Bitcoin: TRIPLE ENTRY CROWD ACCOUNTING

[casascius]

I came up with the term TRIPLE ENTRY CROWD ACCOUNTING as a way to abstractly describe Bitcoin in as few words as possible.  I wanted to solicit feedback.  This term would make sense to those who are familiar with banking but not with technology.

Slightly expanded (EDIT: and revised):

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a documented and published process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one consistent transaction ledger."

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[k]

I've seen the term triple entry accounting mentioned with regards to bitcoin before and I would guess that the term has something to do with the way all transactions are recored in the blockchain (public ledger) but when I googled "triple entry accounting", the top links seem to refer to something different.

http://en.wikipedia.org/wiki/Momentum_accounting_and_triple-entry_bookkeeping

In momentum accounting, changes in balances are the recognized events. For example, an acceleration in revenue earning, such as a $1,000 per period increase of revenues from $10,000 per month to $11,000 per month, is a recordable event that would require three entries to implement.

Is there another recognised definition of triple entry accounting that I'm missing?

[casascius]

Is there another recognised definition of triple entry accounting that I'm missing?

Best I can tell, all of it is theoretical and academic and doesn't refer to any sort of actual commonplace practice.

By changing the name and putting the word "crowd" in there, it's suddenly a new term we can use however we want, as long as it's based on a triple-entry scheme (which of course Bitcoin is).

[sadpandatech]

hmm, why not 'Triple Entry Peer Accounting', or 'Triple Entry Relay Accounting'?   
The rest clicks pretty well in my mind.

[casascius]

hmm, why not 'Triple Entry Peer Accounting', or 'Triple Entry Relay Accounting'?  
The rest clicks pretty well in my mind.

The answer to that, that comes to mind, is that "crowd" conveys that the ledger is public, out there, and collectively maintained by everybody.  When you say "peer", I think of two people of the same approximate age and social status.  When you say "relay", I am thinking of relay races, or delivering messages or things.

In fact, I would almost boldly propose that the term "block chain" be renamed to "public ledger".  This would be a jargon change to use a term familiar to anyone with anything to do with banking and accounting, rather than a term that only has meaning to computer scientists.  It would encourage non-engineers to make many more useful assumptions, such as the fact that entries are only added to the end of it, and that it's available to everybody.

[k]

After a bit more googling I found this paper by Ian Grigg http://iang.org/papers/triple_entry.html which appears to be the "triple entry accounting" that is most like the bitcoin system.

Abstract: The digitally signed receipt, an innovation from financial cryptography, presents a challenge to classical double entry bookkeeping. Rather than compete, the two melded together form a stronger system. Expanding the usage of accounting into the wider domain of digital cash gives 3 local entries for each of 3 roles, the result of which I call triple entry accounting.

This system creates bullet proof accounting systems for aggressive uses and users. It not only lowers costs by delivering reliable and supported accounting, it makes much stronger governance possible in a way that positively impacts on the future needs of corporate and public accounting.

Maybe something like "public ledger accounting" or "distributed multiple entry accounting" might be better, as there are more than 3 parties in the block chain and it would avoid the confusing with the other definition of "triple entry bookkeeping" which has something to do with the momentum or change in revenues.

[sadpandatech]

hmm, why not 'Triple Entry Peer Accounting', or 'Triple Entry Relay Accounting'?  
The rest clicks pretty well in my mind.

The answer to that, that comes to mind, is that "crowd" conveys that the ledger is public, out there, and collectively maintained by everybody.  When you say "peer", I think of two people of the same approximate age and social status.  When you say "relay", I am thinking of relay races, or delivering messages or things.

  Exactly. ;p  But in my mind, 'crowd' makes me visualize random people, maybe ones I don't trust. Where as 'peer', as you say makes you think of people of the same age, social status, in my mind, people 'like me'. It makes it seem mroe trustworthy.  And with relay, thats exactly what we are doing, delivering messages to the ledger. =)

  Cheers

[casascius]

 Exactly. ;p  But in my mind, 'crowd' makes me visualize random people, maybe ones I don't trust.

That's exactly what these people are though... people you don't know, don't trust, and who aren't your peers, reliably processing your personal finances in a way you can trust more than your bank.  That's the part that should be embraced.  The whole Satoshi magic is getting the crowd to do something that crowds just don't do.  Without that, we're just another Beenz or Flooz.  There is nothing interesting about relaying (e-mail does that) or being distributed (the whole Internet is that, as is Google, as is Amazon).

