Corporate treasuries have had various problems as far as implementing digital assets are concerned. The single biggest problem facing corporate organizations is the transition from analog-to-digital systems as the world adopts digital assets.
Luckily, a solution to these and other corporate treasury issues has emerged.
Luke Sully and Isaac Fain, Co-Founders of Ledgermatic a corporate treasury Enterprise solution, have been able to solve the above problems in a single swoop.
Coincidentally, the duo are also the guys behind Custody Digital.
E-Crypto News reached out to both of them. Here is what they had to say.
Luke Sully Co-Founder and CEO, Ledgermatic
- Why do you think enterprise digital asset solutions fail?
There’s consistently been a focus on trading and investment activities, infrastructure, and services and not enough focus on trying to use digital assets for real business activity. The regulatory environment, both in the US and here in the EU remains dynamic and that’s sub-optimal for any major corporates looking to enter the space.
- What is Ledgermatic doing differently?
It’s the first time to natively embed digital assets into enterprise, that’s for sure. For us governance and controls over these systems have not been a technical or commercial priority – until now. Providing per asset controls over a multi-chain solution, with full transparency and audit trails is an issue we’ve worked really hard on.
- How do you guys intend to resolve the treasury gap between traditional assets and digital assets?
There will be announcements about this in due course.
- At some point in the future, digital assets are going to be the de-facto standard. Do you have some sort of in-house migration process for corporate treasuries? How would such a migration process work?
We do and that will be announced specifically in due course. Some of this change – such as CBDC’s – will happen around them, so the process of adjustment and modernise will be in some cases necessary. We are not attempting to make this a digital transformation project for every client; the point here is to provide software when they need it that integrates and works.
- What are the benefits of deploying forward technologies like Ledgermatic?
It’s the first time CFO’s and Treasurers will have the tools to manage digital assets for their business. We see the maturation process of Corporates in 3 main phases. 1; Initiate : a discovery and experimentation phase leveraging single use cases, with no balance sheet requirements. 2 Integration : more sophisticated use cases, investment strategies, financing and cash management requirements leveraging digital assets 3 – interoperability, where teams are seamlessly moving between traditional and digital asset infrastructure and services.
- Do you think corporate firms are ready for the rise of the digital treasury? Please tell us the reasons for your answer. How can corporate firms become prepared for this?
I still think that today digital assets are seen as niche finance stories, with wild claims of riches and glory! As a result, corporates are watching and waiting. However, with the advent of CBDC’s and changes in x-border payments and settlement infrastructure the future is rushing up to them faster than a year/18 months ago. There are compelling reasons to operate in and use digital assets, especially as it relates to the core competencies of treasury management; cash, liquidity and risk management and investment strategies.
- What are your thoughts on the regulation of digital assets by world governments?
Evolving, incomplete, some well considered, other less so. I’m supportive of regulation to police and enforce if its thoughful, proportionate and doesn’t prohibit innovation. As a community we are yet to land on a better way to protect privacy and stamp out anonymity. The 2 are often confused. If you assume privacy is the same as anonymity, then that’s no good. Corporations and financial institutions using digital assets should have the same reasonable expectation of privacy as they would operating in the markets today. I think the Travel Rule tries to equalise data collection activities as if both systems were the same, but the reality is we need a new standard for much of this activity and not tie new activity to old standards.
- What’s the liquidity unlocking process in Ledgermatic like?
The technology will enable this capability and we are excited by the vast number of untapped use cases CFO and Treasury teams can apply it to. We believe there’s going to be real measurable business value enterprise can extract using Ledgermatic.
- How did you get involved with digital assets?
I was introduced to Bitcoin in 2013 when I worked at PwC in Chicago. I immediately saw a new paradigm appearing in the tech and worked within PwC to form the first working group on the topic. I then moved to IBM Security to immerse myself in this more before starting Ledgermatic.
- Are there any features that you guys are thinking of adding to the current Ledgermatic framework? Care to spill the beans?
Not yet, sorry!
- How does Ledgermatic work with the IBM Cloud Hyper-Protect? How secure are corporate digital assets?
IBM is a supportive partner with us on the journey. Confidential Computing from IBM’s gives us maximum security along with fully regulated infrastructure to satisfy the most stringent requirements globally.
Isaac Fain, Co-Founder and CTO Ledgermatic
- What are chain agnostic digital assets? How do they work?
Our security and governance model, CKC (Confidential Key Construction), is a chain agnostic algorithm. Neither CDG nor Ledgermatic has claimed to have a chain-agnostic digital asset, which would imply a portable asset of some kind.Bitcoin Foundation Chairman Brock Pierce Talks to E-Crypto News
2. What is the central technology behind chain-agnostic digital assets?
Same answer as #1; we’ve not made this specific claim.
