Randolph Johnston, Network Management Group, Inc. & K2 Enterprises
Emerging technologies will affect the accounting profession in a radical way over the next few years. Included will be machine learning, artificial intelligence, big data analytics and many more. Blockchain will be a building block of many types of transactions. This makes blockchains potentially suitable for the recording of events and other records management activities such as medical records, identity management, transaction processing, real estate transactions, food traceability, and voting. Blockchain should be useful in accounting, banking, and finance to record monetary transactions, too. Transactions can be recorded and validated, and we expect the transactions to become highly automated, much like a debit or credit card transaction is today. Do you know how a credit card charge flows? Don’t you care about paying for the item or service you want and receiving it? This is likely where blockchain technology will go.
Think of blockchain as a secure list where everyone has a copy of the list and agrees on any changes made. Think about how you use lists to manage events. Frequently you will start with everything that needs done for an event. But what happens when you pass the list around for others to comment on or make changes? How do you keep track of the changes? Isn’t incorporating the changes an extra step that can make for a painful process? A blockchain would allow you to control and accept changes, much like track changes does in Microsoft Word. Unless you are using multi-user access through SharePoint and Word 2016, you frequently send the document via email instead of having everyone update the same document at the same time. The record of the transactions for a blockchain is kept on multiple computers at the same time, called a distributed ledger. However, once the transaction is recorded, it can not be changed. Blockchains are inherently resistant to modification of the data.
Now re-think the business case for an event where you have issued contracts or have agreements for service, media, or food. You are used to seeing these contracts. But what if you could issue a contract in a standard way, make changes according to the rules of the contract, verify the service was received, and authorize payment for the service without needing to receive an invoice, approve the invoice, and create a payment or check to pay for the service? In other words, the transactions become more seamless and secure at the same time. If you can begin to picture almost any category of transaction being this easy, you can understand the excitement around blockchain.
Blockchain becomes an enabling technology for a whole new way of processing transactions. There will be public blockchains, private blockchains, and specialized blockchains much like the varieties of cryptocurrencies like Bitcoin, Ethereum, Litecoin, and many more. We expect offerings from vendors to automate the transaction process, turning them into a black box much like your credit card. Others will build private and specialized blockchains changing commerce around the world.