The reason to build accounting systems on blockchain

Distributed LabBlogThe reason to build accounting systems on blockchain
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It’s probably time that we gave a more detailed description of what Distributed Lab does. People often ask us questions like:
– Do you develop Stellar forks?
– Do you get involved in setting up private blockchains?
– Do you create crypto-currencies?
None of these suggestions is actually correct – but if we try to give strict answers to the questions in them, we could say that the systems which we write:
1) do use parts of Stellar;
2) do initially run private blockchains, for a limited group of people;
3) can enable users to issue their own tokens.

To give a straight answer, we build accounting systems which use blockchain (I’ll explain our reasoning for doing so in a separate post). Businesses do need accounting systems to manage their assets reliably, swiftly, inexpensively and securely.

The assets involved can be of almost any kind – money, shares, real estate, loyalty programs, intellectual property, liabilities, and so on. The usual operations which an accounting system has to feature are, on first glance, very simple:

  1. registering users and role management;
  2. issuance of tokenized assets;
  3. management of the lifecycles of tokenized assets;
  4. transactions between users, and trading;
  5. accepting payments in fiat currency.

In practice, such systems tend to be very large. They include many processes, each of which is made possible by specific components with specific functions (see illustration). Moreover, these processes are not in the slightest related to the blockchain platforms – and they are, in fact, elements of the business logic. In order to be able to unify the processes in creating such systems, we are creating a framework – TokenD. A free, open-source Developer Edition will come out in Q2 of 2018, to be followed slightly later by our Enterprise version.

The framework now uses the Stellar code as a decentralized database – purely because it’s one of the few that are stable and tested. The illustration shows which components have remained unchanged, what needed changing, and what was created from scratch. In the future we’ll be aiming to make it unimportant which blockchain platform the system uses – since they’ll connect through API.

As one example – the component which handles the emission of tokens. Functional pre-emission, turnover control, verifying a 1:1 ratio to actual assets, multi-level control of administrators, and cold wallets – all perfectly match a business’s needs. A pdf of the technical documentation can be viewed at this link: Issuance Management Technical Specification (PDF). And we already have more than 500-pages-worth of such documents (tokend.org).

TokenD can be used:

  1. for developing internal accounting systems – for example, the one used by our partners, Hufsy.com digital bank;
  2. for developing gateways over Stellar – for creating payments systems;
  3. for developing in-house platforms for token issuance – for example, our partners Swarm.Fund.

Illustration by Katerina Krashtapuk

Pavel Kravchenko
About the author

Founder & cryptographer