Triple Entry Accounting:
Reducing Financial Fraud Using
presented by Daniel Winters,
MS Taxation, MBA
- Bitcoin Accounting for Businesses &
Individuals, e.g. Miners, Traders, Bitcoin ATMs
- Tax returns, and calculating Bitcoin
- Foreign Tax: U.S. companies and individuals
with international activity
Block Chain Tax & Accounting
I. Double Entry Accounting: What we have
II. Triple-Entry Accounting on Block Chain: What we need
III. Accounting & Auditing is about TRUST
IV. Double-Entry Accounting: Problems
V. Triple Entry Accounting: Solutions for the enterprise
VI. Who needs this?
VII. What companies could build Triple-Entry Systems?
Balanc3, Rootstock. Tierion, Factom, Tendermint
Data from trusted third parties: Banks, Paypal, credit cards , Bitcoin
payment processors, and the IRS (1099s, etc.)
Accounting records = mutually accepted reality
Investors trust audited financial statements
Accountant is a trusted 3rd party: Do you trust your accountant?
Consensus, in blockchain terms
Censorship resistance = Need records that can’t be altered easily.
Accounting & Auditing is about
- If adequate controls not in place, company’s ledger can be
- Employees/owners can cooperate to steal from the company.
- Accountant = trusted third party. Sometimes, accountant is a thief.
- Auditor is corrupt. People are the weak link.
2. Reconciliation process: need one ledger
- Transactions from other ledgers: bank accounts, Paypal, Bitcoin, credit
- Manual review of 3rd party data. Time consuming and expensive.
- Duplication of data
Double-Entry Accounting: Problems
The transaction IS the receipt.
Transactions recorded in a cryptographically secure block chain
Immutable records = perfect audit trail
Can’t commit fraud if transactions can’t be changed
Payment disputes: eliminated
Solutions for the enterprise
Block chain can provide:
Privacy by encryption
Transparency to authorized parties (select employees,
regulators, auditors, investors)
Privacy vs. Transparency
The Block Chain is the Bridge
Bitcoin companies could early adopters: Exchanges, payment processors,
Bitcoin ATM company
Any company which needs secure accounting records.
- Accounting transactions, Bitcoin & fiat currency
- AML/KYC data on users
- New York BitLicense & states require comprehensive data on users &
- Your business is based on the blockchain. Why not anchor your transaction
data in the blockchain?
Who needs this?
Balanc3: Exchange of Value & recordkeeping. Ethereum block chain to
create smart contract that exchanges value, using Ethers. Transaction =
receipt. Public block chain.
Factom: recordkeeping. Timestamped data hashed into the block chain.
Tierion: Recordkeeping – Anchoring data in the Bitcoin block chain.
Rootstock: Exchange of Value & recordkeeping. Sidechain of Bitcoin. Uses
Rootstock chain to create smart contract that exchanges value, paying with
Who’s building the bridge?
Blockchain receipt: anchoring data in the Bitcoin
• Scales to millions of records
• Receipts are portable
• Public blockchain
• REST API - developers
• HTML Forms - business users
• connect to 500+ apps
The Block Chain is the Bridge