Chris Dcosta with Totem joins us to discuss accounting without having to carry out manual entry or reconciliation.
Totem is building a real-time global accounting ledger disrupting the accounting industry. Our goal is to replace accounting software within 10 years, and in the very near future Totem will change the way you account for everything — taking accounting off the todo list for everyone. All sales and purchases will automatically appear in your accounting records without having to carry out any manual entry or reconciliation. With Totem, you can ensure your accounts are completely accurate, compliant, and maintenance-free.
Links to Totem channels
Get free tokens by creating an identity in the Totem Live App
Gitlab Primary Code Repositories: https://gitlab.com/totem-tech
Chris D’Costa is the founder of Totem Accounting, creator and driving force behind the implementation of the peer-to-peer Live Accounting Protocol. Chris spent over 20 years designing and building enterprise accounting, business intelligence and ERP systems. In 2013, Chris and a few Bitcoin early adopters started the Belgian Bitcoin Association as an educational and policy advisory body around legal status and other issues concerning blockchain and cryptocurrencies to governmental organisations, private individuals and corporations. In 2014, Chris combined his enterprise architect background and technical blockchain expertise to research the concept of global corporate currencies with his clients which disclosed a universal disconnect in the exchange of accounting information. The result of the research is the Live Accounting Protocol used in Totem’s blockchain application, Totem Live. The Totem Live Accounting Network – a decentralized real-time peer-to-peer accounting network – is still in alpha development but has been live since April 2019. The team is anticipating a full product public mainnet launch in late 2021.
*Disclaimer. None of this information is financial advice.
The following transcript was created using artificial intelligence. There will be some grammatical errors below.
00:00:03:06 – 00:00:22:17
Richard Carthon: Hello, everyone. Welcome to another episode of Crypto Current, your host here, Richard Carthon, and today I got a guest all the way out in Brussels working on some really cool software in the accounting space, especially as it relates to Blockchain and Crypto. Very timely right now with everything going on in our space, we have a Chris, Totem Accounting. How are you doing today?
00:00:23:05 – 00:00:26:11
Chris Dcosta: Hi, I’m fine. Thanks Richard, thanks very much for inviting me along.
00:00:27:01 – 00:00:33:03
Richard Carthon: Of course man. Well, excited to learn more about you and learn more about your company. But before we dive into all that, give us some background on yourself.
00:00:34:05 – 00:00:55:14
Chris Dcosta: Okay, so I’m a software engineer. I’ve been working actually in industry for the last 20 or so years, mainly supporting finance functions in very large organizations. But for the last seven years or so, I’ve been involved with Blockchain technologies. And I’ve worked as a programmer in fact and as a Cryptocurrency advocate.
00:00:56:12 – 00:01:07:24
Richard Carthon: You first got into it about seven years ago, like how did you first hear about it and then once you heard about it, what made you like, Wow, Blockchain is the future, I need to learn this and jump all over it?
00:01:08:13 – 00:01:41:06
Chris Dcosta: Okay, that’s quite an interesting stor actually. I was working in industry in 2008, but unfortunately lost my job due to the financial crisis and I was sort of thinking about what I could do with myself at the time. I came up with an idea of trying to build an online marketplace, selling virtual items and anybody that’s ever done anything like that before Bitcoin. Obviously, back in 2008, there were some sort of particular problems that you have around transaction mechanisms and transference of ownership and that kind of thing.
00:01:42:02 – 00:02:04:06
Chris Dcosta: And I actually came across Bitcoin when I was researching solutions to this back in 2009, and it was really in the early days when it had been released. And I’ve been developing on a Mac at the time and it was only compiled to Windows, so, I kind of dismissed it as just a piece of software that was only ever going to be Windows only and, you know.
00:02:04:08 – 00:02:04:23
Richard Carthon: Right.
