Home

Welcome to the BTRI Knowledge Base. (v0.1b)

This is meant to be a short collection of work and ideas which we can share. The really good stuff must remain confidential, but we’re happy to tailor sophisticated solutions for you - just get in touch.


Please use the menu on the left to navigate between the different sections.

Return to btri.de

Publications

Papers

Selection of our papers with short abstract and download links, tabbed by main topic. Updated as soon as we can share.

Blockchain

Blockchain Papers


Real-Economy Applications of Blockchain Technology

The paper can be found here.

Abstract

This paper blueprints the framework for a research project with several objectives. The concept of Fiat-Money-Equivalent (FME) is introduced to outline challenges with volatility of digital payment systems. Also, a localizer function is introduced to overcome transparency challenges in modeling real-economy processes. Identified Research Objectives are in a) integrated systems design, b) export credit and c) transportation industry applications.


Expired Medicines - The dead-stock problem

The paper can be found here.

Abstract

About EUR 19.5bn worth of medicines are going to waste in Europe alone each year. Besides the negative effects on environment and health, this represents a significant cost factor for the healthcare system. A solution that is compliant with the strict regulatory standards for pharmaceuticals could produce significant savings. Can a blockchain based solution help?


Applied Statistics and AI

Applied Statistics and Artificial Intelligence Papers


Financial Bubble Analysis

The paper can be found here.

Abstract

This paper seeks to identify periods of mildly explosive- or bubble-like, behavior of the bitcoin price during the period July 2010 to March 2018. We do so by using Phillips et al. (2015) recursive Generalized Sup Augmented Dickey-Fuller (GSADF) technique on the bitcoin to USD exchange price.


Optimal Location of Airport Hubs

The paper can be found here.

Abstract

This paper takes an analytic approach to the routing and location problem. It seeks to define optimal locations and routes in an restricted optimization environment.


ML & Analytics

Machine Learning and Analytics Papers


Risks, Frauds, Cyberattacks, and Resilience of P2P systems

The paper can be found here.

Abstract

Many start-ups want to simplify global payment transactions, store customer data based on counterfeit-proof security, or even carry out entire business processes in so-called smart contracts by computers instead of people. In the implementation, all rely on the same foundation: peer to peer (p2p) networks with blockchain technology. However, as numbers of users increases, an increasing incentive for fraud and cyber-attacks is emerging. We will discuss risks, frauds, cyber-attacks, and resilience of p2p systems, their reliability and crowd based security implementations, furthermore how society handles them.


Portfolio Analytics

The analysis can be found here.

Abstract

When analysing financial portfolios and evaluating the way in which they’re constructed it’s always helpful to have a good understanding of the individual risk characteristics of a portfolio or an investment strategy. The following analysis provides a rudimentary overview of a strategy’s properties and can be expanded for real-time monitoring.


Projects & Usecases

Simple Proof-of-Concept

As a proof-of-concept we have built a simple blockchain application that satisfies the below specifications. It runs on a fast development environment, is fully functional and highly responsive. The app is free to use and gives you the opportunity to try out different concepts of how blockchain technology can be useful for you. Try it out for yourself or watch the instructional video first for orientation.

  • immutable entries
  • decentralized and trustless design
  • owner controlled assets
  • high transaction rate
  • low latency
  • indexing and querying of structured data
  • user friendly interface
  • progressive web app (PWA), no installation required

Multiple Usecases

The prototype which you can try for yourself under app.btri.de already contains a broad set of functionality. However, we understand that getting started can be cumbersome and thats’s why we provide some handholding below for potential usecases that you can implement for yourself with our free prototype. The general architecture is fairly simple and comparable to the centralized database solutions you might already know. One difference is that some entries can be updated later (we call them dynamic or meta properties) and others can’t ever be changed (we call them static or asset properties). For geeks, we can also say that entries are never changed but additional values for previous properties are recorded, making everything trackable through history. Every entry into the database is represented as an asset with specific properties and below sections give you an idea of how these might look for the specific usecase. Don’t hesitate to get in touch for any questions.

