How a ‘Dual Double-Entry’ Blockchain Could Unite Digital and Physical Assets
Zenotta, which includes both the Zenotta data protocol and the Zenotta network protocol, has raised $10.7 million in its seed round to pursue solving what it calls the “data problem.”
The data problem, according to Zenotta, is simultaneously simple and complex.
Data contains two main qualities: the ability to contain information and value. That value can be derived contractually, economically, socially or legally.
Think about the ways that, for example, a land deed is essentially a collection of data that holds value because of the asset with which it’s associated. Alternatively, think of the ways that your personal data, when aggregated with millions of other people, drives value for social media companies who use it to attract advertising revenue.
“While machines can operate on information through logic and maths, they cannot preserve or describe value. This is the ‘data problem,’” said Andrew Kessler, CTO and co-founder of Zenotta.
“Zenotta converts any form of data or digital content into Smart Data – a rival and excludable digital asset that is truly unique and can be owned. This ownership gives the Smart Data value, and gives the owner the rights and control over their Smart Data asset, something that was previously unattainable.”
Zenotta has been in development since 2015 and mined its genesis block in early March 2021. There is another funding round planned for the coming months, in advance of its forthcoming initial coin offering.
The idea is to make real-world assets, not just digital currencies, tradable via blockchain.
Zenotta’s dual double-entry blockchain
The Zenotta Digital System is made up of the Zenotta Data Protocol (which converts any type of data into Smart Data) and the Zenotta Network Protocol (the Proof-of-Work, dual double-entry blockchain on which transactions are executed).
A dual double-entry blockchain is an accounting system Zenotta has built where the seller pledges to the network a real asset (a file secured by the Zenotta data protocol) and the buyer pledges some native tokens.
This is to correct what the project says are some of the failings of single-entry blockchain ledgers. Kessler points to the shortcomings of non-fungible tokens – for example, “rugpull scams in which people have changed the JPEG associated with an NFT even after purchase. All the NFT does is point to a file somewhere on the internet, which can be changed or even deleted. This is because single-entry blockchain ledgers distribute tokens over their network, not the assets themselves.
“Asset distribution happens off-chain in the ‘real world/internet,’ far beyond the reach of token-based blockchains,” said Kessler. “This allows for crypto payment to be triggered without concomitant asset distribution.”
In Zenotta’s dual double-entry blockchain ledger, if the network protocol can authenticate both halves of the trade the transaction is packaged into a block where the data asset and the tokens used to pay for the asset are exchanged between two wallets simultaneously. Kessler said if any error were to occur, the trade would roll back to the seller, who then holds onto their provably scarce file, while the buyer holds onto their token amount.
“The benefits of the dual double-entry are both for the seller and for the buyer. In traditional single-entry ledgers, the ledger favors the seller,” he said. “Furthermore, the folding of sell requests and buy requests into dual double-entries allows for programmable service levels and governance without control and pricing, the cornerstone of any capital market.”
Smart Data vs. the ‘data problem’
When thinking of most tech, analogies help. For example, according to Kessler, there is a big gap between using fingerprint evidence in a court case versus blood DNA evidence. While someone’s fingerprint may be publicly accessible, their blood is not.
“Current attempts to use hashes (file fingerprints) to link off-chain files to on-chain hashes (or any fingerprinting technology) have several technical difficulties making them undesirable,” said Kessler. “Smart data uses the idea that a file’s binary DNA both builds the file content and also identifies the file uniquely.”
This creates a stronger relationship between what’s recorded on the ledger and what’s happening in the real world, potentially allowing a synchronized off-chain world governed by on-chain parameters.
Kessler also said there are other benefits that accrue with Smart Data.
One is privacy. Existing hashes can be reverse-searched given enough computing power, meaning with enough time you could find what file exists beyond the ledger.
“Our file DNA approach guarantees that it is impossible to learn anything about the off-chain file’s DNA by studying the on-chain entry,” Kessler said. “But when the file is willingly handed over by the owner for inspection, it can be proven 100% to be the owner’s digital property and the correct file referenced by the ledger.”
A second benefit is that Smart Data signatures are modular. In standard, hash-based, data-signature schemes, the validator learns the signer’s identity, the file’s integrity and the file content (message) all at the same time – otherwise none of the above can be verified.
“The modular nature of the Smart Data signing scheme allows a recipient to establish the owner’s identity independently of the file’s content or integrity” if the owner wishes their identity to become known, said Kessler.
Same for independently establishing integrity and accessing file content.
Finally, Smart Data is for files, not just smart contracts, which Kessler refers to as applications. Bad data can track a smart contract. Kessler said the lack of a data oracle means automated smart contract deployment is hindered.
“But if the Smart Data is smart, even ‘dumb’ applications can act intelligently,” he said. “For enterprise, this is a big deal. Integrating Smart Data is as simple as setting the storage format. Enterprise’s application layer needs no upgrading or amendments.”
A statement announcing the funding round said Zenotta would continue to scale up its operations focusing on the further development and testing of its technology while also connecting with its burgeoning mining community. It will also finalize its advisory board and strategic partnerships.
Zenotta’s native token is the “zeno,” which will be used to purchase Smart Data and provide the “gas” for Smart Data contracts.
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