I attended the Rutgers Business School 38th World Continuous Auditing and Reporting Symposium on November 4th & 5th 2016 on the Rutgers campus in Newark, NJ. William Bible, Deloitte partner, presented “Blockchain Technology – Disrupting the World of Accounting”.
He describes Blockchain as a fusion of:
- Peer-to-peer networking
- Key Cryptography
- Proof of work
William noted that each of the above are computationally taxing and even more so taken together, however, the computational power of current systems make the widespread use of blockchain possible and even routine.
He went on to discuss that some key aspects of blockchain are:
- Everyone has access to all transactions but, due to encryption, individual transactions are only available to those w/ the private key.
- Blockchain is a continuously growing database of transactions.
- Each transaction has a unique identifier. You cannot change a prior transaction. The assigned hash value puts the transaction in sequence with all the prior and subsequent blocks. Therefore, you cannot modify/change records/transactions because the network validates all transactions using the hash total.
- Blockchain ledgers are:
- Distributed and
- Blockchain is distributed, not centralized. Nobody needs to perform validation like that required with a centralized database (e.g., bank, credit cards, broker, insurance, rewards points).
- Blockchain enforces one standard for all parties. Data standardization helps:
- Financial statement preparation
- Auditing technique development
- Tools and analytics development
Not all blockchains are created equal:
- “Permissionless” – Open to all parties. Bitcoin is an example.
- Permissioned – Set up by a consortium of parties who specifically grant permission to join.
William concluded by noting that blockchains have several features that make their use are ideal for certain applications. He expects the use of blockchains, especially “permissioned” ones to continue to expand in the future.#ChiefDataOfficer #ChiefInformationOfficer #Blockchain #Auditors #accountant #Accounting #Audit #AccountingTechnology