Wave 2 banking


The neat and simple is concept of DAO (distributed autonomous organization) is to be able to establish transactional integrity in non-controlled, distributed, not necessarily honest environment.

Another concept nice to consider, is Bank can provide itself as a software as a service (SaaS).

Taken separately both concepts are sort of good. Taken together they may form something more. If we consider financial environment where people or companies hold control of certain financial assets, those are secure and reliable… but only as long as assets are in the possession of the owner. At the moment when the assets are released from hands, those becomes subject to manipulation of 3rd parties. Some cases of Market places (i.e.http://techcrunch.com/2016/05/09/lending-club- shares-are- crashing-after- its-ceo- resigns/) are just examples. Lost control must rise lot of stress for any reasonable investor, so all sort or remedies (i.e. special purpose vehicles, securitization) are being designed. But it is expensive.

Now think of the environment where asset holders are use their own internal application to store the data. Cool. No 3rd party. No trust is given out. Data stays locally. Many asset holders — each have its own data store locally. Local means isolated — isn’t it? 🙂

Now think that those asset holders might want to exchange ownership of some assets. How? Well — imagine some sort of distributed group, something like secret league of players. Anyone entering the league is bind to the rules of the league, but not necessary to the rules of the other members. This I would call “distributed organization” or DAO. Actually it should not be real organization. It would be enough to share information among all members, disallowing them to change what is shared, also to enforce non-repudiation of the statements made by any members…well you see — it’s blockchain 🙂

So by using simple, straightforward block-chain you can organize number of isolated players to do act in trustful manner(!) Public chain itself acts as trusted party, as it is verifiable vehicle, shared by many, and possess high degree of trustworthiness, and extends beyond countries and various jurisdictions. It acts as trusted arbitrator to decide who owns what, and it acts as executor of the obligations (i.e. via smart contracts).

It is possible to build DAO based system (or set of records) where Buyer adds something to the chain and thus readable to Seller, seller. Then Seller writes something there as well. All sits in the same ledger. No difficulty to trace any single action or single payment. And supplemented with all necessary legacy tools already there. All transactions are seen immediately — what is the point of trying to cheat? Investor can act in matter of minutes. Time is gained. Tons of it.

Most strange thing so far — nobody sees it.