Triple Entry Bookkeeping With Bitcoin — Bitcoin Magazine

Excerpt:

Triple entry accounting is an enhancement to the traditional double entry system in which all accounting entries involving outside parties are cryptographically sealed by a third entry. These include purchases of inventory and supplies, sales, tax and utility payments and other expenses. Placed side by side, the bookkeeping entries of both parties to a given transaction are congruent. A seller books a debit to account for cash received, while a buyer books a credit for cash spent in the same transaction, but in separate sets of accounting records. This is where the blockchain comes in: rather than these entries occurring separately in independent sets of books, they occur in the form of a transfer between wallet addresses in the same distributed, public ledger, creating an interlocking system of enduring accounting records. Since the entries are distributed and cryptographically sealed, falsifying them in a credible way or destroying them to conceal activity is practically impossible.

The companies using triple entry bookkeeping would derive two immediate benefits from adoption: First, since auditors could quickly and easily verify a large portion of the most important data behind the financial statements, the cost and time necessary to conduct an audit would decline considerably. Audits would still be necessary, but auditors could spend more time on higher risk areas such as internal control. Second, the integrity of a company’s financial statements would be essentially unassailable. Revenue and expense transactions could not be falsified if they required the encrypted signature of the counterparty in order to be accepted as valid. In the case of Bitcoin, transactions only occur when wealth is transferred, so there is no incentive and considerable cost associated with spurious activity. Taken together, both of these effects would have a strong positive effect on stock prices, borrowing rates, and a variety of other fundamentals.

Full article: Triple Entry Bookkeeping With Bitcoin — Bitcoin Magazine

Advertisements

US State of Montana Invests Directly in a Bitcoin Mining Operation

Following bitcoin’s price rise to an all-time high of $3,000, the rural State of Montana Governor Steve Bullock announced a grant of $416,000 to assist Project Spokane to expand. The governor says:

“The funds will be used for purchase of equipment, machinery, furniture and software and for wage reimbursement. Project Spokane, LLC is a data center that provides blockchain security services for the bitcoin network.”

The investment accounts for nearly half of a $1.1 million fund that was made available to help businesses create jobs, train employees and expand further.

James Grunke, the president and CEO of the Missoula Economic Partnership, told a local paper that Project Spokane is on their way to “becoming North America’s largest data center. They are going to have 55,000 servers, and right now they only have 12,000. It’s pretty exciting,” he said.

The rural mountainous State of Montana

This is the first known instance of a direct government investment in a bitcoin mining operation which may signify a change in attitude while also illustrating the scale bitcoin has now reached.

The currency has tripled this year from around $1,000 at the beginning of 2017 to a high of $3,000, currently trading at around $2,700 while its market cap nears $50 billion.

Bitcoin’s current price.

With the price increase, the mining reward has also increased. The combined mining network currently received around $7 million a day, with nearly half of that coming from transaction fees.

That translates to $210 million a month or $2.5 billion a year. However, mining is a very competitive businesses. Hardware can quickly become obsolete as new hardware is added, while energy costs can be considerable.

It therefore remains unclear how this project aims to compete with far cheaper energy in China where the lower manufacturing costs allows them to produce cheaper hardware too.

But Montana is a mountainous and rural state. Moreover, some find it worrying that 80% of bitcoin mining is concentrated in China and the surrounding areas.

It’s not clear whether one of them is the State of Montana itself, but this development is interesting because miners can have significant influence over the rules of bitcoin’s protocol.

States, therefore, may become directly involved and mine themselves or support mining operations within their own jurisdiction so as to potentially have a say over the direction of bitcoin’s protocol.

Source: US State of Montana Invests Directly in a Bitcoin Mining Operation