All the data you need is in the blockchain is a lie
A lot of people in the beginning of 2022 told me that in blockchain, "it's all there". After working in it, I have found that to be a lie at best, and ignorance at worst.
Hello Professionally Curious One!
By the time you see this, I’ll be in Denver, CO. I have a massively new undertaking and is expected to take a lot of my time.
However, even as my time, and energy, gets allocated - I will consistently prioritize writing and sharing. I have “sacred” hours every morning in the same way I have “running hours” in the morning.
My only challenge is that I consistently allow myself to click send.
Enjoy!
Allen
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All the data you need is in the blockchain is a lie
What’s missing on the chain (from a finance pov)?
What it does not tell me, and what it does
All the data you need is in the blockchain is a lie
TL;DR: Blockchain data isn’t complete, but it does solve completeness.
What Blockchain Data Enthusiasts Get Wrong
I have read enough LinkedIn, Twitter, and News posts, sat in enough seminars, roundtables, and podcasts, to know that the general consensus in the blockchain space is that “All the data you need is in the blockchain”.
Those who parrot blockchain will try to convince others that indeed, “All the data you need is on the blockchain”.
That is woeful misconception.
The blockchain tells us what a transaction has happened (occurrence) or that it exists (existence). However, it does not tell us the rest of the story.
What’s missing on the chain?
TL;DR: No story, no context (for the finance guy)
What’s missing on the chain?
Transaction on the chain do not offer any details on:
The nature and context of the transaction. Why is this important? I basically need to know if its tax now, tax deferred, tax reducing, or not taxed at all.
The business contracts and rationale for why we entered / exited - what service, who is it for, who is the vendor billing us
In some cases, the expected reward rate (it’s shared at the beginning once.)
The domicile of where the payment is going, or coming from
This is often called “off-chain data” and it’s a huge issue for anyone running a Finance and Accounting shop at any company.
Without this off-chain data, a transaction is just that, a transaction. We can’t tell you what it means and how you can take advantage of it, only that you are probably going to get taxed for it.
Couldn’t even tell you how to reduce the tax burden either.
What it does not tell me, and what it does
TL;DR: Missing invoice metadetails; have evidence something happened though.
Blockchains does not tell you:
Context on what a transaction is for.
For example:Invoice Details
who a payment is from
What is it for
the payment details
Associated business contract
Whom I calling if I get mad
And because there’s no context, it makes hard to see if upward movements in my balance are all taxable, or some of those are deposits that I’m getting back (not taxable).
Blockchains do tell you:
A bank wire / or payment undeniably happened
What mailbox received it and when
So whenever a blockchain pundit says it’s all there, well, you can turn off your brain for the rest of what they have to say.
p.s. pricing data isn’t there so already, off the bat, it ain’t all there.