Distributed Non-Ledger Technologies: Blockchain Lacks What Is Needed For Financial Records
Why Blockchain Is Not a Ledger, And Never Was and How to Address the Accounting Failures of Blockchain Systems
In my previous article as part of the collaboration with The Securities Services Advisory Group (TSSAG), I talked about Smart Contracts and Data Oracles and why our current approach to blockchain and tokenization must fail if we expect to replace traditional finance and make it better through smart contracts and blockchain as they are currently conceptualised.
There is a structural problem that remains unrecognised which is the reason for saying so.
Our definitions of core symbolic structures (ledger, money, law) are false or incoherent. Blockchain, AI, and modern governance inherit this incoherence by confusing form with function, signal with noise, and truth with appearance. Each claim is internally testable and not a question of opinion and no appeal to authority is needed. The truth condition for symbolic systems is the coherent reconstruction of meaning from form. Without that, there is no law and no ledger in blockchain. Saying blockchain is just a ledger is wrong: it is not a ledger.
This article explains why that is so and why this is self-evident to be true. And more importantly, what are the implications of this.
How often have you heard that blockchain is a form of a ledger that maintains transactional records.
I wrote about this issue before that blockchain technology like Ethereum is narrower in functionality than traditional ledgers and performs operations an audit might question (assuming a bank were to use blockchain specifically as a ledger).
"The functional scope of a blockchain closely mirrors that of a traditional database." Not.
That was in January. A few things have changed that allow me to restate this more formally and precisely. The same issue I observed in our conventional—but flawed—understanding of money is also distorting our understanding of what a ledger is.
This applies across the board: I cannot find a single book or text that correctly describes what a ledger is, functionally.
Under these conditions, the ability to create a functional ledger is essentially a random outcome. If that is the case, then what we call software development or product management in this context does not qualify as such — it is unstructured gambling. This is true for crypto and traditional banking.
As far as money is concerned, I showed that it isn't a "thing" with intrinsic value or properties (like a coin or note), but a spatiotemporal coordination mechanism—a workaround for the impossibility of simultaneity in economic exchange. Yet most economic definitions still reduce it to forms (commodity, fiat, digital) or system specific but not system agnostic functions (medium of exchange, store of value), which distorts our understanding of what money actually is and how it operates structurally. This, in turn, leads us to draw the wrong conclusions and make flawed decisions.
“The function” refers to an essential or defining purpose of something in an abstract or system-agnostic way. For example, the function of a ledger is to record and reconcile structured information over time, regardless of whether it’s digital, financial, or liturgical.
“A function in a context” — which refers to a role or usage within a specific system. For example, in fiat money systems, the function of money as a “medium of exchange” is system-specific, not universally true.
This distinction matters because confusing the functional role within a particular system with the fundamental nature of the thing across all systems is a category error. That’s how we misdescribe money, law, ledgers — and even thinking itself.
So the common structural mistake across domains is this:
We confuse function with form. Form is specific to the system in which something operates. But form and function are not identical.
"Ledger" comes from liegen/liggen/leggen (German.Dutch/Old English) i.e. to lie down and thus invoking staying intentionally.
The idea of a ledger was a diary of a journey. This means it has a few mandatory components to qualify as a ledger. It has a beginning and an end. That are two points in spacetime. And it has events of what happened between that.
The word ledger first appears in Middle English referring to the breviary, a book which contains all the liturgical texts required throughout the day. The liturgy as a ledger tracks the journey throughout the day and the events that happen in the morning pray or the evening prayer. The ultimate destination of redemption or salvation is a different journey and is recorded in a different ledger that cannot be written by humans.
Hakluyt's collection of the early voyages, travels, and discoveries, of the English nation is earliest description we have from 1553. During a voyage to China it was required that all “skilful persons in writing” take note of important observations (important to the journey) each day (spacetime), which would be collated once a week “into a common ledger, to remain of record for the company”, after a process of “good debatement [and] deliberation” where the individual notes disagree (Berg, C., Davidson, S., & Potts, J. (2018). Ledgers. Institutions & Transition Economics: Macroeconomic Issues eJournal. https://doi.org/10.2139/ssrn.3157421.)
This was the first decentralised ledger with consensus mechanism. But what we have today in blockchain is not at the quality of what these people managed to put together in 1553. I will explain why that is in a second.
Funnily enough, this is how machines including LLMs relate to the meaning of symbols. In this case, there was an error: the digitization of a 16th-century book from England mistakenly identified a German book from 1887 about the solar system. Digitized by Google.
Full text of "Hakluyt's collection of the early voyages, travels, and discoveries, of the English nation"
See other formats
DIE
FORTSCHRITTE
DER PHYSIK ...
Digitized by Google Optical character recognition (OCR) produces faulty results
→ e.g. “Temperator sn” instead of “Temperatur zu”, “dampibtrahl” instead of “Dampfstrahl”
Language recognition fails:
The text is clearly German, but the metadata lists it as part of an English historical work.
