Proof-of-Assets (PoA): The Future of Validation

Bankex Proof of Asset

Bank deals mostly with tangible assets. The assessment of assets quality is important to provide an early warning of deterioration in credit quality and allows management to take steps to mitigate the risks.

But unfortunately, the processes often have weaknesses that can prevent them from being fully effective. Here are three common processes used by Banks to help validate the assets:

  1. Physical checks; Manually verify records of a few assets at random and to measure the accuracy of the records.
  2. Lifecycle checks; Manually verify asset accuracy on an on-going basis by verifying the current ownership of the asset, current specification or configuration, daily use records, check between departments, etc.
  3. Comparing Data; Compare the data against other data to increase accuracy.

Keeping track of assets with this traditional method can be a challenge to organizations large and small. Assets can move locations, get reassigned to other people, get replaced, etc.

It is critical for any organization to have current and accurate reports about assets allocation, usage and service history.

The Power of Internet-of-Things (IoT)

IoT is a technology that connects physical objects to be able to utilize the Internet backbone to communicate data in order to provide access to information about that object’s condition, position or other attributes.

Sensor is the most physical element of IoT. It has the ability to provide comprehensive and real-time data about any physical asset. A real use case of IoT sensors by financial industry is Auto Insurance, in which sensors are deployed in automobiles that automatically provide insurance carriers with information on vehicles driving history and therefore the drivers behavior.

Another best example is Smart Propery, in which sensors deployed to help analyze the property condition, environment, security and traffic. This information would increase certain properties attractiveness and thus drive increased rental income and investment activity. In another case, lenders could also better understand a property’s condition and thus its value during the mortgage appraisal process and insurers could improve risk management and provide more accurate pricing for property insurance.

Internet-of-Things could be beneficial for economic actors within the global financial system, like claims administrators, portfolio managers, loan officers, and leasing agents.

But no startup has yet figured out how to integrate IoT sensors technology to maximize profits and improve business performance.

Recent research showed that by the end of the decade, several billion sensors will be deployed to provide data of interest to financial industries.

The Brain of Smart Contract

Smart Contract is a computer protocol that facilities the transfer of digital assets between parties under the agreed-upon stipulations or terms. Smart contracts are one of the functionalities that sets Ethereum apart from other blockchains. A smart contract automatically enforces the conditions by taking the information in the contract as input and assigning values to these inputs. These values then help in execution of required actions under contractual clauses.

Setting something on a Smart Contract is like setting something in steel. There is no erasing, there is no going back.

Smart contract can also be non deterministic, which means that it requires information outside of the blockchain (off-chain) to execute the contract.

Most Smart Contracts are written in Solidity because there is no non-deterministic function on the language. But it does not have to be always deterministic, some companies have used Javascript to allow non-deterministic functions on the smart contracts.

Through The Oracle, an agent that finds and verifies real-world occurrences and submits this information to a blockchain to be used by smart contracts, information about an exterior event can now be used and could trigger the contract execution.

Oracle is the best solution to connect both IoT/Big Data dan The Blockchain within the smart contract.

Proof-of-Assets (PoA)

BANKEX technology combines both IoT and Smart Contract to convert any real world assets into Smart Assets. BANKEX tokenized the non-fungible assets on the blockchain and turning it into “Smart Assets”.

Proof-of-Assets ensures that the token issued as part of the protocol is backed by an actual asset. The protocol is capable to link to the real world and evaluate every asset anywhere in the world through the use of third-party auditors who will assess the value of the item being tokenized.

As standard practices in real world finance, assets owners still need to provide the legal ownership documentation regarding their assets. This way, any kind of fraud can be prevented since any real asset has a number of descriptive parameters, related rights and permissible operations. This is where Oracle comes into action.

BANKEX uses The Internet of Things as the main condition for Smart Contract data validation and External Oracles help validate data on the blockchain. It is possible, for instance, to verify information about a person by their Pass ID, or to request information about an organization by its Registration Number. It is also possible to simply extract data from a specified website. External Oracles enable the realization of virtually any data verification logic on the Ethereum blockchain.

This validation process will provide:

  • additional information about the essence of the Smart Asset;
  • a formula calculating the importance of the validation conducted;
  • a record of the completion of the operation in the blockchain.

After certain due diligence, the asset can then be put onto the blockchain.

BANKEX’s Proof-of-Asset aims to transform finance along with every other sector.

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Author: Albert D Stone

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