Bitcoin or central banks? Craig Wright on triple entry accounting

At the CoinGeek Zurich conference, financial cryptographer Ian Grigg along with others discussed Bitcoin SV’s capabilities concerning accounting. Following the panel discussion, it became obvious that the BSV blockchain can enhance efficiency for accounting in general. 

Grigg said:

(…) if I lose my record, and you are the only one with the record, you can now play against me, you can change it, so you need a third party to stamp and hold that record… but then blockchain came along, Bitcoin came along, and it was literally a triple entry system.

So far, so good. 

But Grigg also said that instead of using Bitcoin as the third-party point, one could use central banks:

Triple entry itself does not require blockchain. We just require some sense of an honest central player, a trusted third party (…). There are many trusted players out there. For example, if we were a set of banks and we wanted to do triple entry we could quite happily use the central bank as the third party. Because we have to trust the central bank, we have no choice.

Now this is interesting. Grigg’s example even works beyond the “set of banks” scenario. It basically boils down to the question of whether to trust central banks or not.

What kind of money are we going to use in the future? A free market money, or a CBDC?

Concerning accounting, the same question seems to occur in the long run: who is the trusted third party being used in triple entry accounting of the future? Bitcoin or central banks? 

MetaNet ICU’s Joel Dalais and myself had the chance to discuss Bitcoin and triple entry accounting with Dr. Craig Wright. 

I passed on the question concerning central banks in triple entry accounting to Dr. Wright:

“There is no robustness in central banks, that’s the whole problem here. In 1991, the concept of time chains first came out, which mirrors the concept of PCI (…). You get to a point where the lowest common denominator sets what happens. So if the weakest part of the central bank gets compromised, everyone is compromised,” said Dr. Wright.

So central banks are an attack vector. But Bitcoin is, too. Which one of these two would be harder to attack though? Not sure. Bitcoin is hard to attack, but so are central banks. 

“It needs to be a distributed competitive system,” said Dr. Wright. 

A distributed and competitive system. We can work with that explanation:

  • Bitcoin is a distributed system 
  • and a competitive system, 
  • central banks are competitive systems, too (central banks vs. other central banks?), 
  • but a central bank is not a distributed system (as each central bank is to be seen as a single entity)?

As Grigg said, banks have to trust central banks anyways. But why is that the case? 

Because right now, banks deal based on central bank money. Banks could deal based on any money though. Think back to banks dealing based on gold and grain—history of banking. 

The discussion with Dr. Craig Wright contains a whole lot of other Bitcoin related topics you might be interested in. Feel free to have a look at the table of contents:

01:08 Double-entry bookkeeping intro by Craig Wright

02:55 Nations needed money for wars

03:22 Gold and accounting history

08:22 Adoption speed of double-entry accounting by the rest of the world

10:22 Secrecy and information

13:00 Today’s free flow of information

15:05 Craig Wright was an accountant

16:15 Justice and bookkeeping

16:42 Triple entry accounting explained by Craig Wright

19:55 Benefits of triple ledger accounting systems such as Bitcoin SV (BSV)

21:25 Bitcoin as a triple entry ledger 

22:45 Bitcoin when the world collapses

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

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