Content validation? None.
No person or system has checked whether what was digitized actually matches the claimed original in terms of meaning.
What Google has done here is digitize analog noise, not digital information.
Digital information:
Is structured, verifiable, and semantically recoverable
Contains clear relationships between form and meaning
Can be reliably reconstructed by a reader or machine
What Google produced:
An analog artifact of a scanning process — blurry characters, OCR glitches, mangled syntax
No reliable signal telling you “this means that” except that our language has structure that partly mitigates the problem
Google used digital tools to record the image of a book — not to preserve its content as symbolic expression. But symbols are not pictures. A symbol only functions when its structure supports the reconstruction of meaning. What Google created is not a digital library; it’s a photo gallery stripped of functional coherence. It is not useless — but it is unreliable. Functionally, it is equivalent to an LLM hallucinating content: appearances without guarantees.
This is a simple but effective reminder:
Meaning is always reconstructed but identical to the symbolic record.
Symbols do not contain meaning — they refer to meaning.
Meaning is inferred by the reader, not embedded by the writer.
Therefore, the structure of the record must guide reconstruction.
If a ledger (or law, or contract, or judgment) says “X” and means one thing this time, and another thing next time — without signalling the change — then the ledger ceases to function like any symbolic communication.
A financial ledger requires more:
Each event is an arithmetic operator that gets summed over the journey the ledger records.
A credit is added to the value of the beginning and thus increases the value of the destination by the same amount (the closing balance).
Each T-account for a given period is a ledger because of its arithmetic structure — a structure that serves as a control, not to assert that every statement reflects reality directly, but to confirm that the journey described has concluded coherently.
And this claim can be verified with absolute confidence.
It is absolutely true that the ledger is correct —
because the ledger claims only to reflect a relative process,
and it fulfills that claim.
Financial accounting uses multiples and connects them coherently by expressing economic transformation, measured entirely in terms of cost incurred vs. revenue received.
In other words, each event has:
a counterpart in the ledger in which it is recorded, and
another ledger that records the same event but in a different journey.
Two logical journeys, describing the same event from different perspectives,
are financial records.
There is only ever one event in the real world:
a purchase or sale.
But this event is always the result of two logical journeys:
the cost of making what is sold
the revenue at which it is sold
The term “double-entry” is thus misleading. Every proper ledger already requires duality: every event must point to the journey of which it is a part of— a debit or credit, contributing to a summation.
This was actually what this was about from the beginning. The first book on Double-entry Book-keeping is said to be written by Medieval Italian merchant Luca Pacioli. The actual title of the accounting section of Pacioli’s Summa:
"Particularis de Computis et Scripturis" (Details of Calculation and Writing)
1494 – Fra Luca Pacioli
This title reveals something very important, which is always overlooked: "Computis et Scripturis" means “Computation” and “Writing.” Math and English are symbolic systems but operate very differently. Accounting uses both coherently.
By the way: Far refers to "Frate Minore" (Minorite), part of the Order of Friars Minor, founded by St. Francis of Assisi. “Fra” is the Italian form of “Frater” — “brother.” Pacioli trained with a merchant (Antonio Rompiansi in Sansepolcro) and taught mathematics to merchant apprentices. He joined the Franciscan order later in life. Franciscans rejected personal and institutional wealth. But they also emphasized living among the people, not in isolation. And that meant to engage with commerce and urban life — not to reject it, but to understand and regulate it. His work, Summa de Arithmetica, Geometria, Proportioni et Proportionalità (1494), reflects both mercantile pragmatics and Franciscan moral ordering. Franciscans helped theologize trade: distinguishing usury (sin) from legitimate profit. What is what: 0 or 1.
Profit and Interest as Moral Arithmetic
Profit and interest are both derived from the same arithmetic structure —
A transformation over time, measured as revenue over cost. The only difference is what journey is being measured, and from whose perspective.
Profit and interest are both expressions of the difference of Output minus Input.
They are functionally equivalent as deltas, but are narratively coded differently based on social norms.
The only difference is how we interpret the transformation: Both represent a change in value over time.
Vt = the value at initial time t
Vt+δ = the value at a later time, after duration δ
The difference is the net change in value which is how both profit and interest are structurally expressed: ΔV=V(t+δ)−Vt
The Franciscan Origins of Financial Legitimacy
The moral exception for profit is not mathematical it is contextual.
Any system claiming legitimacy (ledger, law, tax, token) must:
Declare what Vt and Vt+δ refer to.
Show how the transformation occurred.
Anchor its legitimacy in the journey, not in mere change.
If it can't, it's symbolic fraud — gain without structure.
A computational model — expressing numerical logic with reconstructed meaning from symbolic records. This requires a semantic fixation to ensure that the reconstructed meaning is stable. That is a formal record system of known rules of interpretation. So even in 1494, double-entry bookkeeping was not simply a record of transactions. It was a method for computing and meaning reconstruction.
