Auditchain — Telegram AMA — August 09
On Monday, August 09, we had the pleasure to welcome to our Telegram chat:
Jason Meyers, Inventor - Lead Architect.
We asked him questions about the development of Auditchain.
Some sentences have been slightly edited for readability but the meaning has been conserved.
Auditchain is a decentralized accounting, reporting, audit and analysis virtual machine that automates and provides proof of assurance on the world’s financial and business information.
Auditchain enables continuous external validation of enterprise system and control, financial data and disclosure control environments by a network of CPAs and Chartered Accountants.
Auditchain enables enterprises to provide stakeholders with the highest levels of assurance through decentralized consensus-based enterprise external validation.
The AUDT Token is the base currency and utility for logic curation, enterprise application service, assurance and disclosure payments. The AUDT Token allows delegation and voting on improvements and changes to the protocol.
Q — Ayeley from GAINS: What did you do before crypto and did you have any other previous venture in crypto?
A — Jason from Auditchain: I am the lead architect of Auditchain. I sat next to the audit and financial reporting profession during my 25 years as an investment banker. I also built the world’s first multi-jurisdictional stock plan administration platform. My clients were Facebook, Steve Madden, Rowan Cos, Kayak, and others
My venture into blockchain was inspired by a conflict over an accounting of the use of proceeds of financing with a U.S. regulator, who said of their agency that it was “the hand of God.” The conclusion of that proceeding led me to believe that in the complex world of enterprise accounting, audit, and financial reporting, omnipotence may be better expressed through the development and deployment of a protocol that produces proof to many, rather than the opinion of one.
Q — Ayeley from GAINS: What is the project about in a few simple sentences? For how long have you been working on Auditchain? How many people are on the team?
A — Jason from Auditchain: Auditchain is a decentralized accounting, reporting, audit, and analysis virtual machine that automates and provides proof of assurance on the world’s financial and business information. It is designed to provide integrity on financial and operational states of economic entities with the same assurance that of a blockchain
Accounting, financial reporting, and audit control process NFTs are developed by accountants and professionals on the Protocol and are externally validated by a network of CPAs and Chartered Accountants. Royalties are paid in $AUDT to the developers and external validators each time they are used. $AUDT Token Generation Event is underway in a private sale and is used for settlement of audit and financial reporting obligations, royalties, and for complex feature improvement and protocol governance.
Global Accounting Services is a $550 Billion market, PER YEAR and growing at 5% annually. Billions are lost due to fraud every year in every industry. Regulators do not prevent fraud. Traditional audit engagements DO NOT detect fraud. Every government bailout can be traced back to a flawed traditional audit methodology. FOUR FIRMS provide audits to 95% of the global capital markets. One firm takes a small sample of data from the enterprise during an audit with no confirmation.
Would you trust one miner to sample a fraction of Bitcoin transactions with no confirmation? Of course not. Then why would you trust 4 (four) firms to provide integrity to the $300 Trillion global capital markets?
We have been in development for 4 years. We have a team of 8 full-time development personnel. It’s the most complex project in crypto. We have almost 2000 pages in our knowledge repo.
Q — Ayeley from GAINS: Which target market are you focusing on at the moment? And what other advantages do you have over the Big 4 firms that should make them shiver at the thought of Auditchain?
A — Jason from Auditchain: Transactions on a blockchain are validated by a “plurality” of miners/validators
Traditional audit methods take a statistical sampling by one auditor which is conditional upon what management says about its condition and how those transactions are treated
We are targeting any economic entity that files reports with regulators and economic entities in blockchain that will find out the hard way that they must also file with regulators.
More validators = higher assurance. Controls, processes, and financial states are immutable and validated by an army of the world’s CPAs and Chartered Accountants who provide Proof of Assurance in exchange for $AUDT.
Q — Twitter user @Reiyan_12: Most of the time, accounting companies in general only worry about budgets and praise the quality of a service that is often inefficient. They do not care about investors, much less about our capital, not counting fraud. So how does Auditchain change this?
A — Jason from Auditchain: The cohort contracts of the Auditchain Protocol require a minimum of 3 auditors per assurance category at launch. $AUDT holders can increase this. 100% of all TX are included. Not “statistical sampling” If an auditor fails or “backs away” from making an attestation, they DONT get paid AND they must PAY the amount they otherwise would have received had they attested to as part of the validation
Q — Telegram user Humberto: You have implemented a Proof of Assurance consensus model on the AuditChain Protocol, can you tell us if it is the same as a Proof Of Insurance model? What are the advantages of using this consensus for keeping transparency and good behaviour among your validators?
A — Jason from Auditchain: This is not the same. Auditors attest to assertions. Insurance companies bring the body bags which means it’s too late.
