Hello to the wonderful Cardano community! I am part of the Decentralized Accounting DApp creation team. We figured we give an update and more detail as to what it is we would like to create, and field some interest from the community.
The idea at its core is to create an on-chain balance sheet. A balance sheet, is a statement of financial position that represents all of the users’ assets (everything with value that is owned) and liabilities (everything with value that is owed). The initial product will be tailored for individuals use, but as it scales, it can be used by small companies, and even large corporations. Initially, it will look something like the following image:
Three Pillars of Utility:
The use cases centered around three key pillars:
1. Smart Contracts:
The initial goal will be so that the user interacting with the application can have a nice, clean representation of all the crypto assets they own. The balance sheet can not only store data of what they own, but it can store the ACTUAL crypto currency that is owned, and can be moved around on chain for different uses, and still be represented and stored on the balance sheet. Now, it is understood that crypto is not the only asset that people hold, which is a perfect transition to pillar number 2
Oracles (pulling in external data to the blockchain) will be used so that the balance sheet can have the most accurate representation of the users’ assets. If you own a house, that is an asset that has a substantial amount of value, and should be represented as something you own on your balance sheet. The same applies to what you owe, we can pull in mortgages, student loans, credit cards, etc. The most similar application that exists like this today is Intuit’s Mint. Below is what this might look like with Oracles.
Reporting is key to managing and representing financial positions. There are a lot of reporting requirements that businesses need to adhere to, which are cumbersome, expensive, and take time to perfect. This has a use for individuals and businesses. Individuals can use this reporting for tax purposes. Whether we like it or not, more clarification on tax law around crypto is coming. When it does, this DApp can help report out tax forms for the individuals’ crypto assets. Businesses have many reporting requirements, which is where the metadata will become useful for companies to adhere to either IFRS (International Financial Reporting Standards) or US GAAP (United States Generally Accepted Accounting Principles). The reporting requirements depend on the type and size of the business. The metadata from the on-chain balance sheet will eventually solve this problem.
Future Utility as it Scales:
The initial product will be simple in its design and the use case is for individuals. The real utility comes when it starts to scale, and the balance sheet can start holding more and more assets/liabilities on chain. This is when businesses will start to use this.
There are more financial statements that companies are required to report, which can eventually be added. This can help create efficiency in the work accountants have to do, and it will let them focus on more strategic initiates. The largest industry that can be impacted by this efficiency is the Financial Auditing Industry (which is 109.21 Billion by the way). This is a giant number, but for now, let’s start small and get ya’ll a simple functional balance sheet :)
Reach out with any questions or comments!