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title: Responsible Key Managament - ARCHIVE
tags: [planning]

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title: Responsible Key Managament - ARCHIVE
tags: planning
robots: noindex, nofollow
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# Responsible Key Managament - ARCHIVE

## 1. Introduction

### 1.1 Background
In our BizDev meeting on Tuesday 2nd February we discussed the term "**responsible key management**" as, potentially, a unifying theme to our work at Blockchain Commons, in particular with respect to but not limited to the Smart Custody book and the Gordian System.

The term "key management" typically refers to the "management of cryptographic keys in a cryptosystem", and advocating for better key management, offering the tools to ensure safe and secure key management, and educating and empowering individuals and organizations to understand key management best practices are unmet needs in the broader crypto ecosystem.

### 1.2 RKM in Public Discourse

A quick cursory review of Google Search for terms like "responsible key management" + "bitcoin" or "blockchain" or "crypto" suggests very limited use of the term in conjunction with popular words, with only 1-300 search results in total for each. Furthermore, a search of Twitter for the phrase "responsible key management" yields only 5-6 results in total.

### 1.3 ...[NOTES AT THE MOMENT]

Re Joe. "Agreed. It is not the brand, but it IS the category"

Responsible Key Management is all about empowering the individual, meaning they rely less on intemediaries. Perhaps somewhere in our messaging we fit the term "empowering individuals to attain greater digital freedoms".

"Just like the necessity of voting is the price of democracy, responsible key management and storage by the user is the price of decentralization and for privacy that goes in hand with decentralization"


## 2. Organizational Structure

### 2.1 Current Issues

Blockchain Commons is currently structured as a Wyoming LLC, with the stated purpose of "creating a material positive impact on society by supporting blockchain infrastructure and the broader security industry through cryptographic research, cryptographic and privacy protocol implementations, architecture and code reviews, industry standards to improve the blockchain ecosystem by focusing on infrastructure and solutions that are decentralized, platform and blockchain neutral and vendor-independent, with a strong commitment to open source and a defensive patent strategy." 

Our website, at blockchaincommons.com describes us as "proudly a 'not-for-profit' social benefit corporation committed to open infrastructure. Our goal to create low-cost, best-quality, proven infrastructure that is decentralized, platform-neutral, blockchain-neutral, and vendor-independent. We have a strong commitment to open source and a defensive patent strategy: anyone can use or improve our tools, and no one can take them away, allowing companies and individuals to bring complete solutions to market while staying focused on what makes their own business or project unique."

These stated purposes are too broad, and specifically problematic on two levels. First at the organization level, most people understand an entity to be either for-profit or not-for-profit, and the typical heuristic is for-profits are structured as an LLC or C/S-Corp, whereas not-for-profits are set up as a 501(c ) with (3) as the most common category. Secondly, our messaging is too broad for the average reader, or even sophisticated reader/patron or potential client, to understand.

### 2.2 Legal Restructuring

Given our intention to build open source for public benefit, both stated explicting in published materials and understood via conversatons with Christopher, we are better suited to structuring our entity as a 501(c )(3), where our activities are focused on scientific (i.e. research) and educational purposes (i.e. advocacy, learning).

The steps to restructure in Wyoming involves:
1. File a "statuatory conversation" with the Wyoming Secretary of State, which includes two documents, a conversion statement and articles of incorporation (including a consent to appointment for a registered agent). Unlike most other states with conversion statutes, Wyoming does not explicitly require an LLC to prepare a written “plan of conversion.” However to receive tax-exempt status from the IRS our Articles of Incorporation must include specific language which can be found in the Wyoming Nonprofit Corporation Act, and in IRS Publication 557.
2. Apply for "Tax Exemption" from IRS via Form 1023, Application for Recognition of Exemption Under Section 501(c)(3). This application must include a detailed narrative of our proposed activities.

### 2.3 Advantages of 501(c )(3)
The advantage of this structure is we can pursue Patron led funding, where US-based donors get tax-deductions for contributing to Blockchain Commons. This is a significant incentive for US-based donors. Furthermore, we become eligble for grant funding from large foundations such as Templeton, Ford, Rockerfeller and Open Society to name a few. Each foundation has specific technology and society support areas that align with our work.

## 3. Organizational Branding

### 3.1 Issues with Blockchain Commons
Blockchain Commons is a alienating name, for two reasons. First "blockchain" is a misunderstood term with some negative associations, primarily due to unscrupulous entities and individuals exploiting the hype during the 2017 bull market. Secondly the term "commons" is misunderstood as a concept, that said it is effectively used by other platforms such as Creative Commons. 

### 3.2 Brand Repositioning
Given our stated interest in focusing on "cryptographic research" and "cryptographic and privacy protocol implementations" we have an opportunity to reposition our organization as a research-centric non-profit entity. In academia often specific groups of researchers form a "Center" or an "Institute" to further a specific field of study. These academic sub-entities can/do still monetize their efforts through consulting and other commercial spin-outs or arrangements, but at their core the activities are focused on research, standards and best practices.

### 3.3 Renaming and Domain Recommendations
If Blockchain Commons is a 501(c )(3), we can rename the entity to include the words "Center" or "Institute", and if we (and I believe we should) unify our efforts and messaging around Responsible Key Management, we have the following renaming options:
1. Center for Responsible Key Management (crkm.org $9.18 on Namecheap)
2. Institute for Responsible Key Management (irkm.org $9.18 on Namecheap)

The use of .org in our domain name signals our not-for-profit status, and our mission orientation around public benefit. Leading non profits use the .org designation, and short acronyms give us flexibility in market positioning and expands the pool of potential donors. For example, "Blockchain Commons" somewhat restricts us to work on only blockchain technologies and/or discourages certain donors who are not explicitly pro blockchain, but are pro censorship resistance and privacy, from giving to us. Whereas, an entity name CRKM, or the Center for Responsible Key Management, allows us to have a broader mandate, and enables us to adjust our messaging and fundraising to fit the objectives of a vastly broader pool of donors.