00:02:04:25 – 00:02:24:06
Chris Dcosta: Those kinds of things at the time you kind of ignored as a Mac user. And then gradually sort of over time, I kept reading about Bitcoin and then again in sort of 2012, there was sort of a lot of interest. I think it passed the dollar mark at that time and I thought, you know, I’m going to look into this thing because I just keep reading about it.
00:02:24:08 – 00:02:59:10
Chris Dcosta: As I started to look at the code, I suddenly realized that all of the problems that I had had with the kind of online marketplace from, you know, way back in 2008, 2009 were actually solved by Bitcoin. I didn’t realize it at the time, of course, because I didn’t look back then and then sort of the penny dropped, sort of suddenly realized that this is really an important piece of engineering. Kind of obviously fell down the rabbit hole and read everything about it and did everything that I could to get involved. So, you know, that’s where it all started for me.
00:02:59:27 – 00:03:11:04
Richard Carthon: Right. Well, it’s interesting because you said you were trying to, you know, basically sell these virtual items. Were they similar to what today are NFTs? Were you trying to do the first crack at what these were? Or, describe that.
00:03:12:08 – 00:03:40:25
Chris Dcosta: Well, no. I mean, at the time, the kind of virtual gaming world was World of Warcraft, that kind of thing and those sort of swords, whatever were being sold on eBay at the time. And, you know, it seemed fairly obvious that a marketplace should exist for something like that. I mean, obviously now, particularly with the recent sort of few months where everybody realizes that NFTs are like such an important thing in the digital space.
00:03:41:07 – 00:03:41:22
Richard Carthon: Right.
00:03:41:24 – 00:03:52:13
Chris Dcosta: You know, I wasn’t thinking anything like that. I can’t make a claim to saying, yes, I was the inventor of NFTs or anything wild like that. But no, you know, it was just an idea, if you like.
00:06:38:18 – 00:06:53:03
Richard Carthon: Yeah. Chris, so, tell us a little bit more about, you know, when you saw the transition from as you were learning more and seeing that Blockchain within it, there was a really big challenge on more of the accounting piece and how you could, you know, begin to potentially solve some of those challenges.
00:06:54:22 – 00:07:26:03
Chris Dcosta: Yeah, that’s a really interesting question, actually, and it kind of goes back to the projects that I was working on back in 2013, 2014, which is a Bitcoin point of sale, hardware service. The idea was sort of quite simply that retailers could become kind of pseudo exchanges and they would sell Bitcoin and then their customers could use Bitcoin. But unfortunately, we came across the problem with Mt. Gox, which obviously followed some terrible things.
00:07:26:05 – 00:07:26:20
Richard Carthon: Right.
00:07:26:22 – 00:07:56:05
Chris Dcosta: And the price crashed within the markets. And we realized that sort of, you know, your grandmother who had already bought Bitcoin yesterday for buying her groceries tomorrow is now 30 percent down and, you know, this was not useful for her. So, basically that kind of project came to an end and we abandoned that. It kind of got me thinking because point of sale stuff always has to be related to the accounting function. At the end of the day, that’s where all the information goes.
00:07:56:27 – 00:08:41:25
Chris Dcosta: And I spent some time to kind of think about how accountants deal with the price volatility. But as I did that, I was looking kind of more into how accounting functions under the hood. Obviously, I have the experience, I’ve been working in it for around 20 years or so, but it’s only at this point that I began to sort of challenge my understanding of what was going on. And what I saw, in fact, was that many of the accounting processes were completely broken. For example, if you take an Uber ride, Uber will send you their receipt or invoice by email to you. You then have to forward that to your accountant and they have to match it up your bank statement. And this is all kind of a very heavy manual process.
00:08:42:05 – 00:08:42:20
Richard Carthon: Right.
