Accounting Affected by Blockchain: The Disruption

The buzz about cryptocurrency, blockchain, and bitcoin has been growing over the last couple of years. Blockchain started getting featured first in discussions and conversations of bitcoin and cryptocurrencies. Over the years it gained momentum as the technology behind bitcoin. However, it is fundamentally a financial technology concerned with the maintenance of a ledger that can be accessed and shared and remain unduplicated, thus providing unmatched security. Blockchain is simply a high-end and fool-proof technological assistance to the existing measures of human accounting. From the perspective of non-deleterious disruption, we cannot negate the truth behind accounting affected by blockchain. 

How is blockchain a disruption? 

Digitization of the present accounting practices is a far-fetched fancy in the face of stringent global compliances and regulatory mandates. The fraud control measures that are in place are quite labour-intensive. With blockchain, you can expect simplified regulatory compliances and an enhanced double-entry system of book-keeping. Storing and sharing of data will be simultaneously interoperable.

A never-before-imagined transformative and efficient technology of accessing information and reporting daily accounting tasks would be in action. To face this impending storm, accountants have started enrolling for blockchain-based accounting courses – now if this is not a disruption then what is it?      

Is accounting affected by blockchain?               

Human accounting is not getting replaced by blockchain – yes, you heard that right! Blockchain involves auditing to storing, interpreting, and retrieving accounting data automatically in a systematic manner through the distributed ledger technology. While accountants have expertise in managing records, through blockchain, the same record management will be simplified and made interoperable so that the authorized officials and auditors can access it.  

In the truest sense, blockchain would ease the burden of accountants. However, they must update themselves with the nuances of this technology. Gradually, as the companies start incorporating blockchain in their processes the accountants must also engage in understanding the dynamics of the technology. 

It is only natural that to develop a thorough understanding of a technology, you must know about the advantages and disadvantages of putting it into practice. 

Advantages of blockchain in accounting 

• With blockchain, you can expect faster and cost-effective audits. Auditors can access complete transactional details that would help in the confirmation and verification of the financial status of the audited company. 
• Blockchain offers ease and convenience in reporting and reconciling transactional details. Unique frameworks suiting specific business needs can be made with the help of blockchain for seamless execution. The transactional details can be viewed live with every inclusion and updation. 
• A large volume of assets can be tracked securely as and when needed. In the event of a purchase or a sale of an asset, as records get created, you can track its historical entries and records from the time it existed, thanks to blockchain. Asset-related frauds, thus, get checked to a considerable extent. 
• Every record and transaction are encrypted in blockchain. Errors are minimized, since transactions on blockchain recognize their participants and bear a time stamp. 

Disadvantages of blockchain in accounting 

• Access through private keys in blockchain processes is quite risky since if you lose or misplace a key, you lose money and all procedures of transaction. 
• Since there is a limited number of transactions per node, the procedure may take more time to complete. The issue of scalability, thus, remains a prime area of concern. 
• Blockchain, although, offers enhanced security, the threat to it is much greater. It is quite difficult to identify culprits who could attempt illicit transactions due to the anonymity of the bitcoin system. The technology is, thus, not so transparent and that is the biggest drawback. 
• Records on blockchain bar you from modifying or adding data. The process is irreversible and modification requires extensive rewriting of codes.   

Conclusion 

Accounting affected by blockchain, therefore, holds considerable grounds in its claim, not to forget the fact that disruption essentially is a process of transformation that may not be easy to accept. We must remember that processes, however automated they become, would require human monitoring nevertheless.

Many firms are training their accountants to surf the high waves of blockchain technology. Rest assured, you can hire a finance and accounts expert in India to waive off the headaches of implementing and using new technology and save costs.