From double-entry to block chain “three-type” accounts, why do banks have to chain up

The bank relies on the books and the block chain is essentially the books. However, there is a fundamental difference between this book and the book. Today ' s banks are faced with choices, as was the case with newspapers/magazine, to embrace the Internet as a new Internet medium or to adhere to paper-based media until few people subscribe. This trend was further reinforced by the arrival of the currency of stability。

On the face of it, we can see that many banks are beginning to use encryption, and if at the bottom of the logic, why would encrypted books eventually replace bank accounts? The accounting method is involved。

traditional banks mainly use double-counting, while block chains introduce three-style bookkeeping. the double-entry system, which originated in italy in the middle ages, is a common accounting basis for most countries worldwide. it requires each operation, such as deposits, loans, transfers, to be recorded simultaneously in at least two related accounts in an equal amount to ensure that each transaction is verified in both directions. for example, one party is “ the borrower (debit) ” the related “ the lender (credit) ” this ensures asset = liability + equity, achieves balance and facilitates audit。

When you deposit $1,000 into the bank, the bank records: $1,000 in cash; $1,000 in customer deposits (subcategory of liabilities). However, traditional double-entry accounts rely on independent accounting by the parties, and there is a risk of tampering with and misalignment of accounts, such as a person ' s money in a bank account, which is essentially a figure in the bank account book. In theory, banks can modify this figure, and one can only trust the bank ' s brand/third-party audit/regulation, etc., that is to say, the bank does not act badly and the third party can audit and regulate. For example, the 2001 Enron scandal, using double-entry loopholes to forge accounts, led to bankruptcy。

When it comes to double bookkeeping, is there a single bookkeeping? Indeed, a single bookkeeping is a flow of accounts, and only a single record. By contrast, double-counting is more rigorous。

so, what's the difference between the three-style billing of the block chain? the three-style bookkeeping is based on double-entry accounts, with the addition of “ subheading 3 ” and a shared, non-molecable record. this record can now be achieved through a chain of blocks without trust and without intermediaries. that's the advantage of distributed books。

This third item is often a securely signed receipt or time stamp block, which, in order not to be tampered with, needs to be validated by a consensus network, such as the BTC PoW mechanism and the OS mechanism of the Taicong. This approach addresses the issue of trust in double-entry accounts, which cannot be tampered with and does not raise the issue of incorrect reconciliations. The so-called three-style, i.e., through the block chain as &ldquao; third party &rdquao; arbitration as credible and auditable transactions。

For example, in the nature of the Taifah, which is a distributed book, each transaction is recorded in both the sender and the recipient accounts (similar to borrowing/lending in a double-entry account) and there is a web consensus mechanism (PoS mechanism) to generate non-removable “ third heading ” and time stamp blocks for encrypted signatures。

in essence, the block creates an immutable record, which is more efficient than double-counting and does not require intermediaries to manage it in an integrated manner and to reduce audit work. in big white, it's a double copy of each; three copies plus one & ldquo; smart lockbox & rdquo; automatic stamp, full web witness. it can't be tampered with, check the seconds。

ULTIMATELY, THE BANK CHAIN, IN TERMS OF ITS BOTTOM LOGIC, IS A CHANGE IN ITS DOUBLE BOOKKEEPING TO A THREE-STYLE BOOKKEEPING. ONCE PRIVACY ISSUES (ZK CERTIFICATION), COMPLIANCE ISSUES (KYC) AND SO ON ARE RESOLVED, THE BANKING CHAIN CAN BE SIGNIFICANTLY MORE EFFICIENT, AND BANKS DO NOT NEED TO MAINTAIN A LARGE, OLD FINANCIAL SYSTEM TO MOVE TO A BRAND-NEW, UNIMPAIRED ENCRYPTION CHAIN SYSTEM。

Embracing or marginalizing is one of the most important issues facing financial institutions such as banks in the next two decades。