The promise for accounting and finance
Blockchain is a technology with the power to utterly transform accounting:
There are no different versions. There is a single version of the truth. All parties have the same record.
Ledgers are recorded at the same time, in multiple locations, on numerous computers.
Data is shared across public or peer-to-peer networks.
So, once blockchain rules, there will be no need for double entry to balance and confirm, as all parties share the records of all transactions. In addition, self-balancing and continuous checking will eliminate the need for reconciliation.
The Big Four are all excited by the potential in blockchain, working with clients to share best practice, to experiment and to build solutions. IBM, Microsoft and other big players can provide blockchain-as-a-service over cloud platforms. This means any business can now deploy a private or public blockchain, using established protocols without having to incur network-development costs. Nevertheless, even in the case of TradeLens, the global trading platform developed by IBM and Maersk, which was launched in January 2018 with a critical mass of major participants, take up by more of the potential participants to a blockchain can still be slow.
However, the infrastructure is increasingly in place and increasingly robust.
“The use of blockchain for global shipping isn’t just a new solution — it is a wholesale reimagining of the industry. For it to be successful in the long run, the network must continue to grow, the technology must continue to improve, and more value must be created for all participants.”
– TradeLens: How IBM and Maersk are sharing blockchain to build a global trade platform, IBM.com, 2018
The volume of bitcoin transactions still is relatively low. Despite the rapid growth in computing capacity, blockchain technology may not yet be able to support the high levels of transactions required in more mainstream applications.
Transferring data continuously among multiple users makes databases exponentially slower. It also requires a lot of energy consumption. Right now, it looks as though it will be a few years before blockchain is sufficiently quick, cheap, efficient, secure, trusted and regulated to become established in global financial systems.
However, this is a radically new technology that could fundamentally change how transactions are processed and recorded.
Such transformational shifts in technology are not regular occurrences. They don’t happen quickly.
But, given time, blockchain could change everything. Management accountants need to be alert to the vast potential of this new technology, both for the benefit of the business as a whole and its potentially transformative impact on all accounting processes.
In October 2017 the Association announced a new collaboration with the Wall Street Blockchain Alliance (WSBA). Together, this partnership will explore and define the impact of blockchain technology for the accounting profession.
- CGMA, Changing technology and finance
"Leveraging Blockchain Technology" with Ron Quaranta of the Wall Street Blockchain Alliance (New York, USA) GBD3
