Alright ladies and gentlemen. I'm sitting here speaking with the art chain
Developer CEO at the team member the brains behind outer chain. Hello guys. How you doing?
Very good very good awesome awesome. Thank you guys for giving us the time to ask you a few questions
About your project first of all I want to ask you tell us a little bit about yourself Jason
For 30 years
On the banking side on the venture capital side
we call it the buy side right investment banking side is the sell side and
also on the issuer side
An issuer is a principal of a company. That issues securities
Okay, so you played on both side of the fence basically yeah, that's right, okay?
Of that same exact fence all right, what about you dr. Stewart or a Stewart Hebert tell us a little bit about yourself?
All right, I'm a cryptographer
Meaning I've been working in the field that I called crypto for
Many years in fact
Some decades before anybody used the word crypto to mean crypto currency
within the field of
cryptography I'm probably best known as one of the co-inventors of
the technique for ensuring the integrity of
Digital records that we now call the blockchain though
When we were writing our papers about it. We call the digital time stamping
your viewers will
Appreciate even if they haven't thought about it before that
One of the great features of Bitcoin and
All the cryptocurrencies and of every block came pride
Project since Bitcoin took off is that the records in the blockchain?
for example Bitcoin transactions in in the Bitcoin blockchain
Cannot be changed you can trust
Once your transaction is buried several deeps several blocks deep in the Bitcoin blockchain that it
Cannot be changed
That is fantastic to hear so if I'm hearing you correctly
You started the idea of the blockchain with another person who was the other person?
so that
actually there are two to two co-authors my
My co-author on the our first three papers about time stamping was Scott's bernetta
Who with me at the time was a researcher at?
ELQ or Bill communications research the Bell Labs of the local phone companies in the US after
AT&T ma Bell as we called its Langley in the US after Bob Bell was was broken up in the
Early early to mid 80s
into the southern rebalance
That is great
And I know that you have been mentioned in Satoshi's paper three times out of eight times is that correct out of other people?
Let me mention the third co-authored a buyer who was then and still is now the?
professor of mathematics at
Barnard and Columbia
University uptown here in New York
Well, sir. I want to thank you for creating such a brilliant idea for us to discuss
and that's why this world is going to become better with the
Technology that you thought of so we appreciate you it's an honor to be sitting in front of both of you
Some years for
the idea to
take hope all over the place, and I must say I wasn't anticipating the
amazing wave of excitement
That we see before us now, and I don't think we have seen the 1% of a yeah in my opinion
Awesome so
Jason this question is for you now, you know you came out without a chain
Yourself or you and your team thought about this project how long you been thinking about this idea
How did you guys come across this audit chain project the idea behind it to solve the problems that are out there
Had a financially devastating war with a regulator an accountant in
2013/14 so in 2014 that's when you start thinking about this
when I started thinking about reducing regulatory conflict and
You know how does why is accounting so subjective and conditional?
Why are financial statements as asserted by management?
Subject to
Such scrutiny in such a way that they can be interpreted
with
Room for interpretation in several different ways and then when I read I guess you know
when I read
the etherion paper
That's when I said, you know what
Here's an opportunity to create the one single
universal immutable
Indisputable accounting truth Wow hand over the keys to the regulator, and it is what it is what it is
So they have the opéra hand at this point to make their own judgment instead of you telling them what you think is that correct?
I'm not gonna tell anybody what to think the only thing that our objective is is on the one hand
dr. Havers you know ensuring
The integrity of digital records and the other applying his theories to the
continuous audit of such digital records and
reporting of
the
Contextualized digital records in the form of you know the fourth basic financial statements sure sure that is auditing
That's fantastic to hear now
Are you 100%?
dedicated to this project
Or do you guys have other jobs that you have to tend to cuz look we we face or we go into a lot of?
Icos where somebody comes out with an idea they throw out there
They collect all the money, and then you know it's the second child after all the money has been collected. Where do you guys stand?
We're sitting basically in our bunker and most of our developers
Sleep here, and they wake up we have breakfast we strategize they code, I cook
we strategize some more and
You know we do this 18 to 20 hours a day. Oh my goodness, so you guys are all in one place
Brainstorming how to take this to the next level yet not all of us
we have people in Switzerland give people in Asia in
Russia
Upstate New York upstate New York, but he comes down here
And he bunks up with us - okay a couple that is that's awesome. That's for life
You know you have to Eric Cohen
Some of your viewers may not understand, but there is a regulatory
reporting standard taxonomy around the world
called
XBRL and
Eric is its
co-inventor
Almost put things in their perspective right you have dr. Hebert who?
co-invented
The data structure now known as blockchain for ensuring the integrity of digital records, and you have Eric Cohen who co-invented
XBRL the standard regulatory taxonomy around the world
so
In effect when I started getting it together we had to gather rock stars because I'm not in the count. I'm not an auditor
You know I just came up with this idea. You know how do we reduce regulatory conflict?
