This vlog episode connects Pacioli’s comments on reconciling multiple books to today’s interest in blockchain technologies.
Pacioli, in his treatise on bookkeeping written in 1494, talks about transactions with various parties, including taxes to the local government, banking transactions, consignment of goods, and transactions with long distance salesman. He notes the importance of capturing data carefully for all transactions. This become more difficult with turn-over in local government or banking personnel, when salesman travel and take good with them, or good are assigned and we depend upon someone else to record the transactions. All of these items point to problems we are still living with.
Blockchain desires to solve these bookkeeping problems that go back to Pacioli and before. I don’t believe today’s blockchain systems demonstrate enough understanding of the basics of bookkeeping to do that. It is possible to innovate in bookkeeping to solve them, but it will require improvements to bookkeeping, not ignoring it.
Oliver Wendall Holmes supposedly said: “I would not give a fig for the simplicity this side of complexity, but I would give my right arm for the simplicity on the far side of complexity.” Today’s blockchain solutions are by and large on this side of complexity (in other words simplistic), if not simply complex. The promise of blockchain will only be achieved in the simplicity on the far side of complexity.
This is Episode 120 of Conversations with Kip, the best financial system vlog there is.