anything to happen with a black home tomorrow we can always fall back to the real world so we have that option and that's also why it allows us to be frank about a state of implementation few an autonomous is going for the private block chain right like did you consider anything apart from a block chain to do this so the reason I ask is there is always this debate that sensor correct if you if you are having a centralized chain right like with one validator then

there would be many people that would say that a block scene is actually useless in that case and there's a whole stack of technologies that will be better than the blockchain some way or another so tell us like what kind of trade-offs you explored before picking the blockchain to make it completely priority absolutely that's a very valid point we get asked this question multiple times URL but with one subtle difference right on a database it's a lot easier for you to manipulate data than it is on a blog check right even if you are one validated still a very involved process for you to be able to do that and i can tell you none of my developers can even do this just as one mitigation but that is not good enough

the reason we do this on the blockchain is because we see this to be the future we want to be poised to the point where i don't know when this is going to happen hopefully within the next five years the government countries start deploying a countrywide network for their citizens right and when to a point then we build applications such a way then hopefully when that happens for us to be a very simple switch and we won't need to do what we're doing now what we're building now as much as it can be done in a database for us it's about where this can go in the future so so you're more motivation forces you want to be sort of compatible with the latest blockchain standards in the expectations

that there would be some form of countrywide or global consortium networks that you could migrate to emptied yeah or eventually to a public chain as well public opinion chain we would definitely love to move there it's just that we are not ready even from an application point of view because we like you're saying that all of the contracts are actually backed up by paperwork that holds up in court so even if only public blockchain there's a problem the problem that I have that I'm worried about the public block chain is not transaction-related is how we saw sensitive data related so if on the block chain if I'm starting any set the public locked in i'm selling

any sensitive data because we made a small mistake in the algorithm all right there's a bug then I do not want to deal with that kind of exposure just yet okay so before we wrap up tell us where where you're at right now what's the prior crow black looking like or are you raising funds of you raised funds tell us a little bit where you're at right now its autonomous sure we're in the pre or we're going to start our series a soon in terms of the product the product itself we spoke them we spoke about in corporations and we spoke about corporations like share transfer or we do them a lot more than share transfer proper actions or the heading of a new direct heading of resigning directors

removing secretaries and so on you can even execute any non smart contract related legal corporate actions on our platform so if you say hey I just need this board resolution for my meeting minutes for instance then you could just drafted yourself on the platform and just use the platform to sign it or you shall pass on us while contract to sign it we also for that so in the end what what happens is your company's park contract becomes a central repository of actions that taken place to the company and you could get this information that companies my country and then beyond that what we've also done is build an employee shelf in scheme smart contract so you can imagine in a real way what happens when you issue options to

employees is first you need to have a master contract in place which has got all the general terms we've got the rulebook then you've got the allotment or development Lexus the god Mathis two employees right then you say okay I issued you this much conditional one conditional options and so on and on a monthly basis or after the guide square pipe assuming he exercises these options you have to do that by the way of the paperwork correct by doing this is something that we've automated with their our employer option scheme smart contract the traditional role and a player option scheme also requires a committee and independent committee typically headed by the very

first accompanied and say a third-party lawyer and the idea by the committee is to make sure that when you've been turned on you'll get us another option so you actually get those shares in the end and the way we've designed the employee shops and smart contract is has eradicated even that need for a committee because once it's done a ton of the smart contract there's no way of to use the reverses right until we've done that we also did six so you also have saves so certain agreement of you check with E smart contract as well and what this basically does the cool feature here is it works together with our funding module so even in the family module where we have done this we've automated the blog resolutions there go to start the funding module to the term

sheet the shareholder agreement ash a subscription agreement that process flow right up to the last board resolutions that actually do the issuance of the new shares and when that last part resolution sugars the issuance of new shares automatically shareholders that our power company smart contract get converted if the conditions match so again we've replicated all those extra steps typically need it so that's the stage where right now now but I will talk about their future features in the interim we are also working on making the platform scalable as you can imagine what stock Allah has plc is still very much a pilot it's not really a

production level application the initial idea was to get the business process right and it's been proven but the business process is right now we're trying to build the scalability component into it by splitting the application into minor modules & sub applications and so on in to whenever there we are also doing proof of concepts for other big financial institutions that want to do something similar to what we've done for the private company space so we also have that going on and with that the future looks like either we will do a big proof of concept for is major financial institutions whilst we're building are making our platform scalable but beyond copper actions we also have the aim I want to go and

disrupt the accounting process that exists today so everything from I just came back from a business trip where I now have to call it a whole bunch of receipts submit them to my accounting person who checks them a second time and then they get submitted to the person that actually spaces the funds if we could reengineer that process again smart contract children so that you don't have to do accounting once a month and you do it as you go on a per transaction basis where all these three actors are involved then that gives you that second component of is the finance component to your company's my contract and then we're least we're done maybe we talk about the beautiful future where we narrow the line between IPO a private company in an IPO by offering exchange

features also the couple is my contract but that's way beyond the future just on the on the expense and accounting stuff like where do I sign where do I I think that's probably the most arduous thing that any any employee that travel a little bit they'll has to do is doing expenses every month so you can if you get on to make beds like take a picture of the receipt it's done that'd be great no I think that what's really fascinating about this and that were were just overlap so it's a little of what we're doing in stratham is the the audit ability of all this right because once you've created all these platforms you once you've created this platform where it affects your digitizing on the blockchain the entire process you know

which is the life of your company it becomes really easy for external auditors regulators you know it ain't this type of decision maker to look at this and you know when you think of auditing you know you implant a process and then you like you said a while you throw a book at someone and then they look at to look to see if that process was done according to the weight of the book was written if you build so the the process in accordance to the way that it's meant to be executed you can audit in real time or even not even have to audit anymore because you know potentially those auditors or the external auditors are building that process with you and are part of the validation nodes in d you should be

auditing the system once and every time the system changes and not the auditing per transaction which is what we do today right exactly yeah like you do with software excellent well thank you so much for coming on the show today I was really fascinating to talk to you and I and for our listeners it's actually quite late we managed to to we had an opening for this week and then man who agreed to do the show although it is close to two o'clock in the morning in Singapore where you are so thanks again for coming on I really appreciate it and we're looking really looking forward to seeing the developments Thank You Sebastian thank you my Republican and thank you so much

to our listeners for tuning in epicenter is part of the let's talk pic or network you can find this show and lots of other great shows I'd like to talk bitcoin calm we released episode every tuesday and you can find those just about anywhere you find you know video or podcast and you can find us on youtube soundcloud itunes or any podcasting platform also if you're interested in the sprint and show you can do that by leaving at the tips and the tipping addressed in short description so thanks so much and we look forward to [Music]