How Blockchain is Disrupting the Accounting Industry
Blockchain could be coming for the accounting industry.
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Blockchain is arguably one of the most discussed technologies of 2018, and there's a reason for that. As a sort of indestructible and incorruptible ledger, it offers a new way to store and share data in such a way that it's simultaneously interoperable. This could reduce the need for accountants to store data in disparate locations with no way to consolidate and validate it all.
In fact, you could argue that blockchain itself is an accountancy-based technology. After all, while it's mostly known to people as the technology that underpins bitcoin and other cryptocurrencies, it underpins them by reconciling accounts. When it comes to other industries such as real estate and the automotive industry, it's mostly used to track ownership of assets and the values at which they're bought and sold.
That's why blockchain has so much potential for the accountancy industry. It can provide a much more transparent and durable framework for us to track and measure assets. It could make it easier than ever to understand what assets are available in real-time, along with their values and any other commitments that could affect cashflow in the future.
Should accountants be afraid?
This is the million dollar question, but the good news is that the answer is no. One of the first things that people start to worry about when a disruptive new technology comes along is the possibility of it taking people's jobs away. With accountancy, blockchain is set to hugely impact everything from auditing and cybersecurity to the way that we store, access and interpret information.
If anything, blockchain presents an opportunity. The accountants and accountancy companies which embrace blockchain and get to know its underlying concepts will be the ones who are more highly sought after in the future. And with every day that passes, a blockchain-based future is looking more and more likely.
Accountants are generally experts when it comes to record-keeping, and blockchain technology could effectively allow records to be kept on an interoperable system that can be safely and securely accessed by auditors and other third-parties. In this intervening period, it falls to accountants to oversee the implementation and maintenance of blockchain and other new technologies.
A history of disruption
Blockchain technology already has a certain amount of history when it comes to disrupting the accounting industry. After all, specialist accountancy firms have already started to pop up to deal with cryptocurrency assets, and many countries are in the process of developing laws and legislation to govern the tax that should be applied to income made via cryptocurrency trading.
Many of the larger accounting firms are playing a role in the development of these new regulations by actively campaigning for certain regulations, both for cryptocurrency and for blockchain technologies in general. This is a smart move because it increases their odds of being able to ride the wave whilst simultaneously positioning them as the obvious choice when someone needs to hire a consultant or to find someone to do business with.
And of course, blockchain ledgers would increase transparency and help to fight fraud, which can only be good news for everyone. Instead of having to trawl through misleading paper trails to identify whether someone's telling the truth on their tax return, auditors could simply verify the data using blockchain records.
The role of accountants in blockchain tech
By this point, you might be worrying that you'll be expected to learn to deal with programming languages and APIs. The good news is that the technical and implementation side of things will always be carried out by specialist developers. The bad news is that you'll still be expected to have a thorough understanding of what blockchain is and what the technology itself has to offer us.
That's why more and more accountancy schools are starting to offer courses and certifications on blockchain technology. At the same time, demand is growing slowly but surely, especially as more and more vendors are starting to use blockchain technology in the products that they're offering. We could all soon be using blockchain-based systems to file our tax returns, even if we don't necessarily know it.
Sure, there's been a certain amount of discussion about whether blockchain technology will make accountants redundant. But the same discussions seem to pop up about every new technology, and very few of those predictions have turned out to be accurate. The truth is that blockchain's impact on the accounting industry is likely to be similar to that of the development of the personal computer. It might change the way that we carry out individual tasks, but it won't get rid of our jobs completely.
Blockchain is coming to disrupt everything, literally. Wherever data is stored, there's an opportunity for blockchain to come along and take over things, but that becomes even truer when it comes to industries where interoperable data is required. In healthcare, for example, blockchain-based patient records could pave the way to a fairer system in which different providers all have access to patient data. The patient could have access to it, too.
For accountancy, blockchain-based records systems will keep accountancy firms on their toes by increasing transparency and making it easier for people to switch providers at the drop of a hat. They will also make it easier for auditors to step in and to make sure that everything's in order.
Still, this increased transparency is a good thing for clients and providers alike, and the only people who are likely to lose out are the ones who are cutting corners or whose services aren't quite up to scratch. Those who are fully compliant and who are quick to react to and adopt new technologies like blockchain are those who will come out on top.
Remember that it's never too late to get to know blockchain. Even if it doesn't seem too relevant right now, you'll thank us in the future. Just marking out half an hour a week to read the latest news stories can be enough to give you a head start. Good luck.