why you can’t afford to ignore the new technologies.
by sean stein smith
walk into any accounting meeting or conference, or open any magazine, and there are a few words that inevitably dominate the conversation, and they are all related to a common thread: technology and the technological integration of the profession.
see more accounting & finance show previews here
blockchain, although in existence since the 2008 white paper published by satoshi nakamoto, flew under the radar for several years before bursting onto the scene in 2016 and 2017. fueled by the surge in popularity and buzz around the cryptocurrency bitcoin, the excitement, anxiety, and opportunities around blockchain are virtually impossible to understate.
in order to not get swept away in the sea of hype and buzz around the technology itself, it is important to understand two things:
1) what exactly blockchain is, and
2) how blockchain technology connects to the accounting profession.
one thing to remember, however, is that blockchain is a decentralized ledger that can store a variety of information, and can allow different network members different levels of access.
none of that is revolutionary by itself, but by combining these facts with blockchain-specific characteristics, the potential related to blockchain becomes clear.
let’s start with summarizing blockchain technology, including some of the core characteristics that make blockchain different – and some would say better – than existing options in the marketplace.
- immutable – once data has been verified and added to the blockchain network, that information cannot be changed or altered. reversing blocks of information can be uploaded, but the original block of data cannot be changed
- consensus verification – without going into too much technical detail, any information or data that is uploaded onto the blockchain needs to be approved by existing members of the blockchain
- encrypted – all information that is uploaded and approved onto the blockchain is secured by encryption, whether via a public/private key protocol, or some other security option, very important in a business environment beset by data breaches and hacking attempts
- real-time availability – one of the most powerful attributes of blockchain, in addition to the encryption and consensus protocols embedded within the platform, is that once information has been uploaded and verified by existing members, it is broadcast to all other network members nearly instantaneously
taking a step back – and realizing that blockchain technology is just that, a technology tool and platform, and not an amorphous force to be feared – is arguably the first step toward a more comprehensive understanding of how to leverage blockchain for clients and internal operations.
drilling down, some of the potential opportunities related to blockchain include applications for audit, tax and practitioners working in industry. data that is already approved by involved parties, information that is encrypted as it is approved by consensus before addition to the network, and then broadcast in real time to all network members can potentially revolutionize the accounting profession.
the security, encryption and transmission of information on a continuous basis will simultaneously render some lower-level accounting tasks obsolete, but also create opportunities for practitioners to engage in higher-level, and higher-margin, services. confirmations, reconciliations, inventory counts and ad hoc financial reporting are driven by information, the same information that forms the basis of blockchain applications.
blockchain may be a technology tool, but has the potential to render the accounting profession unrecognizable within the next 10- to 15-year period. practitioners have a responsibility and duty to keep current and up to date on this emerging trend.