Which hopefully can lead to regulatory enforce a reduction in the regulatory enforcement
Which hopefully will lead to a reduction in
budget
appropriation requests right right
Reduction in a tax burden on the part of the people to support such monolithic
cost structures at such government agencies
Not just the United States
But around the world that's fantastic to hear you know I gotta admit myself when I looked at your project
When I start I start with the team first because you can tell me you know you're gonna sell me all the world if you
Don't follow through and the team is not capable of following through then the project is gonna
Go to waste however when I looked at your team
I realized how big this project is and it's still way under the radar until
People started to hear about it. It's gonna blow out of proportion my question to you is
We've you thought about how to change to solve a problem. What was this problem?
well the one the reduction of regulatory conflict and to the
The reduction of the subjectification and conditional
conditionality of
Financial statements, which for the most part are asserted by management human beings correct
in addition the
internal controls and disclosure controls in
That are opined on by an auditor in a financial statement of a public company are
basically a certain by management tested by management and
Represented to the auditors that they have been tested in accordance to certain standards
The Treadway Commission
for instance and
that they work and
That there's sufficient to the size and complexity in the organization
so
We've taken
a great deal further in that
On our network the Federated nodes which are operated by the CPAs and CAS
around the world Eponine
Chartered Accountants and certified public accountant correct
That one of their jobs is to certify a state machine
A state machine is sweet of enterprise applications that perform all the accounting reporting
About star the things okay and to listen for anomalies
outside of a band of
Acceptable operating procedure of that state machine and to detect and reporting the anomalies to its
managers correctly and the second function is to detect any
mathematical anomalies
that are
material
in financial statements and also any anomalies that may indicate
non-compliance with generally accepted accounting principles in the United States and
international
financial reporting standards
Outside the United States so in other words your your audit chain is not going to be based in one country or another it's gonna
Be on an international level, it is a global project the reason I'm asking you
This is because taxation and audits and all the stuff varies from a country to another country every country has the same
taxation varies from country to country
IFRS is
Principles based and generally accepted accounting principles are is rule-based
So yes jurisdictionally there are differences, but they report now if you report in the United States
You
You report by a set of standards if you report outside the United States
But not in the United States you report pursuant to a different set of standards
Okay, makes sense makes us know
Let me ask you this is it that yeah from from outside the states that might not be clear, but even within the United States
There are 50 states and
50 sets of statewide tax
Regulations and even even more
Local tax rules no I agrees the reason I asked the international thing is because what is the?
Division four outer chain is it going to grow globally internationally, or is it going to be tied to a certain local?
Like the United States only and that's the question
Europe is more advanced in terms of Technology and in terms of
Its standards in some ways than the United States, but
Your question kind of provokes me to mention our
Decart alliance okay
The decart alliance is a coalition of members of the Accounting audit
Investment legal financial reporting and enterprise community all coming together
to
provide thought leadership and arrive at a consensus based upon continuous audit and reporting
protocol that is auditing and
Admission as a member is free until June
It's not for everybody it's for practitioners in the space you can visit the website by going to
WWE
Are PE?
org
Ok well I appreciate you clarifying this point for me Jason. Thank you
translate the acronym for
DC a are PE I'm looking at a poster
Get the words in the right order because material methyl
decentralized continuous audit and reporting
protocol
Ecosystem, oh wow so that's a mouthful, but uh every word matters absolutely no I agree now
Let me ask you this is art a chain
Completely decentralized can it be taken down at a later point you can have faced any threats in the future
Like the Bitcoin or aetherium or any other blockchain it is decentralized
meaning the larger the number of nodes on the network the more secure and
decentralized it is
Fantastic fantastic now I understand you you're a maximum supplies 250 million
160 million audits are going to be sold in the ICO, is that a micro right correct me if I'm wrong
That is correct total 160 million will be sold correct now
Do you have any loc amongst all your team members?
Where your tokens are locked for a certain period of time amongst the advisors on the team and how long is that period?
The advisors of the team's tokens are locked for a period of a year
And they vest equally on a per block basis over a year. Okay, okay, even that devices respective to put it in perspective
the securities laws in the United States
Lock you up for a period of only six months
Underwriters if you are covered in a registration statement meaning that your shares are freely tradable
You see you have to sign an agreement with an underwriter that usually
Requires that you do not sell and that you lock up your shares for a period of 180 days
Well, just perspective okay, because some people in the community
Believe that a year is not enough even two years is not enough you need to read
prospectus --is of public and
initial and secondary offerings which will describe
Lock-up periods and the standard lockup period is 180 days okay?
