Blockchain can record all information for future reference, but does that guarantee the information is true? No, it isn’t. Suppose you want the world to rely on one universal ledger of truth and use it for vital operations like supply chains, logistics, and accounting, how do you ensure the data on that ledger is actually valid? That’s the opening introduction from Dr. Craig S. Wright in the third and latest edition of The Bitcoin Masterclasses series, held this week in Zurich.
If you’d like to learn more, recordings of all previous workshops on The Bitcoin Masterclass series are available on CoinGeek’s YouTube channel.
“When we’re looking at data, Bitcoin doesn’t solve everything by itself. One of the biggest problems in any system is ‘garbage in, garbage out.’ This is a problem with any blockchain—if I store data on a blockchain, it isn’t suddenly correct,” Dr. Wright says.
Dr. Wright launches straight into Ian Grigg’s concept of “Triple Entry Accounting” (TEA): that is, the checks and balances of traditional double-entry accounting, but with a third-party ledger keeping an eye on everything passing through. However, even TEA doesn’t guarantee the truth by itself. Wherever and whenever data is recorded, there’s a chance for accidental mistakes or deliberate corruption.
“There weren’t any big material frauds… there were just lots of little frauds that added up to something material,” he says, giving an example from an auditing case he once worked on.
He mentions physical gold storage. Sure, you can count gold bars, but you must also be able to check whether the bars are genuine or contain the claimed gold purity. Very detailed (and often invasive or time-consuming) checks are necessary.
“Bitcoin doesn’t get rid of accountants, contrary to what many think,” Dr. Wright says.
Of course, not everything that happens in the world is electronic, meaning there are some problems technology alone can’t solve. Whatever checking systems you devise, humans will find a way to game or work around it after a time. Even laws and regulations are only effective if they’re followed (and enforced).
However, Bitcoin provides a more secure and verifiable way to track data, especially where that data may have been changed or duplicated. It also allows data to be “pseudonymized,” meaning changes are traceable to an individual actor, but the link is not necessarily visible to everyone. This allows for more detailed data to be gathered, recorded, and shared without the privacy concerns this would usually raise.
An electronic system also means building more frequent checks into the process or automating it is easier, so human complacency isn’t an issue. It’s harder for people to deliberately falsify records after being registered. Overall, it’s easier to identify where a problem has occurred.
Dr. Wright refers to TQM (total quality management) and Six Sigma as past attempts to devise systems that reduce errors in business processes. These will continue to develop as ideas and technologies improve. In the case of technologies, the hardware also becomes smaller and more affordable.
So even though the human element remains necessary in any process, Bitcoin and the blockchain can still improve data veracity by streamlining processes and making them more thorough yet efficient. This also requires a massively scaling blockchain like Bitcoin SV (BSV).
Dr. Wright sets his “students” in the Masterclass to brainstorm some of these possibilities in the following workshop session. It’s educational, thought-provoking, and worth watching The Bitcoin Masterclasses—it could prompt a potentially valuable business idea.
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