3FOOD

Third Industrial Revolution Consulting Group
completely dedicated to the task of attacking the Blockchain in order to even have a chance at
changing recent records. The older a record is, the more computing power it would take to
change. This is a level of records integrity never before possible for digital systems -- quite
probably for anything ever produced in the analog or paper worlds, either. What’s more -- and
importantly for Luxembourg’s purposes -- it can be harnessed by those same legacy systems.
Every critical existing database can be given this level of security in its past records by having
administrators periodically create a SHA256 hash of their past state, and embedding that into
the Blockchain. This process, which allows anyone to later compare the original set of data to
this reduced hash format and prove a match to ascertain its integrity, is called anchoring.
Whenever a past record doesn’t reconcile with the anchor, it constitutes indisputable proof of
tampering. It is far more superior audit tool than any of the human-dependent tools that the
big accounting firms use.
We strongly suggest that the government of Luxemburg pursue anchoring solutions to improve
the integrity of all financial and government record-keeping systems. Currently, transaction fees
on the Blockchain are around $0.07 per transaction. For the cost of $0.07 per day, the records
of a firm or agency could be made completely immutable during the daily close. This has
significant implications for financial accounting as it almost eliminates the prospect of
bookkeeping fraud and makes the task of auditors far more comprehensive, efficient and less
expensive.
One public database that Luxembourg could subject to blockchain anchoring is its registry of
property titles and liens. This would potentially reduce disputes and thus lower transaction
costs within a real estate market that, as mentioned, has prohibitively high entry costs. Another
is the patents registry. Auditability and accountability to the recording of IP could help to
differentiate the Luxembourg Intellectual Property Office with the objective of attracting
international patent filings and the startups that generate them.
One jurisdiction that is already applying blockchain-based strategies to enhance transparency
around public records is the U.S. State of Delaware. 262 Given that Delaware, like Luxembourg, is
responsible for a large amount of corporate registration and licensing data due to the high
number of incorporations based there, it presents a leading-edge example that bears studying.
Delaware is placing public archives into a distributed ledger setting and exploring the prospect
of doing the same for company registration data such as records of directors and other legal
matters. And as an extension of this auditability feature, which can be enhanced for other uses
of the Blockchain, the state is also creating a new class of distributed ledger share for
262 Vigna, P. “Delaware Considers Using Blockchain Technology,” May 1, 2016, The Wall Street Journal,
http://www.wsj.com/articles/delaware-considers-using-blockchain-technology-1462145802
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