Open Information Enterprise Transactions: Business Intelligence and Wash and Spoof Transactions in Blockchain and Social Commerce

Abstract

This paper investigates what are referred to as 'open information transactions' . Such transactions are in contrast to traditional transactions, where typically two parties to a transaction are the only ones with information about the transaction. For example, in a sale, the seller and the purchaser typically are the only ones with information about the transaction. However, some emerging technologies, such as blockchain accounting, supply chain social media, and hashtag commerce are making information about the transactions potentially openly available to others. This paper investigates some of the implications and strategies that include the use of that open information. For example, open information in accounting and supply chain transactions provides the potential for both business intelligence analysis of the information and possibly misleading and illusory transactions, analogous to those that have garnered the recent attention of the Justice Department in cryptocurrencies.Finally, this paper suggests that blockchain transaction processing will provide reliable information in those settings where there is a "single truth" feed of information flow for the phenomena of interest, no ability to do off-blockchain transactions (or a large penalty cost) and limitation to a single identity for each enterprise on the blockchain. KEYWORDS asymmetries of information, bitcoin, blockchain, blockchain electronic markets, dynamic pricing, fraud, hashtag commerce, information visibility, misleading trades, off-blockchain transactions, open information transactions, social commerce, spoof trades, wash trades 148

Accounting and Auditing at the Time of Blockchain Technology: A Research Agenda

“…BT provides a technological replacement of the trusted party needed to verify transactions by offering a triple-entry ledger system that provides authentication transparency (Dai and Vasarhelyi 2017;Yermack 2017;O'Leary 2018). 2 However, BT does not simply add a third ledger to the traditional double-entry bookkeeping approach but adds a shared ledger.…”

Some issues in blockchain for accounting and the supply chain, with an application of distributed databases to virtual organizations

“…Perhaps the most important aspect would be determination of partner organizations and establishing nodes for each such organization in the virtual organization. In addition, determination of those who resource exchanges can occur with would also be critical to ensuring that transactions are legitimate (O'Leary, ).…”

“…And I doubt it ever will, since what company will want the details of every transaction available to the public?Some researchers have noted that many of the proposed uses of blockchain are already done quite efficiently, using tools such as databases and data warehouses (O'Leary, ). Some commenters are concerned about the publicly available nature of information in public blockchains, suggesting that few firms are interested in making information about their transactions publicly available (O'Leary, , ). Still other researchers and commentators have noted that there can be disclosure issues in public blockchains; for example, O'Leary () noted the potential of ‘spoof’, ‘wash’ and ‘off‐blockchain’ transactions in public blockchain accounting and supply chain systems.…”

“…As a result, each private blockchain potentially provides a different semantic model of the flow of information. As noted by O'Leary (), based on Arrow's () impossibility theorem, there is no one model that is optimal for all participants in a consortium.…”

“…If private blockchains are peer‐to‐peer, then information may be captured by each of the participants. In addition, depending on the controls built into a private blockchain, there are still potential opportunities for spoof, wash and off‐blockchain transactions (O'Leary, ).…”