How Bitcoin Will Disrupt Accounting and AuditJake BensonCEO/Founder of Libra

About Me

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Summary• History of Accounting

• Bitcoin is Accounting Technology

• Accounting and Audit Impact

• Beyond Currency

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1000s of years ago 100s of years ago

10s of years ago

The simplest explanation of bitcoin you’ve ever heard

Bookkeeping and taxes don’t have to be so painful

Record keeping meets the internet of things

Accounting Came Before Language

• Pre-numerical counting systems pre-dated even written language, more than 7,000 years ago

• The invention of a form of bookkeeping using clay tokens represented a huge cognitive leap for mankind.

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It even came before numbers themselves

Credits and DebitsThe most important event in accounting history is generally considered to be the dissemination of double-entry bookkeeping by Luca Pacioli in 14th century Italy.

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The basic principles we use today were invented 700 years ago

First World Problems

• Sarbanes-Oxley Act of 2002, passed after the Enron and WorldComm accounting scandals.

• The 21st century also saw the passage of the Dodd-Frank Act after the recession of 2008.

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Accounting has been outpaced by financial innovation

What is the ‘Blockchain’?

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Debit Credit

1GwM6Hi2k7BQs2qzg28adftbSk5UirVJN2 5 5 1Jr8utBdg25dxUEMrW

DrTjgSCjKckJMjwS

12Smcj8xtaaXTNnLh68joFqC2Y9FwXj84B 307 307 17b5J4b66bzmHA1inw

4LsVRcPVYkCKPP84

17b5J4b66bzmHA1inw4LsVRcPVYkCKPP84 0.0287639 0.0287639 13DakNcnm4WXoYBun

Tdo3X2YE8gzfE9uV

1L8fi8McFaPu2yj1Sw3cyqs1hDUmgkah2T 20.5 20.5 1NKaaq3q7yuVnactsMf

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It’s just a ledger

What is a Bitcoin?

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They actually don’t exist - it’s just a balance

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Why it works

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Every single transaction is audited and copied millions of times

Anatomy of a Transaction

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A message: subtract an amount from account A and add to account B

Accounting Implications

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How does this lead to a better future?

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Blockchain

Public MetaData

Personal Private Data

Tax Data

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Public Meta Data

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‘Twitter’ API for finance - realtime global insights in spending

#Movie Ticket#Home Improvement#Grocery#Auto Repair

What if we could query economic activity like we could query communication?

Triple Entry Accounting

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Self-auditing books - it’s tough to lie when everyone is watching

Debit Credit5

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Debit Credit5

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Alice Bob-5 5

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Alice’s Books Bob’s Books

Public Book

Beyond Currency

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What else can be exchanged this way?

Debit Credit1GwM6Hi2k7BQs2qzg28adftbSk5UirVJN2

5,000 USD‘IOU’ in Bank

5 BTC‘IOU’ in Coinbase

1Jr8utBdg25dxUEMrWDrTjgSCjKckJMjwS

Debit Credit1GwM6Hi2k7BQs2qzg28adftbSk5UirVJN2

Share of Tesla Stock $190 1Jr8utBdg25dxUEMrWDrTjgSCjKckJMjwS

Debts

Shares

Debit Credit1GwM6Hi2k7BQs2qzg28adftbSk5UirVJN2

Criteria X Met Contract Execution 1Jr8utBdg25dxUEMrWDrTjgSCjKckJMjwS

Contracts

The Future

Accountants and Auditors are financial Doctors. We’ve just given them penicillin.

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