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Interoperability in trade and commerce with the BSV blockchain

trade and commerce warehouse with BSV Blockchain logo

In the current ecosystem of blockchain providers, either blockchains have scalability issues which make them unsuitable for enterprises or they’ve steered away to a ‘private’ or ‘permissioned’ model that defies the benefits of the technology.

The BSV blockchain’s (BSV) distinguishing characteristics are that it delivers both scalability and a secure public model that enables the interoperability of a world of applications.

Interoperability between products, services and companies

Public blockchain helps achieve interoperability between products. Where data silos or data monopolies are one of the biggest challenges enterprises face in the current digital world, the BSV blockchain can be effectively used to address the challenge.

Let us look at some of the capabilities that come to life when the BSV blockchain network is used for trade and commerce.

Tokenisation

Tokens are a way to track assets. The most common implementation in the software industry is security tokens or access tokens, which give authorisation to software resources such as APIs for a predefined amount of time, given the user satisfies authentication criteria. Alternatively, the most common implementation in financial markets is the tokenisation of a company’s shares.

Tokens in isolation do not hold any value, but they provide an immense level of traceability and transparency when associated with other systems. Consider a token associated with each part of the car at the time of manufacturing, from small to big, windshields to engine – every part is tokenised. The utilisation of tokens becomes important for the requirements of validating the authenticity of each part during sale, resale, insurance, etc. 

The way to store this big data on blockchain is a series of meta structures pointing to tokens, possibly Merkelised structures. With the Internet of things becoming mainstream, it adds value to not look at every device, but rather at individual components. Organisations could view manufacturing information as when they perform customer surveys about reliability over time, such as if parts of a car work after a recall event. It is not only granularity of data that adds value here, it is also honest data as it would utilise blockchain’s native features.

Though the example of tokenising the parts of a car is pretty simple, the concept becomes very interesting when applied to industries such as finance and supply chain management. Within the highly regulated financial industry, any asset which is tradable can be tokenised i.e. currencies, securities, goods, stocks, real estate, equity shares etc.

Recording transactions on blockchain would provide transparency, reliability due to immutability, auditable title transfers and revenue flows. It could even reduce the entry barrier for small investors, for example if a share value for one share for a particular organisation is too high for one investor, tokenising the share would mean investors can invest only in a part of the share, as per capacity. In fact, every dematerialised financial derivative and security is already tokenised. But by using blockchain, it becomes transparent and easily auditable.

In the supply chain industry, visibility is a challenge given the nature of complex transactions involving information flows, inventory flows and financial flows. The synchronisation of these flows is generally manual and involves costs for audits and inspections, increasing both cost and time-spent. When blockchain is used, all the units of inventory, orders, loans, bills of lading are tokenised, giving each a unique identifier. 

Since the transactions are recorded on a global blockchain, the multiple parties transacting for exchange of value benefit as they get access to accurate and one single view on the flow of information. This visibility is not limited to the partners within the supply chain, it also gives transparency to the end user by giving them information like transparent details of ingredients used in the dish served in dining, which serves as a business differentiator.

Decentralised Autonomous Corporations (DAC)

Currently the structure in organisations is hierarchical, with decisions made by top-tier leaders which percolates downwards within the defined hierarchy. The concept of DAC challenges this idea and is defined as an organisation which runs via code and software, minimising human involvement, for both strategic decision making, governance and operational processes. 

DAC are distributed and are not vulnerable to single point of failure. There are two necessary but not sufficient components that collaborate to form a DAC.

Autonomous Agents

The requirement to implement a mechanism of self-regulation necessitates the use of an Autonomous Agent (AA). In simple words, AA is a software capable of taking autonomous actions in order to meet its design objectives.

There are two classes of AA required for any organisation to attain autonomy – Voting AA and Task AA. Voting AA as the name suggests has the power to vote. The shares of an organisation are represented as tokens which grant its holder ownership and voting rights. These tokens can be exchanged, transferred or generated newly for newly joined members and are issued on blockchain. A Task AA searches for vacant tasks guided by its own preference orders over available tasks. For example, it can select a contractor and submit the contractor’s proposal for voting either to the Voting AAs or to the DAC members.

Contractors

AAs do not have the capabilities to manufacture a product, write code and develop hardware. They require actors in the physical world for this purpose, called contractors.

Using Artificial Intelligence (decision trees, neural networks) and feedback loops incorporated by questionnaires and reputation systems, a more sophisticated system can be achieved. Also, it is important to note that DAC is not about handing over authority and control to algorithms, but to provide more freedom to humans by automating coordination in distributed global organisations.

With respect to implementation, DAC boils down to secure multi-party computation, synchronised using blockchain. The agents are coded as payment channels or smart contracts.

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