By: Vlad Petskel

Back in 2008, a cryptocurrency known as Bitcoin brought many new opportunities for online transactions. While Bitcoin sparked change in the financial world with a new form of digital currency, it’s the blockchain technology behind it that can potentially cause huge waves of disruption in several industries.

What gives blockchain so much attention in the financial world is that it removes the middleman when It comes to transactions, making them more transparent and efficient. The basic structure of blockchain is a distributed ledger that is public to an entire network that helps ensure security. The members of the network then agree on certain terms, regulations, and procedures that are coded into an algorithm and work as the backbone of the system. The security comes from the “distributed” aspect of the ledger. As a business transaction is performed, different blocks are created and linked, ensuring the information is distributed throughout the network and not locked down in a single location. Each transaction performed is given a timestamp, which is unchangeable and permanent. The blocks are linked together to create an irreversible chronological chain which allows activity related to transaction to be traced to its origin. Because this information is held in a single ledger for both parties, this decreases the time professionals will need to spend reconciling the books.

In the accounting industry, blockchain holds the potential to change the way auditing is performed. Through the chains it generates, all information surrounding a transaction will not be both available and traceable to anyone that may need it. The idea of technology making uor jobs easier may instill the fear that auditors will no longer be needed, however auditing may start to take a shift from a verification practice to a more analysis-based job. Technology may simplify tasks, but people will still be required to interpret, analyze, and confirm results.

Below are some advantages of Blockchain:

Advantages

  • Distributed Databases:
    • Since blockchain data is often stored in thousands of devices on a distributed network of nodes, the system is highly resistant to technical failures and malicious attacks.
  • Security and Immutability
    • Confirmed blocks are very unlikely to be reversed, meaning that once data has been registered into the blockchain, it is extremely difficult to remove or change it.
  • Treelessness
    • Blockchain removes the need for peers on the network to trust each other because it has inherent protections against fraud.