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Data Accounting

We first exchanged goods, then we used means to exchange goods, such as shells and coins. Today we use money. We have transitioned to a world where we present and exchange data to receive goods and services.

The system for accounting provided by Luca Pacioli, the double-entry accounting is the foundation of our work. We present a modern way to do double-entry bookkeeping for data.

Data accounting is the process of metering data in a standardized unit of exchange, and converting it into a form which can be exchanged to provide data symmetry between accounts.

The unit of exchange is not measured in a numeric value as found in cash systems. Data have multi-dimensional value, which means they depends on your perspective and your relationship to data. This determines how much this data-set is worth to the individual.

The standard measure of exchange is a hash, representing the state of the data. A SHA3-512 hash always has 128 characters, regardless of the size of the data it is representing.

Metering data / anchoring data in space

To meter data, we can refer to them using a digital fingerprint, i.e. their hash. This allows us to refer to the data in a consistent form. The hash has captured sufficient entropy to be unique, so it becomes a unique resource locator. This ensures that it is always deterministic to what data we relate to.

Accounting data / anchoring data to account

The second step is that the data is attributed to a specific account. This is achieved by using cryptographic signatures known as public/private key encryption. The public key acts as a unique account address. It is necessary that the accounts in use are globally unique, so there is no realistic probability of a name collision between accounts. This ensures that no data is attributed by mistake to two accounts or more.

Proof of existence / anchoring data to time

The last step to account data is the usage of a cryptographically secure clock, so we know which data were witnessed first. Data can be replicated, so the value lies within the social implications of the message within the published data. This cryptographic timestamping allows us to determine the first account to witness the data. The most secure witness-networks which provide a service for cryptographic witnessing of datasets are Bitcoin and Ethereum. The first known examples of partial data accounting were done by Surety in 1995 and OpenTimestamps in 2012.

Practical accounting

The accounting book in the data accounting age is a 'data vault' which is controlled by one or multiple accounts. This allows both personal data vaults or organizational data vaults.

A data vault is controlled by a cryptographic wallet. The vault has the objective to govern the data for the account owner who is associated with the vault.

The vault provides a capability to export and import data, so it can be exchanged between data vaults. This allows for collaboration at scale, and the usage of data as a means of exchange.

Please contribute to this article (fixing errors) by exporting it and sending it back with your improvement to community[at]inblock[dot]io.