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Stratumn’s Vision : Building Trust Networks for Economies

Each one of us at Stratumn holds the belief that blockchain technology offers potential solutions to the predicaments of our economic and financial system. But it’s part of the bigger picture that we see on the horizon.

Our VisionAaron Burden

On June 8th 2017, we were thrilled to announce the news of our Series A round. Lead by OpenCNP and joined by Nasdaq Ventures, Digital Currency Group and Otium ventures, the 7m euros of capital will help us take Stratumn and our Proof of Process Technology to the next level.

Looking back, Stratumn’s story started in 2011.

It was in April of that year that I felt the first glimmer of something special when I discovered the Bitcoin Whitepaper. Bitcoin offered a radically new vision of trust, one that does not require us to trust any institution, rather we can just trust the underlying technology itself.

Like many others, I was completely taken by it and decided to dedicate my professional work to help design, develop and promote the technology. I also had a feeling that there was something else in store. I didn’t know it at the time, but the simple message, trust the process, kept coming back to eventually connect everything together.

Fast-forward to the summer of 2015: I had spent the last four years supporting Bitcoin, through building apps, speaking at conferences, authoring a book, and more. That summer, my close friend Stephan and I developed working prototypes of what would later become Proof of Process.

With this beginning in mind, I would like to tell you the story and vision behind Stratumn, a jeune pousse in France, poised to re-invent how ideas, goods and services move amongst people and companies in our hyper-connected world.

The Trust Machine

Bitcoin is an incredible piece of technology. It introduced a decentralized data structure known as “the blockchain” to secure the transfer of a digital cash between two parties who don't necessarily trust each other. This worked without the need of intervention from a third party to mediate the lack of trust!

Since January 3rd, 2009, “it just worked” and today a single bitcoin is traded for around $2500. An amazing feat for a breakthrough technology published by the unknown developer, Satoshi Nakamoto.

In 2014, a young developer named Vitalik Buterin launched Ethereum, which used the blockchain technology to securely establish a world computer allowing anyone to execute code that could be independently verified. The code came in the form of “smart contracts”, potentially self-verifying and self-enforcing protocols to govern the movement of digital cash or any other kind of asset. Extending Bitcoin’s promise, escrows, crowd-funding contracts and more are now possible without intermediaries on the Ethereum blockchain.

As the blockchain began disrupting existing business models, it sparked an explosion of new startups racing to build distributed ledgers and smart contracts. In 2015, over $450m was invested in Bitcoin and Blockchain startups. An impressive sum for a nascent technology.

Stratumn

Stephan and I viewed the blockchain from a different angle. We were interested in how blockchain technology could be used to secure any process, not just asset exchanges, between people who do not necessarily trust each other. It’s a subtle difference, but a key one, and one that leads us to a completely different way of thinking about the blockchain. In fact, this view would ultimately lead to the utilization of blockchains as a supporting tool rather than the core technology.

Sebastien Couture, the co-founder of Epicenter Bitcoin, and Francois Dorleans both saw the potential and joined us to help launch Stratumn in the Fall of 2015. We marched forward, secured our first seed round at the beginning of 2016 with Otium Ventures, and immediately went to work.

The year 2016 was an expansive year for us. We quickly grew the company to 10 employees and delivered a dozen projects built on our process security framework called Proof of Process or PoP in short. By working closely with our partners that year we quickly validated the usefulness of Proof of Process, enabling us to close our next round of financing.

Everything Is a Process

When we look around us, everything from the natural world to the business world exists as a process. Stock trades, insurance claims, energy production and consumption, and manufacturing supply chains are all managed as processes. This continuous movement of ideas, goods and services enables the global economy and provides the material basis for our modern civilization.

However, today, trust in our critical processes are threatened by their overwhelming complexities, and often exacerbated by a lack of transparency, traceability and accountability. As The Economist noted in an analysis of the 2008 financial crisis:

With half a decade’s hindsight, it is clear the crisis had multiple causes. The most obvious are the financiers themselves, who claimed to have found a way to banish risk when in fact they had simply lost track of it. Central bankers and other regulators also bear the blame, for it was they who tolerated this folly.

Where blockchains offer a new vision of trust, one that is liberated from the constraints of over dependence on opaque institutions, our process security framework, PoP, completes that vision by establishing processes that can be trusted on its own merits. In order to enable these merits, PoP leverages advanced cryptography to ensure processes come with proofs that can be verified by partners, regulators and customers.

Technology from the Industrial Revolution

Each one of us at Stratumn holds the belief that, yes, blockchain technology offers potential solutions to the predicaments of our economic and financial system. But it’s part of the bigger picture that we see on the horizon.

Coming from the age of the industrial revolution, one can easily see how we have modeled our information technology around centralization. During the industrial revolution, we found efficiencies by centralizing the production of goods. Henry Ford proved the utility of this approach with the modern-day production line.

In this paradigm, the information behind the production line is also centralized.

If we look back a hundred years, information was written on paper cards, organized in boxes and locked in rooms. Offices full of people were needed to maintain these paper based systems. As a result, the one who held the key to the lock maintained a disproportionate amount of power. This information centralization is, of course, subject to corruption, intentional and otherwise, in addition to the high costs of maintenance and synchronization.