Refer to the Projects section below for examples of usecases in which the application of blockchain technology can provide value over current processes.

Expected Impact

We expect the impact of the above mentioned measures to be highly significant. However, the challenge might not lie so much in creating a technical solution (we already have it in place) but more in managing the change process and getting authorities to accept the digital ledgers. This might easiest be done if authorities themselves set up the blockchain and allow other parties to run additional nodes. Pioneering decentralized solutions to global and local sustainability challenges will generate positive social change by making available novel solutions for decentralizing and disintermediating processes. Demonstrating the viability of solutions enabling a more even distribution and sharing of information and resources which respects privacy while providing levels of transparency is one of our main objectives.

Projects

Security Token Offerings (STO)

To put it simply, a security is an economic instrument representing an actual asset. Stocks, bonds and managed property trusts are examples of securities. Traditionally, when a security is purchased, the operation is done the old fashion way, on paper. A security token performs equally in functionality; the difference is that it confirms ownership through blockchain transactions. Security tokens offer a number of financial rights to investors such as equity, profit dividends, income shares, vote casting, and access to many others investment mechanisms. In summary, a Security Token is an ICO + legal and regulatory compliance: \[SecurityToken = ICO * \sum_{compliance=1}^{n}legal_{i}+regulatory_{i}\]

Some of the major advantages include: - Compliance programmed in the token - Fungibility through trades on the blockchain - Liquidity can be provided by classical market-makers (for a cost) - Faster, less costly issuance process through standardized documents - Avaible for smaller lot-sizes than classical capital-market instruments

Please get in touch with us to discuss your project and design an economically viable, value-adding solution for your financing needs.


Pharma - Track & Trace Supply Chain

We’re currently integrating the scanning functionality so that new assets (i.e. database entries) can be generated by scanning a special QR-code or RFID chip. Those QR-codes can also be downloaded from the login panel (search at the bottom right of the login panel). RFID chips need to be supplied by us. The app / blockchain will only allow entries from chips and codes that we provide. However, here is a sample asset structure that will allow a patient to verify that his meds are authentic.

Property Value Static / Dynamic
Asset Name Some Medicine static
Maker Big Pharma Company static
Charge 13245987 static
Production Date dd.mm.yyy static
Handled by Name, Entity dynamic
Location ///pfeffer.punkten.frisch dynamic
Temperature cc° dynamic

The beauty of this simple setup is that timestamps for any updates of dynamic properties are automatically added and later used to display the history of the asset, ie you can see who changed which property when.

The last entry could be used to ensure that the package has always been handled at appropriate temperatures. A temperature sensor could automatically report this data in pre-determined intervals as updates to the blockchain asset. This is a good example of future functionality that we can implement with sufficient funding. But with the other entries alone, the model can provide full functionality: A patient would simply scan the medicine package with the scanner that is on any smartphone and if the supply chain for this package is fully and correctly documented the screen turns green and the patient can be sure to take the original medicine.


Aviation Maintenance Applicaton

Despite ongoing digitalization, aviation maintenance still runs on a good amount of paperwork. But there are more documentation requirements with FAA and EASA certifications, meaning there have to be (ideally immutable) entries for who changed what part when with which certification. Additionally, working hours for each part have to be logged so we know when it’s time to exchange it. A blockchain solution can easily take care of all of these requirements. Our prototype works without the scanning capability currently but already we can create fairly good documentation as it is. A simplified data model for aviation maintenance could look like this:

Property Value Static / Dynamic
Part Name Some Engine Part static
Maker Some Aviation Company static
Certificate / Part FAA 13579 static
QR Code ID BTRI generated QR Code static
Exchanged dd.mm.yyy static
Handled by Name, Entity dynamic
Working Hours xxx hrs dynamic

As with pharmaceutics before, the working hours could be entered into the blockchain by the part itself when it connects to the web everytime the aircraft is on the ground. Many additional fields are possible, as well. We could additionally log the hours for which the mechanic worked on the aircraft and use is to generate bills and feed into accounting processes of the maintenance provider company.


