As the quondam logical fallacy goes -
you can't essay a negative, in addition to
absence of evidence is non
evidence of absence. While for a long fourth dimension this might've been truthful inwards diverse fiscal audits - you lot could exclusively essay that to a greater extent than or less invoice existed, non that at that spot were no invoices you lot missed - cheers to the blockchain technology things powerfulness alter inwards the nigh future.
Positive vs negative proof
In general, nosotros utilisation positive proofs a lot inwards our everyday lives in addition to inwards business. To practise a positive proof, nosotros exclusively ask to present that something be - present an invoice of a transaction, a recording of a conversation, etc. Even inwards the
Bitcoin Genesis Block Satoshi used a positive proof - a quote from The Times to essay that the Block could non accept been created earlier 2009-01-03.
Negative proofs, spell applicable inwards mathematics in addition to another cases, are oft used inwards logical fallacies. If your destination is to essay for example, that at that spot are no mice inwards the attic. You tin easily disprove that theory amongst a positive proof if you lot discovery a unmarried mouse there. However, searching the attic in addition to non finding anything exclusively proved that you lot accept no evidence at that spot are mice there, non that you lot had a proof at that spot were no mice there. Influenza A virus subtype H5N1 subtle, but of import difference.
Proofs on the blockchain
As inwards most cases, it is slowly to practise a positive proof on a blockchain. Point to a transaction paying for a detail invoice, if it is included inwards a block amongst 6+ confirmations, it's all you lot need.
Now, what if instead nosotros are beingness audited in addition to nosotros accept to create an exhaustive listing of all transactions nosotros sent in addition to received? It is possible, but nosotros would accept to practise to a greater extent than or less preparations beforehand.
Cryptographic audit on the blockchain
First of all, nosotros ask to found to a greater extent than or less trend of uniquely declaring to a greater extent than or less data, maxim "I am X in addition to this is a message coming from me: ...". If nosotros had something similar
government-issued unique digital signatures, that would hold upwards skillful enough. Alternatively, nosotros could rely on to a greater extent than or less less infallible methods - notarized letters, tweets from to a greater extent than or less official handles, posting information on our website for everyone to see, peradventure
sending the information to our competitors (if nosotros seek to prevarication nigh something, they would practise goodness from calling us out). Once nosotros tin essay that nosotros equally the individual or a corporation were the authors of whatsoever given message, nosotros tin utilisation
cryptographic digests to essay whatsoever piece of information is coming from us, in addition to coupled amongst embedding messages into the Bitcoin blockchain for timestamping (directly, or through Factom for example), nosotros tin practise tight fourth dimension bounds on when the information was created.
Why practise nosotros ask all of this? Well, depending on how nosotros utilisation the blockchain, nosotros volition ask to hold upwards able to practise timestamped commits / anchors that nosotros accept to essay came from us.
If nosotros exclusively utilisation 1 address on a populace blockchain for all of our transactions, nosotros accept to commit to that address early through the higher upwards system - "I am X, in addition to I volition hold upwards using the address 1PiachuEVn6sh52Ez7o6Fymvw54qvQ4RBm".
If nosotros utilisation multiple addresses on a populace blockchain, it would hold upwards best if all of those addresses were
split-key address generation, multiplying the base of operations individual primal past times a sequential listing of integers. This way, nosotros tin easily break the populace primal of the seed in addition to allow whatsoever auditor to derive all of the other populace keys, spell withal keeping our individual keys safe. This trend nosotros exclusively ask to declare 1 address early to practise a total proof for the audit.
If
the blockchain nosotros are using is private, whether it is used exclusively past times us internally or past times multiple parties, it would ask to hold upwards anchored into the Bitcoin blockchain periodically to essay it wasn't altered inwards whatsoever trend (
Factom does this for example). Once nosotros accept that, nosotros would also ask a consummate re-create of the blockchain (or at to the lowest degree the relevant piece betwixt 2 anchors) equally constituent of the audit. If it is our internal blockchain, it would hold upwards analysed inwards whole, if it is shared - nosotros would ask to betoken which parts nosotros used simply similar inwards the populace blockchain scenarios.
Having gone through all of that effort, nosotros tin finally practise our concluding information compilation for our audit, consisting of:
- The entire block history inwards the piece of fourth dimension nosotros are analysing (say, all of 2010)
- Whatever else is needed to essay the block history was unaltered. This tin come upwards inwards block header chain upwards to the newest Bitcoin block, simplified-payment-verification-esque branches of anchor transactions included inwards blocks, etc
- Our master copy commits to the addresses nosotros would utilisation (if applicable), along amongst the necessary proofs that nosotros committed to them at the appropriate time
- Any relevant metadata nosotros want to submit (descriptions of which transaction was for what, etc.)
Finally, nosotros would accept non exclusively a cryptographically verifiable proof that all of the transactions took place, but also accept irrefutable proof of the fourth dimension frame they took house inwards (we couldn't forge a few extra transactions from in conclusion twelvemonth afterwards the fact) in addition to hold upwards able to essay that nosotros didn't omit whatsoever piece of information - creating a negative proof.
The in conclusion 1 is possible because the records nosotros are dealing amongst are cryptographically sealed (we can't alter the blockchain without invalidating its future, which would hold upwards evident), but also populace in addition to finite (we CAN iterate over every block in addition to every transaction in addition to banking concern fit whether it is relevant to the audit or not). This trend nosotros non exclusively render every relevant transaction, but essay at that spot are no relevant transactions nosotros didn't provide.
Conclusions
Thanks to the advent of cryptography in addition to blockchain technology amongst atomic, countable transactions, it is at nowadays possible to practise an undeniable cryptographic provable consummate audits. Hopefully this volition help us avoid more
audit fraud cases inwards the future...
