The blockchain is a disruptive technology. It has the potential to change many aspects of our future lives. Even if governments or corporations would try to stop it, it is impossible to completely eliminate due to the decentralized nature of the technology.
According to the Harvard Business Review,
“With blockchain, we can imagine a world in which contracts are embedded in digital code and stored in transparent, shared databases, where they are protected from deletion, tampering, and revision. In this world every agreement, every process, every task, and every payment would have a digital record and signature that could be identified, validated, stored, and shared. Intermediaries like lawyers, brokers, and bankers might no longer be necessary. Individuals, organizations, machines, and algorithms would freely transact and interact with one another with little friction. This is the immense potential of blockchain.”
Blockchain can also revolutionize the way we do accountancy. This is how.
Currently, if you want to transfer money internationally it will take 2 to 5 days. This is extremely slow considering contemporary technology.
One big advantage that blockchain technology has over the current financial and accounting process is the speed of money transfers or real-time transactions. With blockchain , there wouldn’t be any wait for a transaction to be in your bank account.
Because of the immutable characteristic of blockchain, arguments between two parties regarding a contract would be significantly decreased. Since the data registered on the ledger is impossible to modify or alter, title or property transfers could be done automatically by the blockchain without any litigation.
This application of the blockchain is called smart contracts. Those are pre-established agreements between two parties, which are integrated in the ledger. Theoretically, smart contracts could eliminate the need for intermediaries in many sectors of the economy.
An interesting aspect with the blockchain technology, is that financial statement audits could be done automatically in a secure and trustworthy way. Anyone who has an Internet can access to the whole transaction history on the blockchain. Since the transactions are recorded in real-time and can’t be modified, the transaction could be automatically audited, which eliminates the need to hire accountancy firms.
According to Deloitte, “At the end of the road, fully automated audits may be reality.”
With the use of the technology, nobody would be able to alter transactions, which makes it transparent and secure. Also, it will give the opportunity to smaller companies who don’t have much money to get audited every quarter like public companies. This will allow the to update their business plans like big corporations are able to do right now.
Legitimacy of Documents
Another interesting feature of the blockchain is that it can accurately and legitimately verify documents. With the technology, a hash string of a file would be created, which would make it a unique identifier for that file. The hash string would then be integrated and timestamped into the blockchain. After that, the transaction can’t be modified, which brings trust and transparency to the whole process.
It will be interesting to see when blockchain makes its debut in the accounting industry. It is revolutionizing supply chains all over the world right now and is just waiting on other opportunities to enter other markets.