Back in 2013–14, Bitcoin — and more importantly, its underlying technology, Blockchain — were having a breakout moment. It introduced a completely new way to think about money — from how it’s created and stored to how it’s transferred. This technology promised to upend traditional financial systems as we knew them.
Naturally, established financial institutions saw both a threat and an opportunity. Their biggest fear — then and now — is being left behind in the next wave of technology and watching clients take their money elsewhere. We saw a version of this during the early internet era, when banks scrambled to build a digital presence. Many ended up with bloated, clunky apps that are still being modernized today. Those that didn’t transform at all got left behind.
At the time, I was working at a leading financial firm that wanted to explore blockchain’s potential. As is often the case in traditional organizations, top-down directives came to “find use cases” for this new technology. But in truth, we were genuinely excited to dive in and experiment.
My team worked on the operations side of the business, and one area stood out as a potential match: the Accounting systems. That’s where we started looking for blockchain’s first meaningful application.
Ledger
Without diving too deep into technical details, the core concept to understand in accounting is the Ledger. I’m a technologist and not an accountant — so I know just enough to build and maintain an accounting platform, not to teach a finance course. Experts, feel free to leave your critiques in the comments.
That said, most people are familiar with the general idea of a ledger: it’s a system of record for financial transactions. If we focus specifically on how transactions are stored in a database, two key concepts stand out:
One, is supporting double entry. If you buy 10 shares of company Y and pay $10 for it, then there will be an entry for 10 positive shares and negative money paid(-$100). So when you sum up everything for your account for today, it gives you exactly what you own — your total shares and your remaining cash balance. If you then sell 5 shares for $3 tomorrow, it will record an (offsetting) entry to record the sale of 5 shares and money received(+$15). Hence you can use Ledger entries to get an accurate picture of your finances.
Second is the “AsOf” concept. This refers to the temporal aspect of the ledger, i.e. it records when each transaction happened. In our hypothetical example, today’s “buy” trade and tomorrow’s “sell” trade will be tagged with their respective dates. This lets you recreate your financial position at any point in time, a capability that’s incredibly powerful and essential for auditing, reporting, and compliance.
These basic concepts might seem simple, but they’re the foundation of incredibly complex financial instruments and services. Their power lies in their reliability and simplicity — a ledger can be kept with just pen and paper.
But of course, in today’s fast-moving, high-volume financial world, pen and paper doesn’t cut it. As the scale of financial products has grown, so has the complexity and performance required of the accounting systems that support them. For example, a portfolio service might need to instantly calculate the cash balance for 10,000 portfolios right after markets close.
That’s where full-blown accounting platforms come in — and why they remain such a critical piece of modern financial technology.
Distributed Public Ledger
With that foundation in mind, let’s go back to 2014, when we first began reading up on and trying to understand the core of blockchain technology. One thing quickly became clear — the concept of the distributed ledger was fundamental. Here’s the description on Wiki:
When a ledger update transaction is broadcast (to the P2P) network, each distributed node processes a new update transaction independently, and then collectively all working nodes use a consensus algorithm to determine the correct copy of the updated ledger. Once a consensus has been determined, all the other nodes update themselves with the latest, correct copy of the updated ledger.[5] Security is enforced through cryptographic keys and signatures.
Lots of fun and interesting details there, but in short, there’s no central actor/system determining what is the correct entry. Rather, a collection of nodes have to agree on what the right transaction to enter into the Ledger is. There’s some complicated math to ensure bad actors cannot introduce incorrect entries.
So how does this solution fit into the existing Accounting platform? It doesn’t really fit well. You could stretch to create a scenario where blockchain could fit. Which is what we did by coming up with a variety of hypothetical situations where we could shoe-horn it. Like private entities running private Blockchains to maintain private ledgers. But very quickly the whole scenario would unravel and cost would not justify the end result.
The primary reason being that because things are public, that would mean anyone could know what another person or bank owned. That would be against the privacy rules of any financial firm. The other problem is that several independent nodes have to agree on what the real entry is, and that could cause problems if bad actors gained control of enough nodes (51% problem). This was especially bad for private blockchains.
Conclusion
This is where I heard the term “a solution looking for a problem”. This described our situation perfectly. So we backtracked and wrote out our findings without committing to build anything. Leadership also eventually agreed with our analysis and paused the Blockchain-hype for a short while.
With that hindsight, the hype around AI also feels eerily similar. Every business leader is dealing with AI-FOMO and is trying to shoehorn the use of AI into every conceivable part of their business process.
That said, blockchain has since found more appropriate use cases within the financial sector. One of the most promising is the use of smart contracts, which offer real utility in areas like trade settlement, syndicated lending, and escrow services — places where automation, transparency, and conditional execution are actually advantageous.
The blockchain hype taught us a valuable lesson: not every new technology fits every business problem. As AI continues to evolve, we’d do well to apply that same level of scrutiny. The eventual winners won’t be the ones who adopted AI the fastest — but the ones who adopted it wisely.
Would love to hear if you had a similar situation happen to your team!