00:08:42:22 – 00:09:34:00
Chris Dcosta: And it exists not just sort of for lightweight things like an Uber ride, but it also exists within industry as well to a greater extent, in fact. And the financial controller spent the best part of three weeks every month doing this manual work and getting the accounts into shape and it’s very kind of labor intensive. So, the one thing that block communicating information between random parties and arriving at some kind of consensus over the truth of that information, and that’s kind of what accounting does as well. It’s about arriving at truth, it’s about trying to find whether auditors, when they look at their accounts, they’re actually trying to find problems or issues, not that people are necessarily being fraudulent, but just know that the accounts are kind of true and accurate.
00:09:34:11 – 00:10:02:08
Chris Dcosta: So, sort of when you start to think about sort of what Blockchain technology does and how it kind of arrives at that notion of truth between parties that are interacting with each other, you see that it’s very similar to what could be done with accounting. And so, that’s kind of how we arrived at this idea that we can use the Blockchain to kind of connect accounting ledgers together and arrive at some kind of real consensus and truth about what is being posted into the accounts.
00:10:02:27 – 00:10:54:15
Richard Carthon: For sure. And I mean, just like you said, one of the things that I’ve always really appreciated within the Blockchain capability is that you have a true system of truth. You have a true way to like go back and have that piece of transparency that you can go and consolidate a lot of these things. Just like you said, the main purpose of a lot of accounting is to just prove that, yes, indeed, this money went here or yes, this transaction actually occurred. And finding a way to align all of that, so you don’t have to do these extra hurdles, not only just for your accounting, but just in general. If you can streamline that process, I think you have something that is gold. And obviously, it sounds like that is something that Totem is working on So, can you kind of tell us how you’re able to take all of these different elements and then like, streamline a lot of these processes as you were just explaining them?
00:10:56:20 – 00:11:38:15
Chris Dcosta: We actually look very closely at sort of the core accounting function. And it might be overly simplistic to say that accounting has debits and credits. I’m sure kind of your listeners will have probably heard this before, but we realized that what we want to be able to do is do debits and credits for both sides of a transaction, so, in a peer-to-peer fashion. So, any two parties to a transaction and actually you could have more parties as well. You might be paying freight, for example, or you might be paying commission on something, so you could have multiple parties to a transaction.
00:11:40:08 – 00:12:52:08
Chris Dcosta: We’ve started to develop what we refer to as “Accounting Recipe’s” inside our core accounting module. And what these recipes essentially do is they sort of say what kind of transaction are you making at the moment? And these are actually the same questions that your accountant will ask you, but it’s done kind of in a programmatic way. So, we say if you’re taking an Uber ride or you’re buying some clothes in a shop, there’s a particular set of recipes that would surround those kinds of transactions. So, you’re not going to, for example, book your Uber ride to buying office furniture, the accounting ledger that’s related to buying office furniture, because you wouldn’t. So, you can predictably know in advance how those accounting entries should be made and around that you can actually build some recipes. So, that’s something that’s kind of unique to us because accounting software in general can sort of do that, but it kind of requires the client or the person using that software to configure their software themselves.
00:12:52:20 – 00:12:53:05
Richard Carthon: Right.
00:12:53:07 – 00:13:22:02
Chris Dcosta: And we see that you could, I mean, we’re an open source software, we expect that in the future what will happen is that we’re going to have people putting forward suggestions for different recipes, for different use cases or whatever. So, we can cope with many, many scenarios and many, many products, and many, many services without having to sort of customize it for each individual client, it’s kind of something that we’re really excited about.
00:13:22:04 – 00:14:02:19
Richard Carthon: Thanks for explaining that. The way I kind of visualize it in my head, so personally, I historically, I’ve used an application called Mint, in which case basically I’m able to pull in all the different transactions from different cards or whatever that I use, streamline it and then basically try to teach it to pull in transactions and attribute it to certain buckets within my budget that I use. So, it sounds like in a way that’s what you’re creating, but because people can create these recipes, a lot of when a potential new user comes on because someone else has already done it before, your program might be able to recognize it faster, and then be able to programmatically attribute it to the correct type of title.
