Double entry systems make possible a means of balancing books. A double entry system has two separate columns showing debits (often on the left) and credits (usually on the right), allowing the total amount to be shown by adding and subtracting. In other words, the two-column technique allows you to get a running total and update the sum total.
Double-entry systems also make it simple to determine if an overdue account has been settled. An accountant can detect if an error has occurred or if an account is past due by comparing the difference between the debit column and credit column sums if the totals are frequently run in manageable chunks (in the absence of electronic records).
Supposedly, dual entry systems are maintained by individuals as well as by organizations and governments. Each of us has access to a double entry system through our bank accounts. If someone claims that we did not pay you, we can establish through a debit from the account that, for example, a check was paid on a specific date and for a specific amount.
However, double entry systems can be manipulated or “cooked”, as we have seen with corporate scandals (such as Enron), to provide an inaccurate picture of a company’s value. Why? Figures and amounts can be hidden by the person or organization in charge of the accounting books when there is no equivalent or obvious countermeasure of a double entry system (as in the case of the bank account mentioned above).
The blockchain offers this defense through a permanent (immutable) and openly available record.
Why can’t a blockchain be changed?
The hash algorithm and the blockchain validation reward system are the two components that work in conventional blockchains. The blockchain cannot be modified directly due to the hash method. Please note that you cannot undo it.
However, there is a kind of “loophole”. A contest and vote verification mechanism is used to validate each block. No matter who validated the block, you can void it if you invested enough money to acquire 51% (or more) of all voting power on a blockchain.
This type of override, known as a Sybil attack, is something that blockchain designers aim to avoid. They remove two incentives for that. First of all, getting 51% of the vote is very expensive. You would have to pay tens of billions of dollars to buy Bitcoin. Second, if you were successful in doing so, people would stop believing in the blockchain and all the money you paid to win those votes would be lost.
Therefore, from a financial point of view, it is not reasonable to nullify a blockchain. What if, however, you were just malicious?
Blockchains have independent, decentralized organizations that allow code changes to the blockchain’s operating system. Historically, they have voted to nullify the attack and reset the blockchain to a point in time before the attack should something similar happen when there have been other types of errors.