What is Blockchain and how might it affect the world of finance?
Blockchain has become a buzzword in a vast amount of industries, but what exactly is it and what does it mean for the world of finance and accounting?
It’s best known and created for the cryptocurrency bitcoin, but it has far wider potential and industries are ready to incorporate it into their business processes.
In short, it provides an incorruptible ledger of data and therefore, offers a new way to record, store and share information.
In the world of accountancy, it could be used to record and store assets, liabilities, transactions as well as providing methods of recording cash flow and reconciling accounts. Needless to say, it’s a welcome addition to the accounting industry as it could potentially negate the need for paper trails traditionally used to perform accounting functions.
Due to its transparent and unchangeable record of all accountancy-based data, it provides an opportunity for accountants to streamline their processes with the added benefit of ensuring records are accurate; an incredible improvement over traditional accountancy procedures that could be fraught with errors and fraud. Blockchain has the potential to enhance the accounting profession by reducing costs of maintaining and reconciling ledgers; therefore, helping accountants save valuable time and allow them to plan and evaluate as opposed to recordkeeping.
As a potential replacement for bookkeeping and reconciliation work, the technology has driven many to ask the question, ‘might it threaten the work of accountants?’
The short answer is no. There is always a period of uncertainty and worry when a new technology arrives. Whilst blockchain will most definitely disrupt the accounting industry, the general tasks and responsibilities of accountants will remain. In fact, it will more likely allow accountants to take on a more advisory role as opposed to managing ledgers and records; providing them with opportunity to grow.
It’s no doubt their role will change, but potentially for the better. Data will still need to be entered and maintained and accounts still need to be overseen and analysed.
What this new technology will provide is efficiency, record permanency and transparency, and that is an accountant’s dream.
As you can see from this article, accountancy is changing and becoming more technically aware. For more information on careers in finance and accountancy please contact me at email@example.com
Look out for the next article on block chain where we discuss the early uses of blockchain in accounting.