In 2018, accounting still remains one of the high-in-demand jobs in business. It is also one of the industries, which is expected to change the most as the result of blockchain adoption. To find out what happens when blockchain meets accounting, we spoke to experts in both disciplines.
What can blockchain do for accounting?
When talking about the issues that the blockchain technology can address, all experts seem to be unanimous that the new technology can dramatically reduce accounting costs as well as making the industry more transparent.
Thus, Stefano Covolan, the founder of Korporatio, a tech startup that puts real-world companies on the blockchain, says that “blockchain can automate almost all steps required in the accounting...recording the transactions on the blockchain can increase transparency in every company that uses it.”
According to Stefano, if every SMEs' book were open to the public, it would significantly increase efficiency and reduce costs, as it would be much easier to keep track of everything for tax purposes, and communication between different entities would take much less time.
“Among the many industries that could see the transformative impact of the blockchain, accounting stands near the top... Blockchain allows for the use of a decentralized ledger, as a single source for buyer and seller to draw the relevant data needed to prepare financial statements,” Mike Minihan, a longtime accounting expert and partner at BX3 Capital, says, adding that “the cost savings and efficiency for both parties of not having responsibility for maintaining this transactions ledger is a potential game changer.”
At the same time, Dr. Michael Yuan, a long-time technologist and the chief scientist at CyberMiles, mentions many transformative ways to use the blockchain technology in the finance industry: from managing customer identity and data privately and safely, to storing important financial records in a decentralized network, to supporting a large library of smart contracts.
Practical use cases
The world of financial services has already seen examples of successful blockchain adoption. According to David Ambrogio, a consultant with Bitcoin ATM networkPelicoin, the Big 4 accounting giants have already launched blockchain-related projects: there is the “Blockchain Analyzer” by Ernst & Young, which facilitates the company’s audit teams review and analysis of transactions on the blockchain. KPMG has launched “Blockchain Nodes” initiative together with Microsoft in to discover new applications and use cases for blockchain technology within the accounting industry.
PwC, that has been accepting bitcoin in its Hong Kong office since 2017, also released its own blockchain auditing service for crypto businesses.
Deloitte first launched its “one-stop blockchain software platform” Rubix back in 2014 and kept on expanding its offering ever since - their recent partnership with Waves Platform is intended to make ICOs and crypto-trading more accessible.
Naturally, as cryptocurrencies get more recognition, businesses appear that focus on accounting in crypto: there’s Gilded which helps companies improve recordkeeping for crypto transactions, Balanc3, that offers full-fledged finance management for digital assets, and SoftLedger, that automates accounting for cryptocurrency transactions.
The future of accounting
While most experts don’t expect drastic changes in accounting to happen any time soon, they agree that it’ll become one of the industries the blockchain technology will affect, once it gets a wider adoption.
Brent Traidman, the CRO of crypto wallet BRD, says that “certain industries will look to blockchain to improve trust, minimize risk, better intercompany reporting, and reduce inefficiencies in the current process.”
He adds that open ledgers are vital for real estate transactions since many of them are poorly managed, expensive to track, and often require costly research in order to determine who owns certain properties today. Traidman expects new companies to appear over time, that’ll help governments and businesses track and manage assets more efficiently.
Patrick Devereaux, a partner at Apereum, believes that "we will see accounting software using blockchain enhancement to provide a more streamlined product and reduce human data input and oversight. This is already in process with some of the big accounting software providers, it will not be long before this is a standard."
Some experts say that it’s not just blockchain but a blend of technologies that can disrupt the industry. Stefano Covolan of Korporatio says that when paired with AI and machine learning, blockchain will allow for a more precise predictive analysis and automation for time-consuming processes like accounting reviews and payment of taxes.