Blockchain is taking the world of technology by storm. Using cryptography, it offers users an incredibly secure method for conducting digital transfers. In a world being transformed by digital technologies, the potential future for blockchain cannot be underestimated.
How Does Blockchain Work?
A ‘hash’ is embedded on every data transfer – this is a permanent and unique record of the transaction, and includes its exact date and time. The enhanced security offered by Blockchain makes it an attractive prospect for many businesses and industries; the potential for the successful implementation of the technology is being witnessed in Cryptocurrencies such as Bitcoin.
Blockchain and Accountancy?
When it comes to data security, the accountancy sector has reason to be vigilant. The accounts of businesses and individuals are extremely important documents holding some highly confidential data. If this private and personal data is leaked, it can lead to serious financial and legal consequences. For this reason, processes are in place to minimise the risk of data getting into the wrong hands. However these processes are often stringent and laborious for staff; they are also limited by the levels of security in the physical and digital systems themselves.
Blockchain is a technology which could not only provide a virtually unbreakable security wall within accountancy, but it could also streamline the industry, increasing efficiency and profits.
Therefore it is no surprise that some big business names such as Microsoft and RSM, as well as educational institutions like Michigan University, have formed the Accounting Blockchain Coalition (ABC).
This is an alliance dedicated to educating businesses and organisations on accounting matters relevant to digital assets and distributed ledger technology, including blockchain.
What are the Challenges of Implementation?
The implementation of Blockchain in such a highly regulated industry will not come without its challenges; many hurdles will have to be overcome before the technology is widely used in accountancy. Given the fact that Blockchain technology is still in its infancy relatively speaking, this could take some time.
Furthermore, as Blockchain continues to develop, widespread and sweeping changes will be required within the accountancy industry as a whole to enable the technology to be used.
Regulation and standard-setters are faced with huge challenges:
- They must be able to prove that Blockchain is able to adhere to industry standards…
- Certain industry standards will have to be adapted to consider the use of Blockchain.
- They must also be able to prove that the industry is able to successfully work with the technology; they will have to write regulations around this too!
This is just a part of the mammoth jigsaw surrounding Blockchain implementation. For the technology to be successfully introduced, huge investments of time and money will be required.
However, the benefits of successful implementation could hugely benefit – if not completely transform – the industry in the long run.
What do you know about Blockchain and its applications? Do you think it will change the world for the better?