On Prices

The upcoming API 0.0.8 release targets Global Units, Custom Units, and a new Price object that bridges them. It is forcing me to consider some difficult questions.

Amatino’s double-entry data model adopts a ‘quantum mechanics’ approach:  Transactions are the atomic units of all financial information, but they themselves are composed of the more fundamental Entry object, with which we never directly interact. This approach allows financial data to be stored as arbitrary precision numbers in their native denomination.

It also means that the data model does not inherently satisfy the double-entry accounting equation. If external constraints are not applied, it would be possible to store an unbalanced Transaction: The composing Entries may not add up to zero, and the equation would not hold.

Obviously, Amatino is designed with stringent constraints. Attempt to insert an unbalanced Transaction and the digits ‘400’ will present themselves quick smart. But what if a Transaction balance is changed after it is inserted?

How could this happen? It is a matter of relativity. Say you create a Transaction (TX) worth 1 U.S. Dollar (USD) with Entries party to two Accounts: One denominated in USD, and one denominated in Woozlewozzles (WZL). WZL being some Custom Unit you have fed to Amatino.

Perhaps TX is created on 1 Jan 2018, dated at 1 Jan 2018, and at that time, the last WZL / USD price you provided was for 31 Dec 2017, at 2 WZL = 1 USD. Amatino will eat TX and store one Entry for 1 USD, and one Entry for 2 WZL.

Now suppose that on 2 Jan 2018, you have access to new price data. You supply Amatino with a 1 Jan 2018 WZL / USD price of 1 WZL = 1 USD. Ceteris paribus, TX is now unbalanced: Attempt to retrieve TX and Amatino will compute output using the price with time closest-to-but-less-than TX time: 1 Jan 2018.

That yields a WZL entry with double the value that it had at Transaction entry. The double-entry equation is violated and the universe (presumably) implodes.

What’s the solution? The two I am working with right now are:

1. Anchors

When creating a Transaction, a client may specify some (but not all) constituent Entries as being ‘anchors’. When a new Price is inserted, Amatino looks for any Transactions with Entries party to an Account denominated in the Priced unit, with an effective time less than the next most recent Price, and greater-than-or-equal to the new Price.

Amatino then calculates the difference between the old balance and the new balance based on the new Price. That difference is distributed proportionally across any (or the only) Entry that is not marked as being an anchor.

One advantage of Anchors is that they would be compatible with future-dated Transactions with heterogeneous Global Unit denominations.

2. Blind Repair

Similarly to solution (1), Blind Repair would look for any Transactions affected by a new Price. Instead of applying the difference in balance to specially identified Entries, Amatino applies the difference to any Entry in the Priced unit.

One advantage of Blind Repair is that it does not add new complexity to the Transaction model. Anchors would require implicit or explicit decision making on every Transaction entry.

Blind Repair would not be compatible with future-dated Transactions with heterogenous Global Unit denominations. Global Unit prices are updated metronomically at ~1800 UTC each trading day. If a Transaction contained Entries party to say, USD and Euros, how would Blind Repair choose which Entries to adjust? I don’t see a way to make the process deterministic.

What to do?

Right now, I am leaning towards choosing Blind Repair. I would combine it with a new restriction: Transactions cannot be future-dated when they are denominated in heterogenous units where one of those units is a Global Unit.

It will be frustrating to be unable to conveniently future-date known upcoming or recurring Transactions with such denominations. However, I think the increased complexity of Anchors means they are not a viable alternative.

Have thoughts on a third way? Let me know in the comments!

– Hugh

 

API v0.0.5 Released – Ledger Changes

A new version of the Amatino API has been deployed to all regions. 0.0.5 contains breaking changes to the Ledger object, and is not backward compatible with 0.0.4.

  • Ledgers may now only be retrieved one at a time
  • Ledgers are now paginated in rows of 500
  • Ledgers may now be returned in order of ascending or descending transaction time
  • Ledgers now require a order_oldest_first boolean argument
  • Returned Ledger root type is now a JSON Object rather than a JSON Array
  • Returned Ledger start_time and end_time will now be the start and end of the Ledger window, rather than the earliest and latest Transaction in the Ledger
  • Ledger end_time will now default to now at UTC if supplied as null
  • Ledger start_time will now default to end_time – 1 year if supplied as null
  • Fixed a bug that could cause Amatino to return a stale cached Ledger when null had previously been provided as a Ledger start time
  • Fixed a bug that caused Transactions to be stored with incorrect times (The transaction_time field was not being properly interpreted as UTC)

All the above changes also apply identically to the RecursiveLedger object.

