By Larry Chiang
Money is a proxy and a protocol. Stores of Value, Methods of Exchange and Units of Account have been proxied and proceduralized for a longggg time.
In China this upcoming week, crypto conferences seem to be seen as legal 😉 see “Shanghai Blockchain Week” any pay particular attention to a 3-day conference in a western hotel {W hotel}. Turbulent legislative winds blow there in Washington DC America also… , let us examine top 5 use cases for distributed ledger(s) that are independent of government regulation. These protocols stem from the Chiang dynasty in 909 BC. B.C. as in before Christ and also 2,900 years before Satoshi’s nine page blockchain PDF. These top 5 use cases for #TheLedger are both antique and futuristic. The Ledger is both verrry old and verrrry new.
A ledger is a record of money in; money out. This accounting 201 [#accy201] concept is arithmetic of credits and debits for economic participants. In a semi centralized system it is account numbers. In a decentralized, it’s public keys. Let us humorously and educationally dive into this tweet:
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Larry Chiang (@LarryChiang) |
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Top 5 Use Cases For The Public Ledger in 🇨🇳. My #tcDisrupt after Party notes #05Sep2018 cc Caroline the, 🇨🇦 pic.twitter.com/A2bxO9tvlH
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/1/ Prepayment to save money.
My octogenarian Chinese Uncle loves to prepay to save money. Prepayment to save money is pervasive.
Chinese people have a negotiation protocol of offering to pay early to save money. Prepayments are recorded on double entry accounting ledgers. This appears when we buy Xiao Lung Bao, pizza, sandwiches and even prepaying our API calls (aka a token. Aka “triple entry accounting”, more on that later 😉
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Larry Chiang (@LarryChiang) |
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Chinese people. We like to prepay our pizza to get a prepayment discount
CC 2,10 net 30
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Insert the pizza prepay picture twitter.com/6502838008
[2b] Debit reporting analysis.
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CEO of Duck9, Larry (@6502838008) |
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I mean they “baked in” a 20% discount pic.twitter.com/NnjA7M1D85 |
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Baked in is a pun that is intended.
Speaking of baking bread in the store, subway Restaurant let’s you prepay five sandwiches. And as a customer dividend (pun intended), you get six inches for free.
Insert video, here pic.twitter.com/zDLh7Zc3dQ
It’s nearly impossible to outlaw prepayment and make illegal recording the prepay monies exchanged. Remember, an audit of double entry accounting is basic, common and in adherence to GAAP (Generally Accepted Accounting Principals).
[2] Audit.
The Public ledger allows for less friction in audit. When David Duncan was auditing Enron, the ledgers were semi available because Enron was public. Audits have been taking place since the pharrohs were crosschecking vendor expenses.
2a / Tax
In China, tax collection is an issue that incentivizes a look into merchant money collected. Thus, the government really likes the concept of Public ledger.
It’s nearly impossible to outlaw prepayment and make illegal recording the prepay monies exchanged. Remember, an audit of double entry accounting is basic, common and in adherence to GAAP (Generally Accepted Accounting Principals).
[2] Audit.
The Public ledger allows for less friction in audit. When David Duncan was auditing Enron, the ledgers were semi available because Enron was public. Audits have been taking place since the pharrohs were crosschecking vendor expenses.
2a / Tax
In China, tax collection is an issue that incentivizes a look into merchant money collected. Thus, the government really likes the concept of Public ledger.
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Connie Chan (@conniechan) |
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It’s a misconception that China doesn’t allow crypto. On Friday, Shenzhen’s tax bureau and Tencent announced that China’s first blockchain-based invoice was issued to a local restaurant. Government experimenting with blockchain and WeChat payment to fight tax evasion. #chinaspeed
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Solving the double-spend-issue, is a challenge inside of crypto. Audit in the attempt to collect tax addresses the current
single spend issue. Single spend issues are old, old old. An opaque Single spend results in lost tax revenue.
In America, an example of problematic single spend issue is a barter agreement that occurs in Berkeley Calif. There was business transacted that the government wanted to tax but could not see. Another example is in Venezuela where You barter and hand job for a gallon of gas or a quart of aging milk.
is an example Creative auditing that is cheap that you can train a newbie government worker to do is valuable and will not made illegal anytime soon…
[2b] Debit reporting analysis.
In China, there is no credit reporting. Thus, no FICO and no credit reporting analysis. But there is Debit Reporting Analysis. On ledgers, an analysis is done on
– frequency of deposits
– occurrence of whithdrawls
– methodology of withdrawal
– balance held in the positive or negative
– length of time account is held
– volatility of street address associated
– rise and fall of deposits and credits
– size of condo that was paid off
– distance of commute to job
– how long job has been direct depositing.
Debit reporting analysis is a part of the distributed ledger. Debit reporting analysis is part of China since potential in laws checked how much Ren Ming Bi is buried under your futon.
[3] Prepaying API’s
Okay so going back to GAAP, prepaying is in the accounting jargon 2, 10 net 30. This translates into 2% discount if you pay in ten days. The bill is due in full in 30 days.
If you can prepay a pizza, you can prepay for an API call. An application Protocol Interface can be prepaid. For example, if you pull 75,000 Trans Union credit reports, you can negotiate for discounts for pinging the oligopoly’s massive store of consumer credit data. Buying API calls in the future is a token.
This gets into the concept of prepaying for work and Jobs To Be Done…
[4] a Public Ledger for Work You Did Building a Dam.
A dam is Gravitational Potential Energy. Water flows down to turn a turbine which generates electricity. A hydroelectric dam gets monetization via selling electric or mining crypto. A dam works like a water tower. You only spend electricity to pump water up the tower. Gravity does the work coming down.
The ledger measures how much you spent to capture Gravitational Potential Energy. Outlawing gravity is Tough and gravity as a force has a compression algorithm that literally translates into money.
Similar to Gravitational Potential Energy is prepaying to build out Africa
[5] spending billions to make billions and billions.
Prepaying to build ports and build Silk Road is a way of prepaying to save
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Howard French (@hofrench) |
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China’s Africa moves are of serious geopolitical importance and the resources represent major new options for the better governed countries, but this is not “wanton generosity.” China has spent billions in Africa, but some critics at home question why latimes.com/world/la-fg-ch…
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Uber similar to 2, 10 net 30
2% discount if paid inside of 10 days
0% discount if paid at 30 days
is
2 billion made/month because 🇨🇳 spent $30 billion.
I will be exploring new and old applications of ledgers. Feel free to comment your insights about what you see so I can study
– where crypto is now
– where we are going.
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