The securities laws themselves lock you up 480 days
But your lockup is for one year amongst your team and your advisors is that correct that's correct
But not our partnership pool. You know it's you got to negotiate with some you know rather large
Enemies and you can't impose such
a default lockup unless you negotiate correct
No
I understand that part and plus those types of partnerships are not looking to flip out
It's usually a strict it takes on the form of a strategic partnership correctly look at a flip out of it
but still we can't you can't impose it upfront, but you could negotiate it and
some sort of variation of
Some sort of a locker well to ask for it full disclosure purposes to the community
It'll be disclosed that there won't be a lock-up on the partnership tokens
But that does not mean that each individual partnership will not contain in a locker
Okay, make sense I appreciate clarifying that now tell me when is your IC o---- what date have you decided what day because I looked
On your website. I did not see you. I'm sure that's the question you come across a lot, and I see
On our website before I even mention any of this I missed if I do not say something to your viewers. Okay, please do
I've been saying this in prospectus is for 30 years so here goes
Purchasing cryptographic tokens is just about the most dangerous thing that you can do financially
it should only be considered by people who have no need for liquidity and
Who can withstand the loss of their entire purchase?
There are many risk factors associated with building a decentralized network
I cannot enumerate all of them on this interview
There are many more risks that we're gonna face that we're not going to be able to quantify right now our
Ability to survive is dependent upon our ability to overcome
known risks and
unforeseen risks if any of these risks materialize
We may not be able to effectively manage them, and you will lose everything that is
100% clear and I support your your statement 100% as well furthermore
Oh, you are jamming your ether and Bitcoin into these contracts as fast as you can without
Reading any disclosure that might be provided
Please read the disclosure
documents
put on a parachute
Before you jump out of an airplane
It is only suggested that you pull the cord before you hit the ground
What a way to put it
What a way to put it adjacent you you I I think you delivered the message of the right way
so
But I appreciate you saying this you know people they invest in something they don't know
Without reading what the contents of what they're investing and I agree with you. I've seen it happen over and over and over again, so
Providing a new disclosure framework
for ico projects to plug into our network and
Report and contextualize, what everybody sees in your smart contracts and share the funds anyway?
Where kids utilize in the form of financial statements I agree I agree
justified
Just a disclaimer. It's advice. Please read, please be careful right welcome
Okay Stuart, let us hear. Oh, okay, so I have
No experience in the financial world
I
mean I've kept my my my money in the bank accounts and so on but I have no serious experience in the
In the financial world, but some I'd like to mention the risk that
Store data, and I worried about in 1990 and which is
Some which a few cryptographers in the
blockchain world know about and appreciate but
I've certainly never heard it mentioned in any forum like
yours
namely that the
the dependence of every blockchain project on some assumptions about how cryptographic hash functions work is
Something that is just that an assumption. It's not a theorem for mathematics. It's
It's not even a strong engineering principle. It's just an assumption on which people build
build systems, there's no assurance
known in the cryptographic community that in fact a
Cryptographic hash functions are hard to break the of course so that says risk
That's a risk to the security of
other chains project
every project, but if that's them if if
If our project crashes to the ground because of easy computation of of hash collisions
Will not be the furs will not be the only project to
Collapse and
you know
Other parts of the security of the system II we are now speaking
Through a secure channel established on the on the Internet
The
if the if hash functions are easy to to compute and maybe some other assumptions are broken the
This conversation would not be as sure as we as we think it is all right. All right. Well. Thank you. Thank you
I don't think everybody that is looking at your project our kids are very well-versed
That's awesome here. You know personally I put my put myself into this project I am
Building
Helping to design and build a system that depends on those hash functions. Why?
keeping in mind how to buttress theirs their through their security when the
Well when there's reason to question their their
Invulnerability you can you can look at my first thoughts?
About that question with with drone Etta in our second time stamping paper with fire
That's fantastic. That's awesome. Well. Let me ask you does this out of chain Stewart make you feel younger like Jason
I
Can I know I can't look inside his head, I'm feeling
I'm older than he is and
and been
Thinking about security of digital records for longer than
well
Jason but also
Longer than many cryptocurrency enthusiasts have been alive I said I can I can tell I can tell
Yes, so for me. It's not a matter of youthful enthusiasm. It's um
But it is some kind of
rejuvenation
Absolutely absolutely now Jason this question is for you your competitors
Do you know of any other company on the blockchain that is competing without a change for example, and if you do
What sets you apart from that company?