That magic is what I am trying to capture.

The word "Bit" does it for us geeks - those of us who know the power of BitTorrent.  Something else must do it for the financial types.

[sadpandatech]

 Exactly. ;p  But in my mind, 'crowd' makes me visualize random people, maybe ones I don't trust.

That's exactly what these people are though... people you don't know, don't trust, and who aren't your peers, reliably processing your personal finances in a way you can trust more than your bank.  That's the part that should be embraced.  The whole Satoshi magic is getting the crowd to do something that crowds just don't do.  Without that, we're just another Beenz or Flooz.  There is nothing interesting about relaying (e-mail does that) or being distributed (the whole Internet is that, as is Google, as is Amazon).

That magic is what I am trying to capture.

The word "Bit" does it for us geeks - those of us who know the power of BitTorrent.  Something else must do it for the financial types.

  I see your point in that my offered terms don't do enough to motivate a more personalized and independent intrepretation of Bitcoin. I still think 'crowd' is not sensational enough either in that respect.

  Maybe, 'Triple Entry World Accounting', or 'Triple Entry Global Accounting', or 'Triple Entry Fiscal Accounting', or 'Triple Entry Universal Accounting'? shrug

[BTCurious]

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one transaction ledger."

Replace "magic" with "technology" and you've got my vote. I know you want to capture the magic of bitcoin, but if I were a banker, I'd stay the hell away from anything that "magically worked".

In fact, I would almost boldly propose that the term "block chain" be renamed to "public ledger".  This would be a jargon change to use a term familiar to anyone with anything to do with banking and accounting, rather than a term that only has meaning to computer scientists.  It would encourage non-engineers to make many more useful assumptions, such as the fact that entries are only added to the end of it, and that it's available to everybody.

Yes.

And as long as we're renaming anyway:
Please, please rename "mining" to "securing". As far as I can tell, people are saying "What, computers do some calculation, and then mine bitcoins out of nothing? Lol, what a joke!"
By naming it securing, or maybe "verifying", it signifies useful work being done.

[casascius]

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one transaction ledger."

Replace "magic" with "technology" and you've got my vote. I know you want to capture the magic of bitcoin, but if I were a banker, I'd stay the hell away from anything that "magically worked".

I would address this concern by calling it a magic documented process, as documented magic is more appealing than "technology".  Magic "just works" and is scary, but documented magic not only "just works", it just works for a reason.  I updated the OP just to see how it looks.

I say that because people throw around the word "technology" nowadays to mean the most trivial things.  It seems anyone who buys gadget X and puts it in place Y where it has never been before, is said to have invented a new technology.  Anyone with a soldering iron can produce technology.  Apple soared to where it's at by selling magic.

And as long as we're renaming anyway:
Please, please rename "mining" to "securing". As far as I can tell, people are saying "What, computers do some calculation, and then mine bitcoins out of nothing? Lol, what a joke!"
By naming it securing, or maybe "verifying", it signifies useful work being done.

The word that comes to mind for me to describe the process as I visualize it, is "recording", "hardening", or "memorializing" the transactions to the public ledger.  I think of it as the same thing the local County Recorder does, to make a real estate transaction permanent on public records.

[BTCurious]

Hmm, fair enough, I think that could work.

The word that comes to mind for me to describe the process as I visualize it, is "recording", "hardening", or "memorializing" the transactions to the public ledger.  I think of it as the same thing the local County Recorder does, to make a real estate transaction permanent on public records.

That all sounds like it would work. Basically anything but "mining". I hate the term "mining", and never mention it in explanations to new people.

[cypherdoc]

someone get 2112 in here.  i'm sure he'll have alot to say about this.

[cypherdoc]

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one transaction ledger."

Replace "magic" with "technology" and you've got my vote. I know you want to capture the magic of bitcoin, but if I were a banker, I'd stay the hell away from anything that "magically worked".

In fact, I would almost boldly propose that the term "block chain" be renamed to "public ledger".  This would be a jargon change to use a term familiar to anyone with anything to do with banking and accounting, rather than a term that only has meaning to computer scientists.  It would encourage non-engineers to make many more useful assumptions, such as the fact that entries are only added to the end of it, and that it's available to everybody.

Yes.

And as long as we're renaming anyway:
Please, please rename "mining" to "securing". As far as I can tell, people are saying "What, computers do some calculation, and then mine bitcoins out of nothing? Lol, what a joke!"
By naming it securing, or maybe "verifying", it signifies useful work being done.

