Blockchain and The Account Revolution

The historical evolution of the ledger

For the past 500 years, humans have used a system of double-entry bookkeeping. If you have read Shakespeare’s play,the Merchant of Venice, you know that during the Renaissance, Italy developed into a global trading center because of its special geographical position — the eastern shore of the Mediterranean Sea. Italy has a lot of transnational, trans-continental trade with the places of the Middle East and Asia through the Mediterranean. Even today, transnational and trans-continental trade is still very complex, which needs the demand for complicated financial services. In 1594, an Italian mathematician summed up double-entry bookkeeping based on the continuous innovation on accounting method of the merchants of Venice in the Renaissance. The first modern bank was established in Venice, whose background of establishment is based on its role in global trade and the prerequisites for the creation of double-entry bookkeeping. Double-entry bookkeeping is still within its framework.

Background and features of the distributed ledger

As we all know, distributed ledger is a revolutionary and disruptive ledger, why?

Changes brought about by distributed ledger

In terms of transaction costs, the marginal cost is zero. Transaction cost theory is a subject of economics, which is the foundation of the construction of modern enterprise system. Because we need to use company (the organizational form) to internalize a certain part of the market process into the internal process of the enterprise, so as to reduce the transaction cost. So the enterprise is necessary to exist. The purpose of the existence of enterprises is that the internal cost must be lower than the market cost. If not, there is no need for enterprises to exist. But when the marginal cost is zero, do we still need companies? I guess probably not.

The Advantages of distributed ledger over the existing ledger system

First of all, blockchain accounts are very different from the existing bank account system. It no longer needs to provide personal information at the bank counter and experiences the bank’s information review when opens an account. Opening an account on a blockchain does not require anyone’s permission except a pair of public or private keys generated by an asymmetric encryption algorithm.

The relationship between blockchain and digital currency

In accounts based on distributed ledgers, the unit of account used is digital currency rather than anything else.

Characteristics of digital currency issuance

Firstly, it is a kind of private money. For instance, QQ coin can only be exchanged with legal tender. QQ coins can only be used in Tencent’s applications. It cannot be used beyond Tencent. QQ coins cannot be used to buy things in shopping malls.

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Wanxiang Blockchain

Wanxiang Blockchain

Wanxiang Blockchain is dedicated to building an open platform and offering resources to develop blockchain and promote its application in different industries.