00:14:03:18 – 00:14:17:15
Chris Dcosta: Actually, it’s more fundamental than that. So, what you’re doing, in fact, it’s the same as where all the accounting software does today, is you’re sorting out the accounts after the event happened, right?
00:14:17:17 – 00:14:18:07
Richard Carthon: Right.
00:14:18:09 – 00:15:28:27
Chris Dcosta: Right? So, you’re taking something after the bank transaction has been made, you’re taking it after the invoice has been received and you’re then trying to do something with it. So, it’s kind of post event processing, that’s what you’re doing. So, what we’re doing is we’re saying we do it at the moment of the event. So just imagine, for example, that your bank statement is just another identity on the Totem network. So, the bank gets kind of updated with the fact that the payment has been made, but so do your accounts at the same time as the payment is being made. So, you don’t need to figure out that the payment was made or by which account, or at what time. You don’t need to do that because it actually happens the moment the event takes place and we can demonstrate this directly in our application today. So we’ve shown it to a few accountants and the moment they see it, it’s like, Hang on, what’s that kind of witchcraft that you’re doing there? Because, you know, we have to do that manually. And I’m saying well, this is the nature of Blockchain, this is what we can do.
00:15:28:29 – 00:16:06:04
Richard Carthon: So, everyone listening like this is one of the largest hurdles that accountants have to do. Especially, I mean, for newbies, let me just explain it for you for a second, a lot of accounting has everything to do with going back and looking at all transactions and then trying to reconcile them, basically trying to make them right and make sure that they’re properly documented. What Chris is saying is that their program is doing it in real time, so, you’re not really having to go back and reconcile. You can go back, but you’re going to probably see that most of them have already been fixed and are just good to go. And you’re reconciling kind of in real time, which is not, correct me if I’m wrong, but that’s what it sounds like Totem is able to do.
00:16:06:22 – 00:17:07:12
Chris Dcosta: Yeah, that’s absolutely what it’s able to do. And in fact, what you might not be aware of is that large companies have problems with this because they may have sort of relationships with customers who they may send thousands of invoices or hundreds of invoices to customers. And let’s say they send hundreds of invoices to one customer, that customer may pay, let’s say, 75 percent of their outstanding invoices in one payment. And you have systems like SAP, of which I was a consultant for many, many years, so, I know this, is if SAP can’t figure out where that payment is supposed to match up against, what it does, is it just parks the entry and it requires a human to go in there and say, Oh, yeah, this probably could have been matched to this invoice, but the total amount paid means that there are some other invoices involved and I need to figure out which invoices those are. And this is a massively intensive manual process.
00:17:07:14 – 00:17:07:29
Richard Carthon: Right.
00:17:08:01 – 00:17:38:21
Chris Dcosta: And it fails all the time. But it’s common practice for companies that have regular business to settle multiple invoices. And then on the other end, you end up with this huge manual process to try and unwind what that payment was about. So, with us, it would be real time. It would be able to match every single payment against every single invoice. Even if it was a part payment on an invoice, it would still be able to match that because we have a reference inside the Blockchain itself that allows you to do that.
00:17:39:02 – 00:17:55:07
Richard Carthon: For people that are listening right now, they’re like, Wow, this sounds really cool, I either personally want to use it for my own personal finances or let’s say I’m an accountant or let’s say that I have my own company and I’m looking to use Totem, explain how that process would work.
00:17:56:11 – 00:19:09:08
Chris Dcosta: I mean, we’re still in the build phase. We’ve been building for about two and a half years now. We started in 2008. The white paper was actually written in 2016, funnily enough, but it’s taken this long to kind of get to the stage that we’re at. We’re about 75 percent through the main builds to the beta launch. If people want to kind of onboard with the project, it’s pretty simple. They just visit the link at Totem.live and they create, first of all, a chat user because we have a direct chat interface within the application itself and that allows people to communicate peer-to-peer with their vendors and customers or just anybody else that they want to interact with on the network and they create a an identity for themselves, and that’s it. There’s just two steps. They have to back up that identity as well, because it’s, of course, a Blockchain wallet and we have a step for that. But that’s it. Once they’ve got that, they’ve effectively got at the moment at the state to play a partially functioned accounting system. But that will be fully, fully implemented towards the end of this year.
