Double Entry Accounting
Since the 1500s, accounting has followed
Double-entry Accounting
where
every entry in an accounting ledger has an opposite entry in the corresponding ledger, namely, Debit and Credit.
For instance, recording a sale of $ 100 might require two entries: a debit of $ 100 in the Seller's Ledger and a credit of $100 in the Buyer's Ledger. When the Buyer makes a payment of $ 100 to the seller, the corresponding entries are a debit of $ 100 in the Buyer's Ledger and a credit of $ 100 in the seller's ledger, thus balancing ledgers of both, while reconciling the two ledgers.
The accounting equation is an error detection tool; if at any point the sum of debits for all accounts does not equal the corresponding sum of credits for all accounts, an error has occurred and thus remain unreconciled. However, satisfying the equation does not guarantee that there are no errors; the ledger may still "balance" even if the wrong ledger accounts have been debited or credited. In some cases, unreconciled transactions may be parked up in a suspense account, till it is traced, resolved and reconciled.
Triple Entry Accounting
Triple entry accounting has an enhancement over the conventional system as all the accounting entries involving outside parties that are cryptographically sealed by a third entry. These may include purchases of inventory and supplies, sales, tax and utility payments, and other expenses. The bookkeeping entries of both parties are placed beside each other to ensure that the given transaction is congruent. A seller books debit to account for cash received, and a buyer books a credit for cash spent in the same transaction, however, in separate sets of accounting records. This is where blockchain and DLTs come in: rather than these entries occurring separately in independent sets of books, they occur in the form of a transfer between individual ledgers of the two parties that reflect in the same distributed public ledger, creating an interlocking system of enduring accounting records. Since the entries are distributed and cryptographically sealed, their immutability and transparency are assured.
Aurigraph DLT Protocol
Aurigraph DLT Protocol is designed to offer Realtime Reconciliation, Audit and Track-and-Trace across value chains for Transaction related services for Enterprise and Edge computing. In doing so, Aurigraph DLT can deliver over an estimated 30% reduction in Operational Expenses for Large Enterprises by eliminating expensive Accounting, Administrative and Audit expenses, and effort across value chains, unlocking 4-7% of cash flow and thereby, increasing profits. When large volume of transactions needs to be managed across enterprises, blockchain and centralized platforms fall short on scalability, throughput, and security, exposing enterprises to downtime and data risk. Further, Reconciliation, Settlement and Audit take additional resources to clear transactions stuck in suspense accounts, resulting in delays and revenue loss.
The protocol offers great value proposition in Enterprise use cases such as Decentralized Identities, Clearing houses, marketplaces, Reconciliation and Track-and-Trace applications in Finance and Supply Chain.
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Based on Yuji Ijjri’s paper on Triple Entry systems, Cornell University, 1981-89
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Need At least five active nodes to randomly elect a Notary in under 300 ms
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Each Tokenized Transaction is homomorphically encrypted, digitally signed and transmitted as compiled data over secure channel.
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Notary will Match/Reconcile transaction data, send for RAFT based consensus within the network before updating shared ledger
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Upstream/downstream Track-and-Trace of transactions supported