Q — Twitter user @DERRYN82: What are the main reasons why AuditChain launched 4 staking pools with the same deposit period/ 15 days and staking period/ 30 days
A — Jason from Auditchain: The 4 staking contracts will be launched right after listing. Listing occurs right after the private sale. The contracts are structured to exploit the best and worst in human behaviour. Those who think short-term get punished. Those who think long term get rewarded
The details of the staking rewards are found here. We believe that a rush to the exchanges to buy the token will cause it to rise which causes a conflict in the mind of those who are staked. Do I give up my rewards and sell some? Or do I stay put? Those who wish to stake may find a cheaper price on exchanges if the “conflicted ones” sell
Q — Telegram user The Curious 👀: Can you tell us what happens if an auditor wishes to join AuditChain, what must they do? What are the requirements that they must submit? Or do you already have your own team of auditors?
A — Jason from Auditchain: We are not auditors. Auditors must submit information and stake a balance of $AUDT before being able to act on the protocol. See demo videos here
Auditors must perform a standardized audit procedure under ISAE 3402 to prove that the process controls represented by the NFT work correctly. They share the royalties with the developers of the process controls
Q — Telegram user Carlcrip 💜: In their whitepaper, they mention certain specific points such as Cohort validators. Could you explain a bit what Cohort validators are and what role they play in the fidelity test?
A — Jason from Auditchain: A cohort is a group of validators (auditors) invited by the reporting entity. It represents the engagement agreement between the parties.
Q — Telegram user Seema G: What opportunity does Auditchain technology present to these EU regulators as the perfect tool for them to use? What master strategies or features encourage users to participate in Auditchain projects?
A — Jason from Auditchain: The CEAOB issued guidance that NOBODY is ready for. We solve this problem by providing financial statement auditors with a knowledge graph of all controls represented by NFTs. Who created them, their address, the cohort of auditors who audited them. This is called Proof of Assurance
Q — Telegram user 👽 Crypto Jiren 👽: Can you explain how the process for the incorporation of new economic entities is carried out? What are the main requirements that need to be included? What kind of information do they have to provide?
A — Jason from Auditchain: It’s an intense KYC/AML process that also involves litigation searches. Once cleared, the auditors invited into a cohort can access the information,
Q — Telegram user James: What are the Potential Benefits for Investors in Securities and Digital Assets and also Potential Benefits for the Audit Profession?
A — Jason from Auditchain:
Potential Benefits for the Audit Profession
● Substantial increase inefficiencies
● Higher confidence in audit trail data
● Higher reliability on audit evidence
● Substantial reduction in costs
● Reduced conflicts
● Higher independence
● Enhanced audit performance
● More effective internal oversight over audit quality
● Quantifiable audit cost analysis Potential Benefits for Issuers of Securities and Digital Assets
● Higher likelihood of current financial information compliance for digital asset issuers.
● Greater access to capital.
● Higher valuation accuracy.
● Attractiveness to institutional investors.
● Substantial reduction in compliance and audit costs.
● Substantial reduction of the occurrence of fraud.
● Qualitative and Quantitative fraud detection and prevention.
● Substantial increase in the effectiveness of internal controls.
● Substantial reduction of redundancies.
● Substantial reduction of error.
● Substantially higher operational efficiency.
● Promotes competitive advantage. Potential Benefits for Investors in Securities and Digital Assets
● Immediate access to real-time corporate performance.
● Substantially higher issuer and market compliance and transparency.
● Substantially lower instances of issuer accounting and financial statement fraud.
● Supports substantially higher levels of informed investment decisions.
● Substantial reduction in market dislocation.
● Promotes market correlation to corporate performance.
● Substantially higher levels of stability.
● Promotes higher levels of confidence.
● Promotes wholesale positive investor behaviour.
Potential Benefits for Regulators and Taxpayers
● Permissioned access to real-time issuer and exchange reporting data.
● Earlier detection of regulatory anomalies.
● Real-time remediation.
● Real audit data analytics-driven surveillance.
● Substantially higher issuer and market compliance.
● Automation of full and fair issuer and market disclosure framework.
● Substantial reduction in review with refocusing on the process.
● Reduction in operating and administration budgets.
● Substantial reduction in regulatory budget appropriation requests.
● Substantially higher agency performance quantification.
● Substantially higher levels of productivity.
● Substantial reduction in regulatory conflict.
● Substantially lower instances of the issuer and accounting fraud.
● Substantially lower enforcement activity and costs.
Q — Telegram user Shizuka😊: Is $AUDT simply a community token? Or it has some use cases in the Auditchain ECOSYSTEM. I mean will We have voting power being a holder? And What other benefits do we get by being a holder of $AUDT?