## 4. Monetization

### 4.1 Grants and Donations
501(c )(3) opens us up to a broader pool of donors, who are incentivized to give to us due to tax deductions, and also legally permits foundations to give to us. Typically large foundations are not permitted to give to for-profit corporations, even if they publicly state "not for profit". Intermediate entities like Wyoming L3Cs also cannot secure grants from foundations, or offer tax deduction on donations.

### 4.2 Permitted Income-Generating Activities

Our primary fundraising strategy as a non-profit would be to secure grants and donations, however the non-profit mandate does not preclude us from pursuing certain sustainable revenue generating activities that are aligned with our mission, namely there are two types of income generating activities for a 501(c )(3):
1. Activities conducted directly that are consistent with our exempt function and mission;
2. Activities conducted directly that are not part of the our exempt function, which may be subject to unrelated business income tax.

The IRS undertakes an "Operational Test" which permits Activity #2, as long as the entity is operated primarily for exempt purposes and an “insubstantial part” of the charity’s activities may be devoted to non-exempt purposes. Furthermore, private interests may benefit from the entity's activities if that benefit is an unavoidable incident of the entity’s otherwise proper activities.

### 4.3 Example Income-Generating Activities
Under the two categories of exempt activities Blockchain Commons fits into, Scientific and Educational, we could:
1. Undertake consulting projects that expand the pool of knowledge in the field, especially if contracts specify specific public benefit clauses. Example, our current work with Autonomy, and their support of Gordian fits into "Scientific" advancement.
2. Undertake and monetize educational activities, such as courses, certificates and so forth, for Smart Custody and Gordian, fits into "Educational" advancement.

## 5. Specific Commercial Opportunities that fit 501(c )(3) status

### 5.1 Smart Custody (Education)

Smart Custody is a book that informs and educates the reader to use "advanced cryptographic tools to improve the care, maintenance, control, and protection of digital assets." The important distinction is that it applies more broadly to key management, irrespective of whether an asset is attached. This could include identity, access tokens and many other non-asset use cases.

There is a significant opportunity to monetize the Smart Custody book into a full content, education and monetization ecosystem.

### 5.2 Gordian System (Scientific)

The Gordian Seal is discussed in another BizDev file here [[proposal] Gordian Seal](/a35lGyPoRaO7gXaams1Iww). In terms of non-profit activities, we can operate certification and accreditation programs as a 501(c )(3), including but not limited to certification of individuals such as measuring competency and ability, certification of products such as measuring product performance and security, and accreditation of entities.

First we need to establish the the "Gordian" standard, and then apply that standard through procedures such as testing and auditing.

Example seal for Autonomy could state:
"*Certified by Gordian*"

Or an alternative option is to leverage our key phrase "**responsible key management**" and create an acronymed standard like ISO 9001, ISO 20000, in our case instead of ISO it would be RKM:

Revised example seal for Autonomy could state:
"*RKM Certified - 1001 Standard*"

Here the "RKM 1001" or "RKM 2001" standards reflect a specific combination of responsible key management practices. In the Autonomy app the user could click the "Certified by" button, and a pops up would explain more details.

### 5.3 Consulting

These activties as a non profit risk being categorized by the IRS as "not part of the our exempt function, which may be subject to unrelated business income tax" however if we include a clause in our contracts stating that anything developed must be offered for public benefit, then even consulting and advisory work fits the exempt Scientific category.

For Consulting, Henk offered a number of suggestions to support this direction, including an example invoice indicating how we would bill clients:

Example invoice (not placeholder text only):

INVOICE
To: Strato Micropay, Finance Department, Address, USA

Dear -Insert Name-

This is an invoice for guidance of responsible key management. It's the (X)th installment of (y) in total.

1a. Intake and quick scan, architecture plus engineering.
1b. Result: Risk model in xls
1c. Fee in USD: 11,375-

2a. Tailoring the RKM building blocks and guided decision making
2b. Result: Responsible key management implemented
2c. Fee in USD: 24,950-

3a. Education plan and execution
3b. Result: Grades achieved
3c. Fee in USD: 16,000-

4a. Adversary exercises
4b. Result: Fire trauma - status passed, burglary follow up - status retake, inside job - status passed
4c. Fee in USD: 32,080-

Certification: status pending

**Total invoice in USD: 84,405 (eighty four thousand, four hundred and five dollars)**

Payable to:
Blockchain Commons LLC
Bank details or BTC pay

-END-

## Summary

In summary, we have the opportunity to:
1. **Change legal structure**: Reorganize to a 501(c )(3) and therefore potentially get more donations due to tax credits, and become eligble for grants from major foundations; while still being able to legally pursue income generating activities. Win-win.
2. **Change name**: Rename from Blockchain Commons to encompass our unifying term "responsible key management", with name suggestion including Center for Responsible Key Management, crkm.org.
3. **Change Seal/Standards naming**: Rename Gordian Seal to fit our unifying theme "responsible key management", by creating an acronymed standard such as RKM 1001 etc, in similar format to ISO standards.

If we pursue these 3 steps with urgency, we can hit the ground running with fundraising, PR and ongoing research.