We don't know of any decentralized continuous audit and reporting
Mention anything in particular about continuous on it real-time audit yeah, talk about that
Well the science itself has been around for 20 years more than 20 years in practice
It's not really
It's not that much of a practice. It's there are a few
Enterprises that practice continuous, audit, but only for internal audit purposes. It's not for external audit
yet, okay, and
Certainly none who are reporting audited financial statements in real time
The science of continuous audit is
most prevalent in
academia at an institution known as Rutgers University
Rutgers University
has a
Continuous audit lab which is run by two gentlemen?
whose CDs
The head of the lab professor miklós he has a 16 maybe it's 1 and says
Do you want to pay just by now though I read it it took me three days to read it
It was 61 pages at that time, but they are the world's authority on
Continuous audit and reporting and that's actually where I let Eric code. Well. Thank you for clarifying this this point for us
You when I looked at your project honestly. I couldn't see any other project as like yours. It's very complicated for the average
human being to understand all this
It is complicated only people in this field will probably or this sector will probably know exactly what you're saying
100% so I appreciate you clarifying all this
When I started writing the paper I and marketing is the same challenge right
From a marketing standpoint we have to market to two
diametrically opposed Bruce of people right
There is the crypto crowd who?
Exhibit varying degrees of
Eccentricity and then there is the most conservative profession on earth
In order right yes, the challenge of marketing to both communities is in fact that a challenge to the same extent
That same challenge exists when I wrote when I wrote that paper I had to
I'm sorry, but I couldn't speak to
The ICL crowd I had to speak in a manner that didn't reduce
or
Express in an inaccurate manner
Certain concepts and principles that you know I've been living in for my whole career so in a way
Yes, I speak more to the industry than I do to the crypto community
And I apologize for that, but I you know
And I get yelled at it for
My team even says can't you make it any simpler?
I see if I make it any simpler than it's not going to be what it is intended to be it's you know
It's basically in the securities world. They might call it material omissions, or a material misstatement
Sure sure so it is what it is
And it's expressed that way for a reason, and I do apologize and if anybody has any questions
You know you can ping me we're always here. We're totally transparent and
Happy to talk. That's fantastic to hear now you're gonna answer my question about the ICO. When are you gonna get conduct your ICO?
so
We will announce that
once it clears legal review with you, but
We're hoping that it's gonna be 40 to 45 days from now okay?
Fair enough, but but the date has not been matched in stone yet, okay, understood understood understood
now our chain is going to grow by establishing its own network correct me if I'm wrong right we're
Correct so many Project enterprises
Etc are going to be built on top of your audit chain network. Where do you see out of chain?
network being in a couple years so
in my humble opinion
And I believe in these humble opinions of other statesmen who are my?
contemporaries some of which are my teammates I
See the world in a certain way, and I I
See what I think it looks like in 10 years 15 20 years 30 years
I was lauded and reporting
Foundation there can't be any infrastructure
Any infrastructure has to be built upon a sound
Continuous audit and
reporting
blockchain so that being said I
Personally believe that there will be additional projects built on top of it and anyone who needs
continuous audit and reporting
Will will need to sit on top of or integrate with or?
Interoperate with do you want to chain Network so basically the main focus of auditing or the main?
Consumer for is an enterprise a company
Somebody that's gonna continuously need you
It's not just a company but
nonprofits
Governments Wow okay, don't you want to see where your tax dollars are going? Yes?
Yes, yes, that's a great good community again. Don't you want to see where your tax dollars are going you should run a poll?
You want to see it in real time?
if you want to give politicians an opportunity to
conditional eyes and subjective by the financial statements and budgets of city state local and federal
governments
That's like that's such a powerful a statement right there mind you so
it's
government agencies
not-for-profit foundations, right
The easiest slam dunk of venture capital firms right some of them have 50 or more portfolio companies
They have a staff that wrangles with so-called
CFOs right cash in the bank doesn't mean that that's your runway right right. Yeah angel statements no
Do you know what a financial statement is maybe it looks at the startup world is chaotic?
They have no infrastructure to begin with
So we're making it easy for them to plug in and disclose and we're making it
very convenient for VCS and private equity firms
To monitor where their companies spend at any given moment in time
Which is something that they can offer a look through to their limited partners now?
And if you can offer not just a mark to market
performance of your fund to your partners but
You can look at metrics
From a corporate performance standpoint each and individually and your portfolio as a whole
That's not something VCS and private equity firms can do right now. No mutual funds for that
That's awesome. That's awesome. That's not something here. Well. I appreciate you guys giving us the time and letting us hear your thoughts
Thank you so much. It wasn't honor to be a part of the interview, and I wish you guys the best of luck
Thanks for having us okay
Take care
Thank you. Thanks
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