A — Jason from Auditchain: As more of the world’s professionals create and contribute more and more process control NFTs to the virtual machine, the institution of accountancy moves from manual tasks and hourly fees to royalty payments in a decentralized continuous audit and reporting protocol ecosystem that makes the capital markets safer, far more transparent, reduces and eliminates fraud and provides central banks with enough foresight to stop the monetary debasement of society’s fiat currency.
The $AUDT token is used for settlement of royalties between developers and the external validators of process control NFTs, settlement of audit and financial reporting obligations by enterprises, and an extremely robust array of governance features. Decentralized governance of this kind of ecosystem needs to be in real-time and be performed by the community of $AUDT holders instead of the suits in Brussels and DC. This domain is highly complex and the governance layer will likely lock up all $AUDT in circulation for the foreseeable future as accountants and auditors like to make lots of proposals and have discussions about feature changes and Protocol improvements.
Q — Twitter user @PKragak: In the media, AUDITCHAIN explained that they have the DCARPE Alliance Association. Therefore I want to know, what contribution does this alliance bring to the ecosystem? How does the AUDITCHAIN project community benefit from this association?
A — Jason from Auditchain: We collaborate with standard setters in audit and financial reporting. This benefits the community as our project manager is considered the “Godfather of XBRL” XBRL is the Global Stand for Financial Reporting in 50 jurisdictions. Here is an overview and a sample of its members and roles.
Q — Ayeley from GAINS: How do you plan to handle the funds raised from here? And are you planning to do any future raises?
A — Jason from Auditchain: This is our final raise. We will have raised a total of $4,500,000 to date assuming the completion of the private sale
There is talk about an IDO on a launchpad but that won’t raise any more than $100,000 and most launchpads are only trying to inflate their own token price
A lot of what we see in the crypto space is ephemeral. And now that the US Senate is about to KILL crypto in the US, the end of games may be near.
Q — Telegram user R1Ixoraa: Entities are currently facing a wide variety of regulatory requirements. So, how will the AuditChain ecosystem be a solution to all of them? Can you offer provably verifiable proof that AuditChain is fully decentralized, trustless, permissionless, and with no dominant party in control?
A — Jason from Auditchain: Auditors stake a minimum of 5000 and a maximum of 25000 $AUDT. Why the maximum? So no one auditor can dominate.
Q — Ayeley from GAINS: What stage is the project at? And what should we expect in the next weeks or months following your TGE?
A — Jason from Auditchain: FIRST ERA launch is scheduled for this September
-FIRST ERA — EXPOSE. Expected to launch by the end of August 2021. This era will allow anyone to analyze any financial statement filed with regulators by your favourite public company by submitting a link to the Protocol and paying a few $AUDT. The financial statement is processed and validated within 30 seconds by the network running the Auditchain network client; lovingly referred to as Pacioli. The result of the winning validator is confirmed by a consensus of other validators running the same version of Pacioli. The detailed analysis will reveal errors and/or fraud. The expected popularity of this service will likely cause a reset and provoke and move the institution of accountancy and society toward adopting the Auditchain Protocol Methodology.
The listing will occur concurrently with the launch of the FIRST ERA. Soon after listing, we will deploy 4 staking contracts and 45MM $AUDT will be up for grabs! All this occurs after the private sale
-SECOND ERA — DECENTRALIZED COMPUTATIONAL PROFESSIONAL SERVICES — INCENTIVIZE. Expected to launch by the end of 2021. Developers write and own externally validated machine-readable logic-based accounting, disclosure, and audit process control NFT assets that pay royalties in $AUDT each time they are used. Curators receive NFTs that generate income and opportunities for liquidity. Billions are spent every year on professional services tuning controls. Now enterprises can turn a loss into an asset that generates revenue.
- THIRD ERA — TRANSFORMATION-DECENTRALIZED CONTINUOUS AUDIT AND REAL-TIME FINANCIAL REPORTING. As more of the world’s professionals create and contribute more and more process control NFTs to the virtual machine, the institution of accountancy moves from manual tasks and hourly fees to royalty payments in a decentralized continuous audit and reporting protocol ecosystem that makes the capital markets safer, far more transparent, reduces and eliminates fraud and provides central banks with enough foresight to stop the monetary debasement of society’s fiat currency.
Q — Telegram user Maria Fuentes: Could you really tell us what phase AuditChain is in? And if it is in its final stages, when will it be fully available and when will the official launch take place?
A — Jason from Auditchain: Here is our roadmap. It’s a real roadmap. We really will live up to it.
Jason, thanks for coming into our community, and taking the time to answer our questions. Anything else you’d like to say? Where can we follow you to stay updated? — Ayeley Commodore-Mensah from GAINS Associates