The Amatino API obeys the Semantic Versioning convention: Any version before 1.0.0 should be considered unstable, and breaking changes may occur at any time. Even so, I don’t want to cause breaking changes unnecessarily, and don’t take this lightly.

These changes are aimed at making Ledger objects more useful in real world applications. They are the result of experimentation during development of the upcoming Amatino Swift v0.0.5.

– Hugh

Api v0.0.4 Released – Position & Performance

A new version of the Amatino API, v0.0.4, is now live and running in all regions. 0.0.4 is backward-compatible with 0.0.3, and makes the following changes:

  • Add new ‘Position‘ object
  • Add new ‘Performance‘ object
  • Fix bug causing Trees to display negative balances in <> instead of ()
  • Fix bug causing Trees to sometimes miscalculate the balance of income or expenses accounts in non-native denominations

Position & Performance were not the features I expected to be working on this week. In fact, I had not ever thought of building them at all. Last weekend, I posted Amatino to HackerNews. Lots of great feedback flowed in.

A consistent theme was: “where are the reporting tools?” In my grand-vision, Amatino is a data layer sitting below reporting in an application stack. However, an email from a prospective customer gave me a jolt. They asked: ‘Can Amatino create a balance sheet?’

Well no, it can’t, I answered. I started to type a response about how a balance sheet is too domain-specific, not a generic enough construct, and that it could be constructed in application logic out of the base components Amatino provides. Then it hit me that I was very wrong.

Abstract it back far enough, and a balance sheet is a snapshot of the position of an entity in time. We call it various names and format it in various ways, but it is at its core a very simple way of observing asset, liability, and equity accounts.

The same appears to hold true for income statements. They are, in their most generalised form, a measurement of the performance of an entity over a period of time.

Thought of in this way, balance sheets and income statements become generic objects. They are fully compatible with Amatino’s mission as a provider of generic, jurisdiction-agnostic functions for manipulating financial data.

Armed with this new thinking, I set out to add in-built capability to produce Position and Performance objects, which may be extended by an application to produce balance sheets and income statements.

Creating these objects was, fortunately, quite painless. Most of the machinery used to build them is repurposed from the Tree production line. In particular, the ability to generate a Position or Performance in any denominating unit is lifted straight from the code that builds Trees.

Trees, Positions, and Performances are by far the most complex objects Amatino can synthesise. The algorithms that compute them make my head spin.

That’s a roundabout way of saying: There will be bugs. Positions and Performances have been integrated into the API unit-testing suite at a shallow level. It will take time to build more comprehensive testing. More testing is most especially required around the production of Positions and Performances in arbitrary denominations featuring heterogeneous underlying native units.

The most important takeaway from all this is: Thank you for your feedback. By telling me what you want, you can shape Amatino’s development.

– Hugh

API v0.0.2 Released

AKA: Data in HTTP GET request bodies! Fun for the whole family!

A new version of the Amatino API is now live. API 0.0.2 makes the following changes, all of which are backwards compatible with 0.0.1. All regions have been updated to 0.0.2.

  • Added ability to parse JSON arguments from GET URL query string
  • Removed some redundant input validation on Transaction creation

Many Amatino GET actions require JSON arguments. For example, the retrieval of a Transaction requires the supply (or explicit omission) of a denominating currency.

There is substantial debate as to whether data should ever be included in the body of GET requests. Some HTTP libraries will silently strip body data from GET requests. The big dogs say GET body data is a no-no. This hit me in the face while developing Amatino Swift 0.0.2.

Rather than engaging in the debate, the Amatino API now supports both worlds. Where Amatino requires JSON data arguments to refine a request, those arguments may now be supplied via an arguments url parameter, wherein the value supplied is URL-safe Base64 encoded JSON.

The Amatino API’s version of ‘URL-safe Base64’ is the replacement of all `+` characters with `-`, and `/` with `_``=` padding characters should be left in place.

For example, say an Amatino action requires a JSON object specifying key foo with value bar. Where in 0.0.1 the only option was to supply {"foo":"bar"} in the request body, in 0.0.2 we can include arguments=eyJmb28iOiAiYmGyIn0= in the URL query string.

This is riveting stuff, but don’t worry, Amatino’s client libraries will take care of all of it for you!