If blockchain breaks down corporate digital strategies globally, it will also compromise business departments and the way they manage their business in the future. In fact, according to a recent survey, 50% of financial leaders say that the blockchain will be part of their commercial transactions in the next five years. Those who responded to the survey also noted that blockchain and cryptocurrency will determine the need for financial professionals to expand their skills and focus on specialized accounting.
Blockchain As Disruptor
Survey data was compiled by Robert Half Finance & Accounting and conducted by an independent research firm. The findings are based on the answers of over 2,000 financial leaders of companies in more than 20 of the largest metropolitan areas in the United States.
There is no big surprise in the conclusion and the interruption that the blockchain can and is causing has been well documented before. However, this research examines the blockchain at a micro level and shows how disruptive it is in accounting and finance departments. In particular, it showed that:
- 36% of staff will have to expand their skills to adapt to new accounting and financial technologies
- 34% say that the need for specialized accounting will increase
- 30% say that there More collaboration between departments and IT
- 29 percent say it will not affect accounting and finance until it becomes government regulated
- 9 percent of respondents said it would have no impact.
Related Article: 7 Trends Driving Blockchain Forward
Impacts of the Blockchain on Finance, Accounting
Crystal Stranger is CEO and founder of El Paso, headquartered in Texas, PeaCounts, who built a powered payroll system from blockchain. He believes that there are many ways in which blockchain technology and cryptocurrency affect the finance and accounting departments:
Single Entry Bookkeeping – Blockchain is an accounting technology, so it could be used to create single-entry accounting rather than double-entry. Although, he said, he has already seen this fact in practice, most attempts have instead created a triple-entry accounting
Immutable Audit Trails – The hashing Blockchain can be used to create an immutable audit scan and essentially eliminate the need for most external audits. (A hash is a function that converts an input of letters and numbers into an encrypted output of a fixed length.A hash is created using an algorithm and is essential for the management of blockchain in cryptocurrency).
Smart Contracts – Smart Contracts can be used to automate payments and create reliable employment or credit systems.
Related article: 10 obstacles to the adoption of corporate blockchains
Blockchain in the enterprise
All this derives from the way in which blockchains are built and which, by their nature, are they adapt comfortably to accounting and finance. However, it is not limited to these areas alone. Co-founder and chief strategy officer of Unchained Capital, based in Austin, a blockchain financial services company, Dhruv Bansal explained how blockchains work in the enterprise. Many cryptocurrency portfolios, he said, use a key addressing scheme known as BIP32 or deterministic hierarchical portfolios (HD). In other words, this means that the wallet has only one root key from which it is able to construct a huge number of secondary keys or subkeys, arranged in a tree
Conventions have been established with which different parts of this are used. tree to support different applications from the same portfolio. So far this integrated accounting function has been used to separate the cryptocurrencies themselves, allowing a user to store Bitcoin and Ethereum in the same portfolio in different branches of the tree. With the increase of the company's adoption of digital resources, there will be similar conventions according to which different branches of the tree will denote different business functions: human resources, research and development, sales, customer assistance and other departments. . Within each of these departments, further branches will separate recruitment from conservation, from the east coast to the west coast, from the product to the product.
The advantages of this approach are not just modularity and transparency. HD portfolios also have the property that parent keys can generate child keys and decrypt or sign on their behalf, while children can not do the same for parents. This means that access control is integrated into the accounting. A team guide can only see or sign transactions for their team, a VP for their department and the CEO or BOD for the entire company. So, how will it be used in practice?
Blockchain in Practice
Michael Yuan, a technologist from Austin who is the co-founder and chief scientist of CyberMiles, offers this practical example. Imagine a property or another deal that automatically ends when your bank electronically uploads the correct documentation for your loan. (Example: applications on the Ethereum network can enable this process through "smart contracts" (automated contracts that transfer funds to cryptocurrency once certain conditions are met) Blockchain-based applications that perform unchangeably and transparently routine tasks (such as closing of a house) can not only make the company owners obsolete, but it could also represent considerable savings in terms of costs and time for the debit accounts, credits and outcomes of the collections.
Blockchain technology can also be applied in # 39; financial industry in other potentially transformative ways,
- Managing the identity and data of customers in a private and secure manner, while allowing for more uniform transactions and settlements within the network
- Archiving of important financial documents in a decentralized network, bringing more privacy and security accounting
- Support for a vast library of smart contracts that nurture process decentralization, such as dispute resolution
"As a digital ledger where cryptocurrency transactions are recorded chronologically and publicly, the blockchain is undergoing a slow and laborious process, improving the efficiency and the error rate of the administration of progress, "said Yuan.
Are the jobs of the accountants replaced?
However, while Blockchain interrupts finance and accounting, Mike Whitmire, CEO of Sherman Oaks, based in California, FloQast says it will not make the features easier. There was a lot of talk, he said, about how the blockchain will destroy accounting, and above all auditing. Some say that the use of cryptocurrency will drastically reduce the amount of audit work for accountants, since the transactions will be recorded on an immutable public record, so it is less necessary to confirm that the transactions actually took place. "However, for us, trusting that transactions are recorded accurately, he added, someone will have to verify the technology that produces the blockchain," he said. "Accountants will switch from controlling individual transactions to control systems that produce such transactions." This is just the continuation of a trend that began with the development of VisiCalc, the first mainstream application for spreadsheets. Accountants do not have to recalculate the totals from each computer program because we can control the program itself and trust the output as a result. It's the same story with blockchain.
The result is that accountants who want to remain employed will need to develop the IT skills needed to understand how blockchain and other technologies work. "They do not necessarily need to learn how to write code (although that would be a good idea), but they need to be tech savvy enough to keep up with the rapid pace of change and understand what IT people are talking about," Whitmire
Blockchain and Cryptocurrency Experience Rising in Demand
There are, needless to say, implications for those already working in the financial and accounting sector or for those looking to take their first steps in the blockchain-driven finance world. Ben Hodzic is a director at SelbyJennings, a UK-based financial recruitment company and part of the Phaidon International group. Offers two tips for workers in this area. The first is that when you apply for a Market Making (a market maker or liquidity provider is a company or an individual that cites both a purchase price and a selling price in a financial instrument or commodity in stock) or trading position Algorithmic at a trading company, candidates with successful trading experience in cryptocurrency or bitcoin trading are 25% more likely to get a first-round interview request, as customers view these strategies as good diversification tools.
And second, when requesting a position related to the execution focused on the e-trading search for executions on derivative and future products, analysis of the costs of negotiation or analysis of the impact on the market, candidates with experience in cryptocurrency are 10% more likely to obtain an interview request for the first round due to the rapid increase in demand and the volume of encryption.
Blockchain and cryptocurrency will both have a huge impact on accounting and associated professions. Regarding cryptocurrencies, such as blockchain, accountants will have to consider collecting payments in their workflows, just as other payment methods must now be considered, said Chris Hervochon, owner of Ga., Service Provider accounting based on Savannah.
Fluctuations in cryptographic markets create a currency risk for the business, and it is obvious that financial departments will begin to look somehow to cover that risk if they have not already done so. "As far as blockchain technology is concerned, I think that together with machine learning it will take us to the point where auditors are able to examine every single transaction of a company or government with a minimum incremental increment or none. ", said Hervochon. "This should lead to an increase in the level of public confidence in the financial statements presented to the public, in particular for the financial statements of government entities."