Trusted Continent

We're entering new era of human history where we'll be conducting business online. Buying/Selling, executing payments-- these are just the beginning of what will happen in coming years.

This observer believes that even when you purchase or sell things in real spaces like stores, the transaction will be posted on host computers (webledgers being one example architecture).  Devices, cash registers, and desktop computers will be connected to accounting systems that reside on internet services.

Now comes the privacy zealot, saying this is big brother and wishing to stick with paper cash... never mind that the transaction costs of physical cash are 100 times higher; and paper checks 25 times higher than digital cash or intercompany transactions posted within webledger hosts. The privacy zealot will want to keep using cash, and to block me and you from running webledgers that are 100 times cheaper. To accomplish their aims they will pass laws that restrict our freedom, basically. I see this every day.

Ironically, a webledger intrinsically provides greater anonymity than you could hope to achieve in a decentralized, geodesic architecture (sending and receiving transactions from your home). When you buy/sell, pay or receive money on the webledger, those purchases, sales and remittances come from the webledger host commingled with countless billions of other transactions. The principal conducting the business is obscured. Unauthorized sniffers can't trace the IP Packets to your ISP or home.

Remember it is more important to conceal WHO you have done business with, than the actual amount or product description. But this level of anonymity is impossible to achieve with a web browser unless you use anonymous remailers like mixmaster, or websites like Anonymizer. Then you have to trust *those*. And your privacy is anyways imperfect in other ways.

Any webledger product can be designed to achieve anonymity superior to any technology now available. For example, webledger having compiled clients (like BizTone for example, not NetLedger which is pure HTML) may provide encryption/decryption in the client which achieve storage of highly encrypted data on the webledger, inaccessible to the hosting organization or webledger operator, accessible only by the user having the encryption key.

Webledgers are one of an emerging class of internet accounting or transaction systems which *could* be implemented in a way that eliminates certain types of cheating, and thereby reach further plateaus of economic gain. For example, the typical web storefront today pays approximately 5% of gross revenue to credit card merchant services. Two components of that cost are credit card fraud, and the costs of merchandise return and other repudiation operations.

Those are the costs of privacy. Without privacy the thieves and cheaters wouldn't be able to hide their history, which is like hiding your driving record and causing everybody's car insurance premiums to be the same.

Any webledger or public transaction repository (STR) host can be configured to know the internet address of its subscriber at least temporarily. Those individuals who are permanent subscribers of hosts with reputation, and not anonymous, would achieve lower costs in the marketplace.

In other words, internet hosted accounting components such as the STR host and the webledger, begin to create large tectonic forces that will eventually split into two continents: The continent of real people, with known addresses and reputation who cannot hide, and whose transactions are not repudiable, and, the continent of people who don't want anybody to know their identities, which enables the freedom to cheat.

As these two continents drift farther apart, the higher costs of the anonymous continent will cause defections to the lower cost continent of reputation. Any use of nyms, even of long duration and trading history as we see on eBay, is really meaningless since such Nyms can be cultivated in kennels by long histories of non-real transactions, and then 'spent' in one act of cheating.

Accordingly the Anonymous continent will experience a death spiral of higher costs (similar to slums in the inner city) where all products and services will be higher priced.

Trusted Continent

There will be a certain province available on the Trusted Continent, where I want to live, where it is also impossible to cheat on taxes. Most people will roll their eyes back at this point. But any system providing absolute one-to-one correspondence between the individual and his own transactions, with complete audit trail will reach astonishingly lower costs. i.e. your whole GL will automatically file its taxes. Admin costs will be zero. Your credit will be as perfect as your collateral and you will borrow at lower rates. You will never pay any bank fees, or postage to mail your bills. If you don't understand this right now, it will be clearer in coming years.

In the real world look at Japan. When you are born, your name is written in your family register in the ward office where your identity, address and those of your family members are permanently maintained. To have a false ID is much harder than in western countries. This is one reason crime is so low in Japan. That means lower costs.

Webledgers and mechanisms such as STRs are agnostic with regard to identity and will certainly be used by millions of people to cheat on taxes.  In Asia, webledgers are being coded and hosted, which are superior architectures to U.S. webledgers. But where I'm going is lower-cost, trusted webledgers. For example, all of the more advanced Asian nations' governments will provide webledger accounts for their citizens in coming years. To you this sounds like big brother. To me, even though I'm an American, these will be the lowest-cost lifetime solution. Since I don't make much money and can't cheat on my taxes anyways without risking my accounting practice, I would like to subscribe to an honest webledger.

Webledgers enable whole new types of interactions. Like digital cash, auctions, barter, etc. these new interactions impact our basic social contract. They come roaring out of the internet and upset the whole economy and behavioral spaces.

For those who place a high priority on privacy, webledgers are a dream come true. Webledger vendors get frequent inquiries for example from high-net-worth individuals in repressive tax regimes. Some of the oldest webledger hosting firms are run inside investment company or offshore insurance domiciles. Look at Netveil for example. Or any office in Bermuda, channel islands. etc. This is nothing new.

What's new is that anybody can create an accounting and recordkeeping infrastructure on the internet, wholly outside the visibility of governments, and conduct business with an anonymous identity that could never be associated with your real identity.

There would be no lasting physical evidence outside your browser cache. Your dealings would be lost among countless billions of consumer business transactions. While it is true, a determined FBI could assemble evidence by sniffing contemporaneously, this is academic to any criminal who is already being surveilled to that extent.

I recite the above facts only to rebut any association between webledgers and 'big brother'. In fact, if Stalin took over America, LAN-Ledgers would migrate to webledgers so fast it would make your head swim.

I won't bother chewing the fat any further, on the Trusted Continent idea. Hardly anybody has really thought about it enough to be comfortable there, and it's just a distraction here on alt accounting. But someday, a broad segment of the individuals on internet will go there, in exchange for the dollar savings.

Trusted webledger communities will get the entire professional class out of their life: No Bank fees or costs. Credit and settlement are automatic. Free. No Lawyers because no disputes. No CPAs for tax. Taxes are automatic. GAAP reporting automatic. The character and timing of transactions will be agreed by arms-length exchanges, and stored consistently. This will be utopia. Impossible to cheat.

You may ask, 'who sets the rules?' --they are already set, buddy. It's called statutory and common law. The UCC for example. Very few businesses actually conduct business, or contemplate dealings, that violate the UCC, or form contracts that are unenforceable under the UCC. Reason thru this with me please. ASPs could safely neglect such customers and subscribers, being so small in number, and being small enterprises. They are not a significant market segment.

That is not to say, ASPs can afford to be anything but extreme in the protection of privacy and confidentiality. Every business has legitimate business need to keep competitors out of their accounts.

If there is one fact I wish everybody would understand, is this: With technology, you have the power to reveal *only what the other party needs to know* while concealing everything else. The classic example is purchasing liquor at the market: Today, the young adult must present their drivers license which has their entire personal profile, address, etc. NEEDLESSLY disclosing too much. Tomorrow they will insert a smart card that will tell the supermarket, only YES or NO, this guy is 21 years old.

Thus smart cards or even a national ID, might provide better, more granular control over privacy than ever before.

But I can't burn any further cycles trying to educate the whole wide world. It's too much work. I just try to inform webledger vendors of the really big opportunities in this space, to provide the tools for a Trusted Continent to evolve naturally.

A prime example is automatic reconcilation. Any webledger can achieve auto-reconciliation simply by posting courtesy copies of their Subscribers' invoices (ARs/APs) in some type of shared transaction archive, encrypted visible to those two parties who already have those docs anyway.  Read more at

Todd Boyle CPA Webledger XML Accounting