"The Facade of Triple Entry Bookkeeping"

“With the introduction of blockchain technology which in this case is a decentralised digital ledger that stores information across a network of computers, the question arises about the role of accountancy in this since after all accountants record the transactions of a company. Yet some proponents of blockchain technology have proposed a new innovation accountancy such as triple entry bookkeeping.”

“Let’s explain the different types of bookkeeping. Accountants used to use single entry bookkeeping which kept a record of simple cashflow: When was the cash recieved and when was the cash given away. This was associated with simple, instant transactions which was recorded in the cashbook. But as new financial instruments were introduced such as assets, liabilities and equity, accountants who recorded had a desire to record this and change how they did accounting. Meaning single entry bookkeeping transformed into double entry bookkeeping to reflect the equation: Asset = Liabilities plus equity. New terms such as debit which represents assets and credits which represent liabilities and equity. The point of double entry bookkeeping was to point out how dualistic transactions are where in one account it is debited but in another account its credited but the debits and credits equal to each other otherwise there is something wrong with how the transaction was recorded or some other error which an accountant was able to examine which is unlike of single entry bookkeeping as you weren’t able to double check transactions in this manner. But triple entry bookkeeping suggest that the new entry is in the decentralised digital ledger which is difficult to overturn which represents the transaction.”

“However this triple entry bookkeeping is a facade because triple entry bookkeeping doesn’t represent a reflection of a new balancing equation or new financial instruments rather what has happened is that the triple entry is more work for auditors i.e. a new verification method which verifies the two entries rather than it being an entry which both corresponds and confirms those two entries. Also in practical terms, it doesn’t innovate, it complicates. A complication which is even more complicated as reversing this transaction means crediting the debit and debiting the credit but with blockchains, the users need to all agree to reverse it because of the emphasis of the consensus amongst the users andits is relatively more slow as well. In other words triple entry bookkeeping is merely a auditor’s wet dream.”