Bitcoin: an Accounting Revolution

Building Accounting Systems, Triple-Entry, & Absolute Assurance

Bitcoin is an accounting revolution. This accounting revolution enables a monetary revolution. Another way to look at this is:

Accounting Revolution = Technological

Monetary Revolution = Social

Disruptive technologies spark social movements. If they didn’t spark social movements, then they would (by definition) not be disruptive. Facebook, YouTube, and Airbnb are all technologies that changed the way we understood and interact with friends, content creation, and travel, respectively. Bitcoin is no different in this regard, as it is an accounting technology that is in the process of transforming our understanding +usage of money.

This piece will provide a detailed discussion on Bitcoin and how it provides a simple, yet revolutionary step forward in the field of accounting. With this in mind — wrapping our heads around Bitcoin as an accounting phenomenon requires some build up. Our game plan goes as follows:

1. Brief History of Accounting + Audit

2. Historical Trends of Accounting + Audit

3. Introducing Bitcoin + Triple Entry Accounting in Depth

4. Bitcoin Accounting vs Double Entry Accounting

5. Bitcoin + Lightning vs Double Entry Accounting

6. Implications + Conclusions

1: Brief History of Accounting + Audit

Accounting and audit both have rich histories that are worthwhile exploring for purposes of our discussion. It’s important that we understand how these fields advanced over the long arc of time because this understanding will allow us to appropriately frame Bitcoin and its design. It is common to cite the cypherpunks and their compelling works as the beginning of Bitcoin’s story. However, what we will see through our historical lens is that Satoshi’s invention was thousands of years in the making. Below we will walk through each historical point / accounting advancement and attempt to concisely elaborate on its relative significance:

Counting

Before concerning ourselves over value-recording capabilities we needed the ability to communicate numbers at the most basic level. These communication building blocks included (1) signaling numbers non-verbally, (2) verbal communication of numbers, and (3) written…