Blockchain Gap: Posting Process

We’ve discussed the blockchain gaps of liquidity management, double entry accounting, and reporting integration.  This week’s episode discusses posting processes.

The purpose of posting processes is almost forgotten in today’s world of ubiquitous computing.  But they are still used in nearly every major business process–every ledger–to state a position as of a point in time.

All analytical processes begin with a balance, with a position.  “What are sales to date?” “How much do we have in uncollected accounts?” “What is the current backlog?” All of these question are asking for an accumulation of business events as of a point in time: business events like sales, payments, and production.

Blockchain focuses on processing these individual business events, but a real ledger not only does that, but also shows the results of those accumulated business events at any point in time.

How does it do this? Through a posting process. Could it be done another way? Yes, as I noted in the “Big Idea” episode, we could accumulate the business events to produce positions as of any point of time, with the added benefit of eliminating all reconciliations (of which blockchain’s focus on settlement is only one particular kind).  The downside is that with each passing period we consume increased computing resources, and for some types of reports (like a balance sheet) the trend never ends.  My white paper explains these concepts more clearly.

Posting processes–the periodically making of balances–allows us to tune our compute requirements to the problem we can afford to solve. Efficiency of computing is not something blockchain is very good at, and the lack of posting processes is a major reason for that.

This is Episode 145 conversation with Kip, the best Financial Systems Vlog there is. Literally learn more–about ledgers and financial systems–at FinancialSystemsEducation.com.

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