Are we leaving the Middle Ages of the internet?

Just as the development of double-entry bookkeeping in the year 1500 played a part in the culmination of the Middle Ages, the discovery of blockchain technology can be described as the end of the Middle Ages of the internet.

Double entry bookkeeping sees every transaction identically recorded on both the credit and debit sides of a general ledger account – linking pages numerically and reducing the risk of errors and fraud.

In double bookkeeping, entries and their counterparts are made simultaneously, just as in blockchain, where transactions are linked via timestamps to create a form of automatic accounting.

The renaissance of the internet

The advent of double-entry bookkeeping also meant secular property could be properly recorded and captured – signaling the beginning of the Renaissance. The discovery was picked up in the Dutch Republic, and became critical to the success of the Dutch East India Company.

As private investors gained insight into their holdings and economic returns, technical innovation flourished – just as today’s blockchain technology enables the unambiguous recording of digital property transactions and makes duplicate payments impossible.

The discovery of blockchain is described in Satoshi Nakamoto’s seminal whitepaper, Bitcoin: A Peer-to-Peer Electronic Cash System, but even before its publication, cryptographer Ian Grigg elaborated on Yuji Lijri’s 2005 concept of three-dimensional (‘triple-entry’) accounting.

This type of accounting records the counterparty’s execution of the transactions as well as the credit and debit to create a complete, closed system in which audits are performed automatically.

While Nakamoto may not have known the work of Ian Grigg, it’s clear that bitcoin can offer automatic audits like this through its proof of work (PoW) mechanism, which allows participants to earn points by auditing transactions and adding corrections to the ledger.

Bitcoin as a distributed 3D accounting system

The revolutionary thing about blockchain and the cryptocurrencies derived from it, is that they do not distinguish between internal accounting and external control or monitoring. Instead they integrate the principles of decentralized PoW, registration and control into a single digital administration process.

This replicates the simultaneous action of an accountant and financial auditor – balancing the books in real time, safeguarding against fraud and ensuring both completion and certainty.

While bitcoin is not yet an accepted monetary measure of value, it can be thought of as an ultimate unit of account in three-dimensional accounting comprising a distributed ledger, blockchain and the PoW algorithm.

As solid digital money that’s impossible to counterfeit, bitcoin’s monetary integrity is high – affording the internet fraud-resistant, triple-entry bookkeeping and bringing with it the renaissance of the internet. This is both a technical revolution powering all Web3 developments, and a disruptive social revolution with the potential to redefine our economy and society.

A disruptive paradigm shift

Bitcoin is the first ever accounting system to provide absolute certainty over ledger data. It does that with third-party verification through its inflexible, highly redundant protocol and network.

From an accounting perspective, the speed of this process is incredibly significant, representing a paradigm shift from a slow, overhead-intensive regime to one that’s lightweight, user-focused and highly accessible.

Simply put, bitcoin takes apart the archaic, siloed functions of internal accounting and external auditing and combines them into a single, inseparable product.

Not every blockchain is 'automatically' absolutely reliable. That status requires the network to be sufficiently distributed and to have enough resources to support it. While these redundancy pillars are what make blockchain so reliable, not many blockchains meet their criteria.

Because today’s entrepreneurs demand no less than the most reliable accounting schemes*, it’s imperative for blockchain networks to provide absolute certainty. It seems paradoxical, then, to consider that formal fiat money is not crypto-native, and therefore does not bring the assurances of cryptocurrency.

Blockchain is here to stay…

Just as double-entry bookkeeping contributed to the end of the Middle Ages by enabling civil property to be unambiguously and immutably registered alongside ecclesiastical and noble property, blockchain has been pivotal in bringing the internet out of the Middle Ages.

Now it’s been discovered, blockchain technology will never disappear. In the same way as electricity’s pivotal discovery led to a new basis for energy transition, blockchain’s simple paves a clear path towards universal adoption and significant growth.

Combining money, accounting and third party verification in a single, software-based product is something no other package can offer. This unique accounting scheme has the features to enable intense, utility-based user guarantees such as resistance to censorship and asset seizure.

Characteristics like this make blockchains popular vehicles for storing value, with easy access thanks to their high level of digital transparency, which combines with accounting and utility-based guarantees to offer protection against political monetary regimes. Here at DigiCorp, we feel sure that this will eventually become the quality candidate for market-selected "sound money".

* Digital accounting schemes must be highly reliable for businesses. That’s why Digicorp Labs uses DigiByte – a public, open source blockchain that processes transactions much faster than Bitcoin – for its enterprise solutions. As one of the world’s longest-standing and most secure blockchains, DigiByte has the smart contract functionality to provide many potential applications.