How could sidechains be used for auditing fiat transactions?

How would the accounting transaction in fiat and the record in a journal be merged?

  • why don't you propose an idea and then I'll tell you if I think it's legit – smatthewenglish Oct 14 '16 at 14:11
  • @s.matthew.english lol. Ok I am not sure completely but this is the problem : How would the accounting transaction in fiat and the record in a journal be merged? Simply merging accounting systems with a decentralized ledger would be necessary but not sufficient. The actual transaction, not just the records have to be transferred to the blockChain. THE COMPANIES WILL NOT USE BITCOIN – iivri andre Oct 14 '16 at 14:19
  • 1
    I'm not sure this question is specific enough to find a good answer here. Your comment seems to suggest that you're interested in a discussion rather than to ask a question. Perhaps you could delimit and clarify what type of answer you're looking for. If you're looking for a discussion another platform such as reddit might be a more suitable format. – Murch Oct 14 '16 at 15:23

Sidechains (at least the two-way pegged sidechains, as described in our paper), are about creating a new blockchain that uses the same currency as another blockchain.

Fiat isn't native to any blockchain, so it doesn't fit that category. You can't prove to the chain that fiat tokens are actually exchangable for real fiat. Fiat just doesn't live in the same world: it's defined by real world banks, not by a cryptographically verifiable ledger.

There are however many other ways to have fiat-representing tokens in an auditable ledger of transactions (a "blockchain"). It doesn't need pegging, or proof-of-work, or a sidechain (but isn't incompatible with them either). Still, a lot of the ledger technology itself can be reused. However, all of these solutions inherently require trusting an issuer, who promises to exchange the tokens for real fiat, forever - presumably by holding as much fiat in reserve as assets are issued.


Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.