While the erratic value and confusing legal status of Bitcoin dominates the headlines, the underlying blockchain technology is of growing interest to accountants, according to Dr. David Collins, chair of the accounting department
in Bellarmine University’s W. Fielding Rubel School of Business.
“Blockchain is the next paradigm-shifting technology,” he said. “It will change every industry in the world. Those organizations that mobilize early and select the right partners will be in the best position to test out prototypes and ultimately reap the benefits of innovation.”
A blockchain is a collection of digital files containing ultra-secure transaction data stored in multiple locations, with new transactions processed into new blocks that are sequentially added to the end of the chain. Once part of the chain, the data inside these blocks cannot be changed or removed. The technology was originally conceived to create unalterable digital timestamps, said Collins.
According to Collins, security experts believe that there is not currently enough computing power available to change or remove a block’s security features.
Collins says these technologies can be used for any transaction where timeliness, traceability and transparency are important. “Blockchain promises to drastically transform digitized business processes, making them more efficient, more agile, more secure, less costly and more transparent, while eliminating many intermediaries and increasing productivity,” he said.
“By creating and storing blocks of data that are identical across the network, the blockchain cannot be controlled by any single entity, and has no single point of failure,” he said. Collins described it as a “self-auditing” system that is transparent and incorruptible, serving as an independent, permanent record of each transaction.
Bitcoin, the virtual currency, is the most well known application of blockchain technology, but Collins said that’s only one of many potential applications.
Collins highlighted several areas of innovation where blockchain development is taking place, including identity management, intellectual property, direct crowdfunding, digital voting, medical records and even stock trading.