What is blockchain accounting is a question that many in the accounting and finance industries are asking, especially as the technology takes center place in virtual accounting. Blockchain technology has already been considered to be the next big thing in accounting and the more accountants know about it, the better it will be for their career trajectory. Here is a short introduction to how blockchains will change accounting.
Blockchains, by definition, are a secure database that is made up of individual transactions; it is also known as a distributed ledger. These ledgers operate on the blockchain model, meaning that the ledger has no central administrator and is added to by the various participants in that particular blockchain. This technology is now making its way to the finance industry, both for its ability to streamline even complicated financial transactions as well as the security involved; it is considered impossible to hack into a blockchain. And it is now considered to be the newest advancement in accounting, making way for every transaction and title transfer to be completed immediately.
Blockchain technology can be used for a variety of processes in accounting, including transactions, authentication of transactions, asset ownership tracking, triple-entry accounting, document verification, financial statement audits, and more. While these are just some of the uses that are currently attributed to blockchains, the potential is far greater. From accounting and auditing to finance and international economics, the industry is poised to benefit the most from blockchain technology. And because blockchains are recorded in real-time, it can significantly change the way accounting works in the future.
How Blockchain Changes the Accounting Industry
Blockchain will change the accounting industry in a couple of ways, most notably with the impact it will have on accountants and how they do their job. Because blockchains offer the opportunity to automate and secure transactions and contracts, it could render many of the job responsibilities of an accountant obsolete. However, because blockchain is a relatively new technology, having been utilized and researched for just ten years, it will still fall to accountants to use the services effectively for their clients. Blockchain technology could also open up new pathways to services that accountants can offer; these new services have yet to be unveiled and may require professionals to do some of their own research.
Do Accountants Need to Pay Attention?
Accountants would be best served by not only paying attention to blockchain technology but also learning how to use it for their own careers. The Big Four accounting firms have already done some of the heavy lifting for accountants by releasing white papers on blockchain and how it will affect the industry while books on blockchains are slated for release this year, including one about the relationship between bitcoin and blockchains. It’s also important for accountants to remember that cryptocurrency, blockchains, artificial intelligence, and automated processes work together, so learning a bit about all of these technologies will strengthen them in their work.
The idea of pairing blockchain technology with accounting isn’t new; after all, blockchains are what bitcoin and cryptocurrency run on top of in order to be viable forms of virtual wealth. As more accounting work is done online, keeping updated with this technology will prove to be beneficial to these professionals. With the answer to the question of what is blockchain accounting firmly in hand, accountants must now do the work of finding how to best use the technology to their advantage.