"verifying" gets my vote.  indicates a "truth" to the matter whereas secure could indicate even a hiding of the truth.

[David M]

Is there another recognised definition of triple entry accounting that I'm missing?

This is how I explain it to people unfamiliar with accounting or computing...

a) Single entry accounting: Single transaction record
e.g I bought a loaf of bread for $1

b) Double entry accounting: Double transaction record describing input and output
e.g I bought a loaf of bread for $1.  I took the $1 from my saving account.

c) Triple entry accounting: Double transaction record WITH a validation record.
e.g I bought a loaf of bread for $1.  I took the $1 from my saving account.  The seller of the loaf of bread and I agree the transaction was legitimate and here is a signed paper saying so.

For most people, Bitcoin would have introduced them to the concept "triple entry accounting".  

To the OP, I would drop the word "crowd" and replace it with nothing.
Bitcoin has a chance to be the THE definition of triple entry.  

[jothan]

I came up with the term TRIPLE ENTRY CROWD ACCOUNTING as a way to abstractly describe Bitcoin in as few words as possible.  I wanted to solicit feedback.  This term would make sense to those who are familiar with banking but not with technology.

Slightly expanded (EDIT: and revised):

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a documented and published process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one consistent transaction ledger."

I like it. It makes obvious the fact that Bitcoin, despite being anonymous (when used correctly) is completely transparent and it keeps normal people's brains from exploding.

[becoin]

"Bitcoin is a payment network based on triple-entry crowd accounting.  A crowd of computers - run by ordinary Bitcoin users - observes the transactions, produces a single common ledger, and keeps everyone honest.  The magic that came from Bitcoin's inventor - the thread that holds the whole thing together - is a process by which the entire crowd can always agree on what transactions it observed, despite differences in timing and perspective, and even despite varying levels of honesty among participants.  Bitcoin's design ensures that no matter how big the crowd, its collective efforts always produce exactly one transaction ledger."

Replace "magic" with "technology" and you've got my vote. I know you want to capture the magic of bitcoin, but if I were a banker, I'd stay the hell away from anything that "magically worked".

In fact, I would almost boldly propose that the term "block chain" be renamed to "public ledger".  This would be a jargon change to use a term familiar to anyone with anything to do with banking and accounting, rather than a term that only has meaning to computer scientists.  It would encourage non-engineers to make many more useful assumptions, such as the fact that entries are only added to the end of it, and that it's available to everybody.

Yes.

And as long as we're renaming anyway:
Please, please rename "mining" to "securing". As far as I can tell, people are saying "What, computers do some calculation, and then mine bitcoins out of nothing? Lol, what a joke!"
By naming it securing, or maybe "verifying", it signifies useful work being done.

"verifying" gets my vote.  indicates a "truth" to the matter whereas secure could indicate even a hiding of the truth.

Why not "reconciling"? And instead of triple-entry, if it is a crowd, why not use multi-entry accounting?

[sadpandatech]

And as long as we're renaming anyway:
Please, please rename "mining" to "securing". As far as I can tell, people are saying "What, computers do some calculation, and then mine bitcoins out of nothing? Lol, what a joke!"
By naming it securing, or maybe "verifying", it signifies useful work being done.

"verifying" gets my vote.  indicates a "truth" to the matter whereas secure could indicate even a hiding of the truth.

Why not "reconciling"? And instead of triple-entry, if it is a crowd, why not use multi-entry accounting?

 +1 on the verifying change.

  I believe they would want to stick with the 'triple entry' term because it is an already reconized accounting terminology.

[casascius]

Not sure I like verifying or reconciling. These mean things that have absolutely nothing to do with what miners do.

Verifying means checking to see if something is valid.  It is sort of like asking a question and seeking either "valid" or "invalid" as an answer. For example, nodes verify digital signatures before deciding whether to relay transactions.  On the other hand, miners are competing to create a record, not competing to see if something is valid or true. Verifying in Bitcoin is a quick process, miners are doing work towards confirming, recording, logging transactions that were already valid the moment they were created.

Reconciling is a misuse of an established accounting term. The established meaning has nothing to do with what miners are doing. Reconciling is like checking to see if two sums balance and, if not, explaining why.  Miners don't do this.

[BTCurious]

I suppose we need some way of saying they are writing the ledger then… Nothing catchy springs to mind just yet though.