Ownership Title (Grundbuch) Applicaton

For managing property, land registry or other public records an immutable blockchain accepted and operated by public authorities could significantly reduce access time and paperwork to document the wrightful owner of an object, a piece of land or other items that are registered publically.

Property Value Static / Dynamic
Location Location Identifier static
Owner dd.mm.yyy dynamic
Handled by Notary dynamic
DD Data DD data package, encrypted dynamic

As an additional feature for real estate developers and other real estate businesses, the database entry could include encrypted due-diligence information. This could be in form of a link pointing to a service like plasma, designed to store larger files on a blockchain. Through such a feature we could lower transaction cost which are currently very high (around 10% in Germany, depending on set-up and involved parties). Each time institutionally held object changes hands each buyer conducts a fresh due-diligence hiring tax, accounting, legal and valuation consultant. If the information from the last transaction could be stored in a verifiable way and through encryption made available only to the potential buyer, we estimate a 90% reduction in due-diligence cost compared to today. This would come in handy especially for real estate developers, enabling them to shorten the sale process, obtaining a better sale price and freeing up resources for the next project sooner.


Document Management

Whenever it is required to have proof that documents are provided or altered only by authorized and properly identified persons or entities, a blockchain can come in handy. We see this applied in KYC-Systems: Banks frequently demand updated KYC (Know-your-Client) documents including Passports of C-Suite Managers, statues, registry entries, signatories etc. With multiple banking connections this can get quite painful. Providing the required docs only once and granted pull-rights to the banks asking for it can make your life considerably easier. Data structure could look like this:

Property Value Static / Dynamic
Doctype Passport static
Owner CEO static
Link to file path dynamic
Hash of file hash dynamic
last update dd.mm.yyyy dynamic
called by Bank Name dynamic

Storing only the hash of a document allows a GDPR compliant implementation as actual documents can later be deleted from a secure data storage.

The same concept can be applied for Exports as well: Exporters have to provide specific documents that accompagny the physical goods. A Blockchain can easily be configured to host digital twins of the goods that then can hold all required docs along with position, temperature and other data of the transaction. Data structrue could start like follows:

Property Value Static / Dynamic
Twin of ExportGood static
Price EUR static
ExportPapers pdf dynamic
Location GPS dynamic
Temperature 16° dynamic
Handled by port dynamic

Please get in touch with us to discuss your project and design an economically viable, value-adding technical specification for your business.


Glossary & Definitions

Some helpful definitions ot lay the groundwork and make sure we speak about the same things.

Blockchain

Distributed database in which entries are cryptographically sealed. One of the first papers on this is from Stanford in ’82. Database entries are hashed and chained together in blocks (ie saved in chunks) and hash of last block is always at start of new block.


Fiat-Money-Equivalent (FME)

A cryptocurrency coin / token that is backed by fiat money, also known as stable coin. The Fiat-Money-Equivalent is the clearer term as ‘stable coin’ was used in response to high volatility of the main cryptocurrencies. Volatility is the annualized standard-deviation of a time series. Annualize with number of obervations, ie. monthly observations \(\sqrt {12}\). For standard deviation we use the following: \[\sigma = \sqrt{\frac{\sum\limits_{i=1}^{n} \left(x_{i} - \bar{x}\right)^{2}} {n-1}}\] We don’t like the term ‘stable coin’ as it implies stability. However, depending on what asset a cryptocurrency is backed with, it takes on the volatility of this asset plus some additional credit risk from the issuer that is guaranteeing the coin. The resulting cocktail can be anything but stable, especially if real-assets and commodities like oil and metals are used to back a coin.


Usecase

A usecase in an application for specific technology, often associated with blockchain applications. At the time of writing, we see a number of payment-system applications, which rely on a utility token to operate, ie the user has to pay for each transaction. This usually renders the applications to be not very helpful for the real-world economy as many processes require fast and unrestricted database capacity to be useful.