What we call “double-entry accounting” is really a method for interlinking two ledgers in a coherent way that no longer simply describes events, but describes transformations of events.
Meaning that arises out of events and endures
is recognised for being different from the event itself.
We do not simply double entries —
because that would mean fraud.
A log of events is not a ledger unless we know the journey the logs describe.
A log doesn’t make it accounting.
It only becomes financial accounting if:
the journey is known, and
we can verify that the journey has finished (e.g., in a cash flow statement), and
it has a structural counterpart in a different journal that records the transformation of meaning (e.g., a balance sheet).
Blockchain, as currently structured, gives us evidence of transaction — but no way to evaluate what that evidence is supposed to prove.
In blockchain: we can say “A sent 2 ETH to B” and this happened after something else happened. We know the beginning of the journey but we don’t if the journey has ended. And a single entry is not a journey. Two entries are not a journey unless the log has something that tells us the journey finished and here are my entries that describe it.
Blockchain prevents double-spending — but this is not sufficient to make it a ledger of real events. It proves what is known anyway and is necessary to say anything: 0 is not 1.
A log that establishes a truth that is the precondition to even talk about the difference between true and false is self-referential and without meaning.
Not all truths are meaningful — a tautology (fixing the double spend problem and thereby proving 0 ≠ 1) does not create a ledger. It is irrelevant as it cannot offer any mechanism to manage dispute.
This doesn't mean we have to solve for this in exactly the same way traditional ledgers operate with a daily closing balance. But we need something that functionally replaces the closing balance to finish the journey. And in order to preserve the deterministic qualities of blockchain, the replacement has to be in the form of a token. If that cannot be done, we must give up on the idea of creating a deterministic system. If it is not deterministic, it cannot be decentralised — only distributing activities under centralised control.
My suggestion, therefore, is that a transfer — A sent 2 ETH to B — must begin by B sending a token to A to mark the end of a journey and an identifier for this journey. The movement of value — A sent 2 ETH to B — must reference the token from A. That is a decentralised deterministic financial ledger.
Anything else is not.
The principles apply not just for blockchain but universally including the law.
Law is also a symbolic system, subject to principles of reason tested for coherence
Like accounting, law is not about words but about meaning reconstructed from symbol and structure.
Therefore, if symbol and structure is incoherently interpreted, legal meaning collapses — and what remains is rhetoric, not law.
Precision isn't pedantic — it's existential and the precondition for the rule of law
The difference between "may" and "shall", or "includes" and "means", can determine life or death, guilt or innocence, freedom or censorship.
If legal language lacks a reconstruction protocol (i.e. predictable meaning), rule of law breaks down. Right now it doesn't have such a formal method of reasoning (but I am halfway through writing one. Thank me later.)
Interpretation must be computable
If a law cannot proof coherence in application across different cases, it fails as law.
Legal texts and their interpretation must be semantically structured based on principles that are functionally identical to the way a ledger is defined — so the meaning survives the reader.
Just as a financial ledger is a record of events with arithmetic structure, a legal system is a record of actions with logical structure. If not, it’s not the rule of law and we get the EU AI Act violating the constitutional order and our institutions are blind to their own actions causing this.
Law, like accounting, must support verification, audit, and consensus — not personal opinion. My comments are not opinion they are logic deductions based on rational thinking and testing for coherence of what is happening and the principles of law stated by the law itself.
This unifies:
Financial ledgers (truth over time)
Legal reasoning (truth in context)
Semantic coherence (truth in structure)
This leads to a system where truth is computable with certainty — even under relative uncertainty. And that is governance without domination. It is freedom and justice in true meaning and operationalised as through rational thinking and coherence over one arithmetic statement: 0 is not 1. It resolves freedom and security — two conflicting but necessary conditions for the rule of law — fairly. And that is the function that no system or political theory has sufficiently understood and formally described. We live in incoherent systems that cause instability and corrupt the rule of law that has the purpose of resolving freedom and security fairly but must fail to do so under these conditions.
That is the unifying principle of matter and mind and solved geometrically as the constraint resolution over high-dimensional fields. This is the Theory of Between.
This becomes self-evident once stated clearly. I am not inventing a new truth — I am exposing a structure that was always there, just obscured by imprecise articulation of thought or broken language.
0 ≠ 1 is not an opinion, but a precondition for coherence.
A ledger isn't a log, because a ledger has structure and closure.
Law must be computable in meaning, or it isn't law — it's arbitrary text.
It not just a theory either — it's a verification frame for thought, law, and technology design. It is an urgently needed new approach to thinking. It is almost like an upgrade to the operating system of our mind.
That’s why it is #myndOS
And its implications are of existential importance for humanity. Don’t confuse what is in focus with what fundamentally exists. Meaning arises by structured selection, not inherent labeling.
