It is no secret that technology is upending all sorts of industries. Accounting is not immune to this upheaval. In particular, blockchain technology is set to alter the accounting industry. The blockchain is certainly difficult to grasp at first examination yet everyone who works in accounting should make an effort to understand this important technology. Most industry insiders agree the blockchain will change the accounting industry as we know it.
Defining the Blockchain
The blockchain is best known as the tech responsible for the popular cryptocurrency known as bitcoin. However, the two are not one in the same. Blockchain is a transaction ledger analogous to a database of sorts. Accountants have no trouble understanding ledgers so the quest to comprehend the blockchain should not prove intimidating. Think of the blockchain as a high-tech distributed ledger in that no single person controls. The technology is completely decentralized and open source.
Each blockchain transaction is locked in place, preventing cyber thieves and other malicious individuals from stealing data, funds, etc. The question is when the blockchain will make a massive impact on the accounting industry. Furthermore, accountants should know how to adjust to this tech breakthrough for a seamless pivot.
The Blockchain Will Impact Money Movement
Moving money is a bit slow considering the tech at our disposal. It still takes a couple days to process most transactions. Furthermore, bank accounts typically do not reflect the amount of money currently held at the bank. The blockchain will likely make a considerable impact on how money moves. These real-time transactions will prove that much smoother, quicker and efficient, allowing for immediate money transfers that are completely secure.
Blockchain Will Impact Property/Title Transfers
Property and title transfers will also change thanks to the emergence of the blockchain. The blockchain cements original agreements along with documents to the ledger to prevent potential disputes across posterity. Such agreements have been dubbed “smart contracts” as they eliminate the unnecessary middlemen.
The Blockchain and Triple-Entry Accounting
Bitcoin-backers insist the blockchain will spark a bookkeeping revolution. These bitcoin savants have dubbed this movement “triple-entry bookkeeping” as transactional records between creditors and debtors are recorded in the blockchain network along with creditors and debtors’ unique accounts. The end result is a third record as opposed to conventional double-entry accounting. This change has the potential to dramatically change bookkeeping as it will ultimately enhance security, promote trust and allow for instantaneous activity.