00:19:10:01 – 00:19:29:22
Richard Carthon: Exciting stuff. For everyone listening, make sure you go check that out. Find ways that you can be part of this initial group, especially if to spark some curiosity and you make sure you go check it out. And definitely keep in touch and make sure you’re keeping up with them for when the full beta launches. Is there a tentative timeline on when that’s expected to launch?
00:19:30:09 – 00:19:53:21
Chris Dcosta: Well, I mean, the network actually went live in 2019 and we’re basically adding features to it all the time. We’re on a test network and we plan to launch the mainnet, as I said, later this year. But certainly people can start, you know, sort of week by week, that’s going to be available gradually as we work through the year.
00:19:54:13 – 00:20:22:17
Richard Carthon: Another question I want to kind of ask you is, as we are looking into this new year of 2021 and as we kind of head into, let’s call it the next three to five years or even decade, what are some things that have your attention within the Blockchain space in particular that you think will continue to improve that you think others should be aware of? Obviously, accounting is one of those subjects, but are there any other things that you think people should be on the lookout for?
00:20:24:17 – 00:21:01:09
Chris Dcosta: Well, I think the Polkadot ecosystem of which we’re part is really interesting, and I think it’s pretty much underrated at the moment. The main reason is that building a Blockchain within the Polkadot ecosystem is a breeze. It’s really, really smooth. Okay, you might be using Rust, which is, you know, sort of, let’s say, not so easy to learn in the first instance, but the way they’ve set up their Polkadot ecosystem, building on the substrate framework, which is the Polkadot framework, is pretty easy.
00:21:01:11 – 00:21:39:19
Chris Dcosta: So, that’s one to watch out for, because I think there are going to be a lot of teams that are starting to come to that network, really, because, you know, it doesn’t have the same kind of problems Ethereum has with gas prices and smart contracts. You can really configure your Blockchain to do literally whatever you want it to do. So, I think in the coming years, we’re going to see what I refer to as “Dedicated Functionality, Blockchains.” And that’s kind of what Totem is. But I see that sort of arriving in the next two or three years, it’s really going to start to be a thing.
00:21:39:28 – 00:22:11:18
Richard Carthon: I personally, I’ve been watching the Polkadot and its ecosystem very heavily. We’ve actually had a couple of companies that have come on our podcast that are building upon it as well. And so, definitely some really cool things in the works there. So, thanks for putting that on the horizon. If you could go back and give yourself some personal advice from everything that you’ve learned, like you could have your wealth of knowledge that you learned in Crypto and Blockchain and go tell yourself when you first got started, what are some things that you would tell yourself first?
00:22:13:02 – 00:22:30:12
Chris Dcosta: Well, that’s a tough one. Yeah, I think I’d probably tell myself to get started earlier because I think I was aware of many of these problems, but I probably sort of went down other paths before I got to this.
00:22:30:26 – 00:22:31:11
Richard Carthon: Yeah.
00:22:31:13 – 00:22:37:22
Chris Dcosta: Maybe that also helps, you know, it helps you sort of achieve what you want to do. But get started as early as possible, that’s what I would say.
00:22:37:24 – 00:23:28:01
Richard Carthon: For sure. I think that’s a good one. One of the things that we encourage all of our listeners is to take action, especially once you find something that sparks your curiosity and you want to go and pursue and learn more about. So, when you learn something, you get that good nugget, make sure you go take some action. But on that subject too man, I think like you’ve come and you’ve dropped some really good information for us. You’re obviously creating something really, really cool in Totem that people should go and check out. But, as everyone’s listening, what is something let’s call in the next one to two years, as you like, are looking over the horizon of all of Cryptocurrency and Blockchain, what do you think are some things that people should be preparing for and learning more about so that they can be ready for this basically this new age of Crypto and Blockchain?
