Skip to content
This repository has been archived by the owner on Aug 18, 2020. It is now read-only.

Commit

Permalink
update the why
Browse files Browse the repository at this point in the history
  • Loading branch information
Chris Gough committed Jul 31, 2016
1 parent ff1232f commit 6365746
Showing 1 changed file with 35 additions and 23 deletions.
58 changes: 35 additions & 23 deletions docs/why.rst
Original file line number Diff line number Diff line change
@@ -1,33 +1,45 @@
Using blockchains to eliminate trust from eInvoicing gateways
=============================================================
Modern weapons for an ancient problem
=====================================

This stuff is in our repo here https://github.com/monkeypants/slays_the_bridge_trolls
The title was supposed to be **Remove the need for third party trust from automated invoicing processing using blockchain ledgers to capture gateway communications**. It just wouldn't fit on the menu, sorry.

Two things that are so hot right now:
* eInvoicing, because of potential national productivity benefits
* blockchains, because society stopped implicitly trusting banks
You can find our Hack code in the repo here: https://github.com/monkeypants/slays_the_bridge_trolls

Relevant public data / APIs
* ABR, reliable list of all Australian businesses
* simulated OIDC Identity Provider for authenticating Australian Businesses (and providing consent-based authorisation) that leverages existing Commonwealth capability
**Digital technologies create a unique opportunity for Australian business efficiency, international competitiveness and innovation:**

The national productivity benefits promised by a national eInvoicing system come from:
* reducing buyer and seller costs associated with invoice processing
* improving accountability and counter-party trust
* new digital oportunities for value-creation
E-Invoicing is topical because of proven national productivity benefits that could be secured. The Billentis 2015 study commissioned by the Treasury Department, conservatively estimates a productivity saving of circa $3bn in business to government trading. Our team estimates approximately 2bn invoices are exchanged between businesses in Australia each year and that 85% require manual handling. Automation could potentially provide up to $12bn per year benefits, based on a successful, national scale implementation of e-invoicing. In addition we estimated the addressable invoice transaction value at circa $4trillion, translating to an innovation opportunity to industry from releasing $600bn of locked away cash flow from the supply chain.

The problems with existing <todo: refs> eInvoicing standards is that they rely on a network of implicitly trusted gateways, which rely on secrecy and paperwork to provide permiter security.
Blockchain distributed ledgers are also topical currently. The technology is proven by Bitcoin as an effective alternative to expensive and cumbersome third party process curating for trust purposes, typically provided by banks. Several new blockchain ledgers have developed separate from bitcoin including Hyper ledger and Etherium. The proposition for these distributed ledger platforms is to provide an immutable and fraud free record capability to parties where trust is an issue. The team members have separately developed similar hypothesis prior to GovHack that Blockchain technology could provide a valuable new basis for trade. Currently our view is that the chaotic and paper heavy approach to completion of B2B transactions is rife for innovation and disruption. Automating invoice processing between trading parties, intercepting the machine generated messages and document states, storing these in an immutable block chain, effectively takes junk information and turns into financial grade information.

We believe the fundamental value of eInvoicing is the liquidity it provides,
The role of Government data and APIs
------------------------------------
ABR is the most comprehensive source of all Australian business identities available. ID verification, location and electronic trading capability are the key pillars of electronic invoicing. The authoritative ABR data is the key to building a national, commercial grade interoperability e-invoicing framework therefore.

This axiom leads to a set of principles that can maximise the national productivity an eInvoicing scheme can achieve:
* maximise liquidity by pushing trust and sophistocation to the edge of the network
* bridge-trolls are bad; avoid situations that maximise the value of the traffic to the network, seek situations that **maximise the value of the network to the traffic**
We also would like to have utilized the Vanguard metadata registry. Vanguard is anauthorization and authentication service for Business to Government transactions, administered by Department of Industry and Innovation. If you are an Australian registered business you are entitled to an ‘AusKey’ credential that will enable identity authorisation to Government via Vanguard; that could be extended to any business to business transaction. We have created a mash up in elastic search in our hack instead to simulate the use of such a meta data register. Our solution simulates an OIDC Identity Provider for authenticating Australian Businesses (and providing consent-based authorisation) that leverages existing Commonwealth capability in Vanguard.


The national productivity benefits promised by a national eInvoicing system
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The benefits are significant to successfully automating invoice processing between trading parties. At a national level productivity gains we estimate could be as high as $12bn. Harder to quantify are the innovation and international competitive advantage benefits. However the types of benefits we expect include:


* Reducing buyer and seller costs associated with invoice processing
* Improve accountability and counter-party trust
* Access fast repeatable cash flow solutions at an acceptable cost.

FSI’s can loan profitably against invoices and at scale due to ‘straight through’ business loan processing:

* Improved international competitiveness by reducing trade friction.

According the Billentis 2015 report on e-invoicing, ‘The vast majority of industrialized European countries passed through the unstructured bottom-up development in phase one, followed by a more structured process in phase two. The semi-structured process is often initiated by open-minded E-Invoicing service providers. They define on a voluntary basis some rules for an improved interoperability between their platforms. They also build online information platforms and push the visibility of the topic E-Invoicing with the aim of pushing market development. Although big progress has already been made, is it almost always necessary to have the public sector on board for a fully structured and strong uptake of the market. However, the usage of E-Invoicing remains voluntary for all stakeholders. With this structured approach, the market adoption rate after a decade is typically 20-30%.’

Currently in Australia the bottom-up method is prevalent resulting is a network of implicitly trusted gateways, which are closed rely on proprietary standards to provide security and have a cost. The team concludes that we can evolve the approach through a peer-to-per model supported by government and using government trusted data to authenticate identity and location. Ultimately we believe this will result in new and fundamental value creation for industry through e-invoicing by:

* Maximizing liquidity by pushing trust and sophistication to the edge of the network
* Reducing the cost by making an open interoperability standard and free. A situation designed to maximise the traffic to the network, **seek situations that maximise the volume and hence value of the network to the traffic**

This is why we intend to demonstrate key elements of a working eInvoicing system that:
* links the identity of Australian businesses back to a trusted source, even in a social media context
* replacees complex infrastructure with a simple transport layer using cryprographic protocols
* usees blockchain ledger to make gateways accountable for preventing collusion,
* shows how a smart eInvoicing protocol design can recude the cost of finance to Australian businesses, more than doubling the projected national productivity dividend currently anticipated by eInvoicing proponents.

On the way, we will demonstrate how the magic sword of mistrust can slay rent-seeking bridge-trolls, and how Australian businesses could use cryptographic protocls and the blockchain to control the flow of private information across a public, open data network.
* replaces the existing complex infrastructure with a simple transport layer using cryptographic protocols
* deploy blockchain ledgers to make gateways accountable for preventing collusion,
* shows how a smart e-invoicing protocol design can reduce the cost of finance to Australian businesses, more than doubling the projected national productivity dividend currently anticipated by e-invoicing proponents.

0 comments on commit 6365746

Please sign in to comment.