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687

Or baseball cards, or tulips, or whatever.

Or baseball cards, or tulips, or whatever.

(post is archived)

[–] 0 pt

Double entry accounting is as old as the sun. The whole point is that you rob Peter to pay Paul. Peter gets an entry. Paul gets an entry. Credit Peter. Debit Paul. Those are your two entries. That's the "double" of it, the take and the give. It doesn't matter who records it. It's a zero sum game, and that's the point. It's why Revenue is a credit account (increasing with credit), because we take from Revenue to pay Cash or Accounts Receivable. If you prefer arithmetic over bookkeeping convention, you might say that Revenue normally has a negative balance. It might seem weird to keep robbing your Revenue to pay your Cash, but if you didn't then that income money would just appear magically. In double entry accounting it must always come from somewhere. There must always be a Peter to rob whenever Paul gets paid.

I've seen blog posts claiming crypto is triple entry, or some new paradigm too. Complete rubbish they are.

[–] 0 pt (edited )

The core point is that the ledger is immutable. You don't have to trust Peter or Paul's version of the accounting.

Ultimately you're right, it's not "triple entry" it's just trustless accounting.

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All accounting journals are immutable in principle. That's why you can get a card refund instead of a voided transaction and consider yourself even with the store. Typically you'd want to preserve independence between time of entry and time of transaction though, so this is a lot like treating the journal as mutable from the account balance history point of view. Of course addition is commutative so if all you care about is real-time balance or inventory quantity then the order of journal operations don't matter and you don't have to rebuild account history for each new out-of-order journal entry. With crypto it's desirable to always present the immutable view so it's actually simpler than a general purpose accounting system i.e. no voided transactions and no rebuilding account history if a journal entry comes in out of order.

[–] 1 pt

All accounting journals are immutable in principle.

In practice they certainly aren't though. You have to trust whoever is recording the transactions, which is clearly a mistake in many cases given how much fraud exists.

Not having to trust that the transactions are accurate is valuable, that's the broader take away, compared to any particular definition of single/double/triple entry.