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Accountants should join the block party

6th May 2016
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Best known as the technology that underpins the Bitcoin currency, Blockchain is, by all accounts, transformative.

The finance industry is buzzing with the opportunities that Blockchain could provide in terms of how the global economy works and how businesses record transactions.

Essentially, Blockchain works as a global and public ledger, without a central database that can be tampered with. It is a permanent record that cannot be corrupted, creating a trail of financial DNA.

The excitement is understandable. Blockchain has the capacity to revolutionise the finance industry, bringing the ledger into the digital age. In accounting that means all transactions relating to a business could be logged in an internal Blockchain and recorded centrally, allowing auditors or regulators to inspect a business’s books in real-time.

Real-time accounting

At Sage, we anticipate Blockchain will further disrupt the world of accounting. Businesses currently spend a lot on accounting, auditing and compliance, in terms of both time and money. Blockchain could put an end to all that.

Everything that is on a company’s books could occur on the Blockchain, leaving a true record of its finances. Accountants could access that information at any time, knowing that it is accurate and up to date. It would no longer be necessary for a third party to confirm the veracity of that financial information.

For larger businesses, rather than hiring auditors to compile a complete view of all transactions and verify their accuracy, they could be logged on an internal Blockchain, and be recorded centrally. That would allow external auditors or regulators to inspect that company’s books in real-time. The accounting profession as we know it would be transformed.

Beyond accounting  

Blockchain looks certain to change more than just the world of accounting and finance. It is anticipated to transform how governments provide services to citizens, collect taxes, deliver benefits, issue passports, and ensure the integrity of public records.

It could also be used to improve health care by authenticating the delivery of services and allowing providers to share patient records securely and accurately.

Increasingly, the world we live is becoming more real-time; from the way we do business, to the way we live our lives.

Technologies such as Blockchain and real-time accounting solutions like Sage Live will make sure the accounting profession is in the vanguard when it comes to operating at the speed of now.

 

Jennifer Warawa will be presenting in the Accountex Keynote Theatre on 11 May on the topic of ‘What Does the Future Look Like for Accountants and Bookkeepers?’.

Replies (6)

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By carnmores
06th May 2016 20:25

'Er I am still not sure I get it! how in practice do these blocks work please , have we gone from bots to blocks?

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Locutus of Borg
By Locutus
06th May 2016 21:38

I don't really understand it either. I think it is just a subtle advert for Sage Live, as I don't see any businesses trading in Bitcoin, paying their suppliers and staff in Bitcoin and paying their taxes in Bitcoin any time soon. The long term future of Bitcoin is in doubt anyway.

If I remember Sage were late to the cloud accounting party, so I guess this is just to present themselves at the forefront of technology.

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Francois
By Francois Badenhorst
09th May 2016 09:28

Bitcoin is besides the point. The Blockchain has gone past it. It's a public ledger. I mean, don't get me wrong, there are plenty of businesses paying with BitCoin, and they'll continue blossoming - but there are other applications.

Essentially the blockchain can create a verifiable record of any data, file, or business. The blockchain can also create digital assets like as stocks, or bonds or even frequent flyer miles. Another cool application is smart contracts which you can couple with a verifiable audit trail.

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Replying to Francois Badenhorst:
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By carnmores
09th May 2016 21:19

http://www.jenitennison.com/2015/05/21/blockchain.html

As you have cribbed form the net so have I !

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Replying to carnmores:
Francois
By Francois Badenhorst
10th May 2016 11:49
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By duncanphilpstate
12th May 2016 11:47

As understand blockchain, what it effectively gives you is a decentralised database in which the content is verifiable using the blockchain cryptography. That overcomes the problem of data tampering. But it still leaves questions of who can access it (privacy/security); what goes into the database in the first place (security/fraud/error/normal internal control issues); agreement on data format/content (presumably Sage's data would not be the same format as Xero's even if both were in the blockchain?); etc.

I've not heard anyone discuss how data transaction volume affects performance - again, as I understand it, part of the way it works is by cryptographic techniques across many nodes making it impossible for one data item in a chain to be corrupted without detection. That's fine when not much is going on, but in the scenarios I seem painted where billions of chips in the Internet of Things are zapping transactions back and forth, has anyone confirmed that there's enough bandwidth and storage to contain the thing?

There's no doubt it's very clever, but seems to me there's a way to go before it's a mature technology. Yet a lot of people are jumping on board because it's the next sexy project to hide their non-productivity behind (sorry, my cynicism showing there).

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