Blockchain technology has become a hot topic of conversation on social media, podcasts and news.
Blockchain technology is the new technology that traditional decentralized cryptocurrencies are built on, which allows for a secure and transparent form of digital currency. Blockchain technology is not dependent on cryptocurrency and has many other potential applications that could significantly disrupt many industries, including the accounting profession.
Blockchain technology continues to advance as a new technology in accounting and it is important foe accountants to equip themselves with the knowledge to stay relevant in the industry.
Blockchain in Accounting
Blockchain accounting is a relatively new concept. However, we already have a clear idea of how the technology could impact the accounting industry.
This technology enables peer-to-peer exchange where each user owns a copy of the ledger. This means all pieces of information that enter the blockchain are distributed across multiple computer hosts. Through this mechanism, the contents of a block will be hard to tamper with. blockchain technology is a decentralized, distributed ledger that allows for secure and transparent record-keeping. It is composed of a network of computers that work together to validate and record transactions on a digital platform. Blockchain can also change how firms handle outsource tax preparation services by ensuring tamper-proof ledger for all transactions.
Unlike a traditional ledger, blockchain isn’t owned by a single person or organization (nor does it exist on a single computer). Instead, the ledger exists across multiple computers, and can’t be controlled by a single entity. Blockchain accounting provides full transparency – an accountant, auditor and client can access an identical ledger to verify the information on it. This is very beneficial, especially in the context of tax return preparation outsourcing where data entry and secure data management are essential to maintain client trust.
Benefits of blockchain in accounting
Storing financial data safely and securely has always been of vital importance in the accounting industry. With layers of encryption and cryptographic keys, blockchains offer high-security.
Blockchains use a combination of tools, such as encryption, digital signatures, and cryptographic keys to keep data safe. Once a transaction is recorded on the blockchain, it’s virtually impossible to tamper with or remove.
Blockchain-based accounting can increase the efficiency of an organization, both in terms of cost and time. It reduces the costs of maintenance and eliminates the need for manual data entry int several databases.
Future of blockchain in accounting
The future of blockchain accounting is still in development.
Blockchain makes transaction-level accounting possible. Accountants and bookkeepers will no longer need to do reconciliations, but will still need to verify details about the assets and transactions.
Audit trails are likely to become more secure and reliable. Asset ownership will likely be recorded on the blockchain. This will likely have implications for asset management, valuation, and financial reporting. And finally, blockchain could lead to automated regulatory compliance.
In the future, offshore tax preparation services can also leverage blockchain for secure and efficient transactions.
From an individual perspective, having an awareness of the technology through available self-study could help set a foundational understanding. Furthermore, keeping up to date with industry publications and guidance surrounding blockchain technology will help bridge the learning curve for when this technology gains mass adoption.