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Exponential Disruption,
Growth Potential to Accounting
By Geoff Hopkins, Director, Technology and Management Consulting, RSM
Part one of two. Look for more from Geoff in the January/February issue of Connecticut CPA.
Technology is continuously changing the world of accounting. Over the years
technological advancements have helped with work product efficiency, reducing
margin of error, and identifying and making corrections. That being said, the role
and function of the accountant has not changed significantly and continues to
include high-level transaction reconciliation and processing of financial records
for accuracy. So what's next?
Enter blockchain.
Distributed blockchain was conceptualized and put
into practice as a public and peer-to-peer autonomous ledger. As the core
component of bitcoin, it immediately solved a digital currency double spending
problem without a trusted authority or central administrator.
Bitcoin is a cryptocurrency that
emerged as product of Satoshi Naka-
moto, a pseudonym used by the un-
known individual or individuals who
developed the concept. While oth-
er coins (sometimes referred to as
alt-coins) exist, bitcoin is still the most
important cryptocurrency to date.
A 2008 paper attributed to Satoshi
Nakamoto described a peer-to-peer
electronic cash system. While other dig-
ital cash systems failed in the past due
to central processing issues, Satoshi's
method subverts the need of a central
server or authority who keeps a record
of the balances. Satoshi addressed this
via a fully decentralized and consensus
transaction database model. Every peer
system in the network needs to have a
list with all transactions to check if fu-
ture transactions are valid or an attempt
to double spend, and then the system
performs confirmations.
Blockchain may innovate intermediary
arbiters in a manner that was unex-
pected and have a revolutionary impact
during its integration within a variety of
industries and financial functions, in-
cluding accounting and assurance.
The ways in which blockchain will
change the accounting profession
aren't completely clear yet, but it's
imperative for financial professionals
to understand the key concepts and
learn where current visionaries see the
application of this technology so you,
your company, and your staff are pre-
pared to take on the ensuing changes
and opportunities.
"[Blockchain] is to bitcoin,
what the internet is to email.
A big electronic system, on top
of which you can build applications.
Currency is just one."
Sally Davies, technology reporter