Ostrom’s Razor: Using Bitcoin to Cut Fraud in Hollywood Accounting

Abstract

The accounting principles prevalent in Hollywood are seemingly crafted to mislead creators and investors. Film studios and streaming platforms have been found to use complex strategies to annually divert millions in net profits. Many contracts include audit clauses, but the cost of auditing a billion-dollar system is prohibitive for most creatives with “net profit” deals. However, a resourceful minority have recovered billions in profits and damages. We suggest using Bitcoin’s transparent, immutable ledger to eliminate fraudulent accounting and build trust among profit-seeking filmmakers willing to trade maximum income for maximum profit per share. This trust can be spread globally utilizing the Bitcoin network as a transparent and immutable triple-entry accounting system. Our research shows that distributing this decentralized trust is achievable by configuring an ecosystem of existing Bitcoin wallets, applications, and recorded contracts to create a universal source of truth for all parties assisting in the creation of valuable content in the form of movies. This network can form the foundation on which to build a legal blockchain infrastructure that can eventually facilitate the sale of tokenized securities, discretely disseminate recorded financial data, and transparently distribute revenue to a collective of filmmakers indefinitely.