Can you imagine what would have happened when a 47 years old accounting researcher, Yuji Ijiri challenged the double entry accounting system in 1982? The system being followed for years was challenged and was in question. He demonstrated that double-entry bookkeeping is not an absolute system defying extensions but is logically extendible to triple-entry bookkeeping including a set of accounts called "force" in its third axis. This was followed by the biggest invention done in last 500 years, the concept of Triple-entry booking which was invented in 1989 by Yuri. But, the irony is that the biggest invention still remains unknown and very less explored by the world. You may wonder how that is possible in today's internet world, but that is it remained up to the death of Yuri Ijiri in 2017.
Why Triple Entry Accounting is so amazing?
To understand this, we need to go back to the basic accounting history and its concepts. You would agree that without accounting, no trade, no economics or no commerce is feasible. You can’t even imagine the world without accounting being there. It existed from years since the introduction of Single entry books dated back to Sumerian age, 5000 years ago. The two well-known accounting systems breakthroughs are Single Entry Accounting system which was followed by Double Entry Accounting System in the early 14th Century. As the world opened up with the expeditions across the globe by European countries, single Entry accounting system showed many lapses and was considered not the perfect the system. Thus, the Double entry system was evolved to rescue the pitfalls using the Single Entry Accounting System. With the several version of double entry systems coming up, by the start of 15th Century, the double-entry system was standardized by Franciscan friar which became the standard double entry books to be used around the global tradesmen. To date, we still use this system be it use of ledgers, accounting books or software like QuickBooks, Tally or any existing taxation system from Income Tax, VAT to GST. Going forward we need to go away with the limitation of the existing double entry system and look forward to adopt the Triple Entry System.
As per Yuri, The Triple entry system extends the existing two dimension of bookkeeping: Wealth and Income into a third dimension under the same measurement unit, namely dollars. The concept introduces the "Momentum Accounting" under a related but different unit: Dollars per time period. E.g. dollars per month, dollars per day or dollars per year. With the integration of over time dimension, the double entry system is being extended to Triple Entry Accounting. Concluding, "force accounting" is introduced as the third layer of the accounting system to explain factors responsible for earnings rate changes.
The concept came to the fore with the coming of Cryptography and its impact on accounting. Ian Grigg, famous cryptographer, was the first to come out with the practical importance of use of Triple accounting system in 2005. Some people may argue that Yuri's concept is different from the Ian Grigg's concept of Triple accounting system, but the fact remains the introduction of third dimension to the double entry was first conceptualized by the Japanese researcher. No one can deny that. From 2005 to 2007, enough of work was done on the concept of alternative currency, Bitcoin. Yes, Bitcoin is what which brought the invention done in 1989 and its importance to the fore. No one ever bothered to read about the Triple accounting system before that since 1989. No one ever imagined the practical importance of the Triple accounting system. Blockchains are the one which clearly explain the Triple Accounting system, which is based on the concept of extensions to double entry system as proposed by Yuri. Block chains are purely based on the Triple Accounting system and blockchains are the future as is the Triple Accounting System.
Why Triple Entry is biggest invention?
Dr. Eric Melse, who was awarded the doctoral degree for his work ‘Accounting for Trends. Relevance, explanatory and predictive power of the framework of triple-entry bookkeeping and momentum accounting of Yuji Ijiri’, worked on the framework of momentum accounting as developed by the Japanese-American scientist, Yuji Ijiri and proved it to be useful practically.
No one, since the invention of double entry system in last 500 years, ever thought of this concept. From creating block chains, effective and real-time voting E2E and stock market, every sphere will move over to block chains, which is going to use the Triple Accounting System. As the cryptography with the block chains will flourish, it will force the business stakeholders to move to Triple Entry bookkeeping. The Triple accounting system comes up with extending the double entry in addition to the wealth and income entries.
Triple entry system and Banking
You can consider any debit from an account and credit to another account, like double ledger accounting. However, there is one more entry, a cryptographic signature which accompanies this transaction, and the verification of that signature is performed by Blockchain. So, this third entry of cryptographic signature accounts for the triple entry books.
With the adoption of concept in Bitcoin world, the foremost to follow will be the banks which have already moved to online financial transactions. The verification and validation of the transaction using the cryptographic signature will make the transaction more secure and this will be the third entry to double entry books making it the Triple entry system.
R3 Corda’s Blockchain inspired DLT product is crafted for Finance industry and automate payment processes. R3 was first adopted by Barclay bank and now supported by 100+ world leader banks and financial agencies so far. R3 Corda is open source and soon to be integrated to Hyper ledger.
Ian Grigg is considered to be originator of cryptography, but Yuri made a breakthrough way back in 1982. The world today may not have heard of his contribution but it remains the fact that this Japanese researcher is father of Triple entry system. In fact, Triple accounting system is biggest invention in last 500 years.