3. Is the emergence of chain-agnostic digital assets the end of distributed ledger technologies (DLTs)? Could there be a hybrid model between the two?
Interoperability between ledgers is a hot area of current research and experimentation in the field. Projects like Cosmos, Polkadot, and Algorand’s Co-Chain concept are the best path forward to reaching a technical solution for trustless movement of application state between networks with independent sets of consensus actors.
4. How does Peer2graph work? Is Zero-Trust networking architecture the future of computing? Please tell us the reasons for your answer.
Peer2Graph is an authentication and authorization layer that leverages asymmetric-key signatures to permit interoperability of P2P nodes (the peer) and centralized server applications in the client/server model (the graph). Blending these two architectures allows an application to securely take advantage of permissioned blockchain networks in a way that enables the utilization of standard security patterns such as LDAP and IAM, while adhering to the emerging network standards like Zero Trust.
The reality today for corporate enterprise computing is that it is increasingly difficult to secure IPv4 based network perimeters maintained by firewalls between clients, employees, and hybrid cloud datacenters. Strong authentication and session management between peers on a distributed network are a way to mitigate and prevent breaches by malware and data exfiltration on an application’s network.
5. How did you get involved with computer science? Are you one of those child prodigies that were programming since they were ten, or did your love for digital systems come much later?
Like so many others during the time, I dropped out of school as a physics undergrad to work in dot-coms in the mid 90’s. After discovering Kernighan and Ritchie’s book on Ansi C about the same time, I’ve simply had the good fortune to be surrounded by immensely talented people to continuously learn from.
6. How did you get involved with digital assets? What do you think the future holds for digital assets?
I’ve had a keen interest in distributed programming since the late 90’s. Digital privacy and cryptocurrencies followed from that interest through to the release of the Bitcoin whitepaper and my early experiments in running a node and CPU mining.
A decade later, I believe that the future of digital assets is the future of the entire global financial system. As Andreeson said years ago, software is still eating the world, and I think currencies and capital just happen to be the current subjects in the hearts and minds of computer and software engineers.
As entrepreneurs and as advocates for digital assets we have to orient our work partially through the eye of governments trying to balance the benefit of the technology against its potential for misuse. I believe that it’s imperative that we work together in the context of the law to preserve both a level playing field and our individual rights to digital based property and privacy, of which I am a staunch advocate.
7. How do you think Ledgermatic will change the world?
I think Ledgermatic is the best possible blend of tech and services that can allow corporations and institutions to embrace some of the ideals behind cryptocurrencies while maintaining an adherence to financial regulations that are necessary to safely trade and conduct business across borders.
8. Enterprise Digital Asset systems haven’t experienced mass adoption like the native technologies we have come to know, like, and trust. Why do you think enterprise blockchain systems are not gaining adoption?
The real strength of permissioned networks haven’t yet come to fruition simply because the dominant model is client-server cloud architecture that relies on tight integrations via REST based APIs. Eventually this matrix of tightly integrated vertical services will fail to scale and become rigid and expensive to maintain. Blockchain technology has an enormous potential to serve as a base layer that binds heterogeneous computing services from a common security and consensus layer, but that mode of thinking has yet to really penetrate enterprise development.
9. What incentives do you guys at Ledgermatic intend to give enterprise clients to adopt the technology?
Specific programs that drive adoption will be announced in the near future.
10. Where do you see the digital asset space in ten years?
My hope is that we don’t simply co-opt today’s financial infrastructure on the blockchain, but that the systems are meaningfully upgraded to help businesses and entrepreneurs to become the champions for addressing broader issues of our time like climate change, food and drug safety, and inequality.
11. How can organizations future-proof their treasuries with Ledgermatic?
There has been a gap in the market for looking at financial controls in the traditional sense and building a solution for handling digital asset keys that is compliant and compatible with financial standards like GAAP and IFRS. Our goal isn’t to enable speculative betting in the market, but to embed secure digital asset infrastructure as the core of the business.
12. Exactly how does the confidential key construction (CKC) algorithm work to secure corporate digital assets?
Backed by a pool of geographically distributed nodes on IBM Hyper Protect, CKC encodes governance and controls against asset keys. It is a secret-share type algorithm similar in some respects to MPC, but goes further to encode governance roles, restrictions, and encumbrances for the asset directly against the secret-share and the cryptographic identity of the participant.
CKC will be covered in detail in a future white paper.