00:23:29:03 – 00:24:24:25
Chris Dcosta: Well, it’s funny, this afternoon I was speaking to a friend of mine who’s a musician and you know, clearly, NFTs, they’re going to be massive and particularly in the artistic space. We’ve seen examples of that already. And it’s a bit difficult because being in the creative industries, many of the people there don’t really touch technology at all, so, trying to explain what an NFT is to a musician who writes their own stuff, you know, it’s quite difficult. But I think it’s our duty in this space to try and talk to as many people about this, because this is absolutely revolutionary. There’s no other way, that everything is produced digitally these days, every kind of artistic endeavor, music especially. So, that really matches very well with what you can do with NFTs. And I think that’s going to be a huge, huge market. Absolutely.
00:24:25:11 – 00:24:46:23
Richard Carthon: For sure. I agree with everyone on the same page with that. And I always want to encourage everyone to just get involved, find a way to get it done. A couple of weeks ago, I decided to just create an NFT just to see what the process was from start to finish and how much it would cost, how long it would take, how to market and try to get someone to buy it. And it’s just a good use case just so you learn.
00:24:46:25 – 00:24:47:10
Chris Dcosta: Yeah.
00:24:47:12 – 00:25:14:02
Richard Carthon: Because then once you see how to do something from start to finish, it’s easier for you to make game plans, revise and do stuff smarter and faster. Again, going back to Chris’s statement earlier of taking action sooner, just when you learn about a thing, make sure you go and you act on it. But Chris, I really do appreciate you spending some time with us. For all of our listeners, what is a final thought that you want to leave for everyone today?
00:25:16:00 – 00:25:57:16
Chris Dcosta: Well, I think, you know, from a let’s say, a marketing point of view, I would say next time you’re doing your accounts in any form whatsoever, ask yourself why on earth you’re doing it because we live in a connected world, it shouldn’t be like this. All of that effort that it’s been, we know everybody hates doing it, absolutely everybody. So, it shouldn’t be like this and we hope that our technology is going to revolutionize that. Yeah, that’s pretty much it, really. Don’t forget to join our Telegram channel, our Discord channel, obviously reach out to me or my co-founder if you have any ideas or if you want to be involved with the project for sure. And we’re open to any kind of suggestion.
00:25:57:18 – 00:26:05:20
Richard Carthon: What are some other ways that people can connect with you? So, whether it’s your website, I know you said you have your Discord and everything else. I know the website is Token Accounting.com.
00:26:10:20 – 00:26:11:05
Chris Dcosta: That’s right, yeah.
00:26:11:07 – 00:26:12:27
Richard Carthon: Are there any other ways that people can connect as well?
00:26:13:14 – 00:26:35:11
Chris Dcosta: Well, yeah, actually, as I mentioned in the app, once you’ve signed up, you can reach out to us directly. There’s a support channel and that feeds into our Discord, so, we get to see, you know, any messages that you have if you just click Totem Support. You write a message to us, how do I do this? How do I do that? We might not be able to reply immediately if we’re asleep, for example. But we will reply. Absolutely.
00:26:35:13 – 00:26:42:05
Richard Carthon: For sure. Well, Chris, thank you again so much for joining us. And for everyone listening, Stay Crypto Current.
Crypto Current will be guiding all of you who are new to the cryptocurrency world to becoming a cryptocurrency and blockchain expert. Crypto Current was founded to give access to information to everyone on current events occurring in cryptocurrency and blockchain in a digestible way. Since its creation, we have created content that impacted thousands of people through its podcast, blog, and social media.