...by Daniel Szego
"Simplicity is the ultimate sophistication."
Leonardo da Vinci

Sunday, August 19, 2018

Opening business processes via triple entry accounting and blockchain

Blockchain and triple entry accounting makes it possible to create business processes that are easier to audit or verify. Let we imagine for example the following use-case. A company creates a balance about the activities of the company at the end of the year, and based on that result pays dividend to the stock holders. However accounting only at the end of the year might be not so reliable and offers a lot of place for misuse. However, the process can be more transparent if we register the result of the company on the blockchain on a daily basis, like the costs and revenue, or some relevant business related information. Although there is the possibility for misuse and gaming in such a situation as well, however it is much more difficult. 

Certainly, no company would like that such business related information is visible on the blockchain on a daily basis for the competitors. However what might be done is to use a kind of a proof of existence system and for example registering the hash of the relevant information on the blockchain on a daily basis. At the end of the years, daily information related to the hashes can be published which makes the yearly performance of the company more reliable. Another solution might be to use some kind of a more advance cryptographic scheme, like zero knowledge proofs or functional encryption.