Reinventing Bookkeeping and Accounting (In Search of Certainty)
Joi Ito

Hey Joi.

I understand that when you describe accounting as “lossy” you’re expressing your fundamental belief that converting to a numerical value as quickly as possible is, itself, lossy.

But in addition, accounting as typically implemented is tremendously “lossy” as well. Before the industrial revolution, accountants typically worked in real-time, as Luca Pacioli said it: “Don’t go to sleep until your debits match your credits.”

But as transaction counts skyrocketed, accounting began a monthly cycle where the accountants began collecting and transforming aggregate data from various independent parties, such as the sale and warehouse teams. Even worse, accounting information is commonly unavailable between the monthly or, even worse, quarterly accounting cycles of public companies.

We again find ourselves in an age of skyrocketing transaction rates as transaction processing is automated via software. This time, however, we can use software automation to turn accounting back into continuous, real-time process.

I don’t see crypto-currencies as replacing accounting *within* an organization, though it can clearly replace the 3rd party ledgers typically maintained by banks and turn reconciliation into a continuous process as well.

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