As we developed increasingly powerful technologies through the second world war, journeyed to the moon, and entered the internet age, one area that resisted evolution was the centralization of information. Instead of paper cards, we developed centralized database systems to store and sort information. Computer servers and data centers replaced the boxes which held the cards, and firewalls, secured with usernames and passwords, replaced the physical keys which fit the locks.

With roots firmly in the paradigm of centralization, our technology is still designed in this old fashion despite being part of an era of Internet-enabled hyper-connectivity. We still give our trust to large companies like Google and Facebook to protect our private and sensitive information. We rely on centralized networks to move our money and protect our health records. We hold the belief that our regulators will maintain an honest playing field for the banks and investment firms who drive our modern economy.

Needless to say, it’s time for a change.

Technology to Secure a Hyper-Connected World

Blockchain is an emerging type of network technology that leverages consensus to secure the integrity behind information. Bitcoin leveraged the power of these networks to secure a purely digital cash without centralized control.

Instead of a centralized key holder, blockchains are secured with many keys, at least as many as there are users. In fact, every participant may hold tens or hundreds of keys. While it may be possible to hack/compromise one key, it’s virtually impossible to compromise every key!

In the past, when information was organized and locked in rooms, it was very tedious to move around. In fact, archived information was often literally locked away. In today’s world, this approach is not sufficient for a fast moving and dynamic economy. Digital information locked away in silos makes it hard to claim sovereignty over one’s own data.

Blockchains have the ability to keep the integrity of the information in perfect synchronization across a decentralized network. This is BIG. With all of the Bitcoin holders and Ethereum smart contracts, thousands and even millions of people are in a continuous flow of synchronization. This is exactly what a modern economy needs to move forward.

But we’re still missing a key ingredient in blockchains. Privacy.

To achieve a new global economic network, all users must have the right to privacy in the system where they would be able to selectively disclose parts of their confidential information. In the past, the key-holder controlled access to this information, and with or without he, could share that information for their own purposes. In a hyper-connected world, this is a dangerous situation that can be easily exploited.

While dealing with the issue of internet privacy, one must first be concerned with not only the technological implications such as damaged property, corrupted files, and the like, but also with the potential for implications on their real lives. One such implication, which is rather commonly viewed as being one of the most daunting fears risks of the Internet, is the potential for identity theft.
- Wikipedia Internet privacy.

With increased computing power we are now realizing new and powerful cryptographic techniques that allow us to shield our private and confidential information. One such class of techniques are Zero Knowledge Proofs, or ZKP.

ZKP enables someone to prove a secret to someone else without revealing that information. For example, Alice would like to enter an auction but needs to prove to Bob she has more than a million dollars in assets. She can construct a type of cryptographic proof that Bob can rely upon, without learning Alice’s actual balance, and without contacting Alice’s bank.

In summary, blockchain networks and advanced cryptography are key technologies we can use to build a new type of economic network that meets the needs of our hyper-connected world.

Technology for Network Economies

At the heart of society are networks that allow members to trust their interactions with each other. These interactions are never in the form of discrete exchanges, it’s always a process.

All industries, from marketplaces to supply chains, involve activities and partnerships that can be represented as processes operating in specialized networks. In our ever connected world, these give rise to an emerging model of economics that is beyond the silos and the security risks of industrial economies. This is the era of network economies.

By securing these critical processes in networks of trust, we can be the catalyst for a robust economics of the future. With this purpose in mind, our Proof of Process (PoP) protocol is designed to enable anyone to prove the integrity behind every step of a process to every other actor.

By just securing the answer to a simple question with every new step of a process, “who did what, when, in which order (where) and for what reason (why)”, we can ensure processes are trusted based on this new vision of trust.

This means the who, what, when, where and why are all captured in a single cryptographic proof to represent the actors, the data, the time, the order of the step and the legal reasoning behind every single action in the network.

Proof of Process Technology is the first technology stack built to implement this new type of network. Leveraging PoP, any organization can build the backbone to connect and secure their various information systems - establishing the canonical source of truth - for all stakeholders of the network, including customers, partners and regulators.

Thus, PoP liberates people and organizations to trust the millions of processes that connect our world uniting them under its field.

Expanding the Field

To launch the Proof of Process protocols out into the world, Stratumn develops and maintains The Indigo Framework. This framework enables developers to design, build and deploy Proof of Process Networks.

Central to these networks are the stakeholders. Initiated through a bootstrapping ceremony, the stakeholders guard the keys needed to form consensus around a valid state of the network. The stakeholders are also responsible for accepting which processes are allowed on the network. Each process, when enrolled, has a specific format that must be followed by each participant.

The Indigo Framework contains all the tools and components that developers can use today to build these networks.

The Road Ahead

The Proof of Process Technology stack has many applications in a wide range of industries. With our strategic partners and investors, Stratumn is working to bring this new technology to capital markets, insurance, energy and manufacturing supply chains.

We sincerely would like to thank CNP Assurances, NASDAQ, Digital Currency Group, Otium Ventures, Allianz, Bureau Veritas, Thales and Bouygues Immobilier for all their help and support as we move forward towards the vision with the mantra “Trust the Process.”