The blockchain and the profession - is radical change coming?

We had an 'Accountancy salon' last night on blockchain technology and how it could impact on the profession in the long term.  Organised in conjunction with the AuditFutures programme, it was a lively debate and you can see some tweets and pictures here.

There is definitely a long way to go in this discussion - there are still many unknowns about how the technology will develop, how it might be adopted by businesses and how it could impact on accountants. But here are a few thoughts I took away from the evening (picture of the panel below). 


Firstly, it’s helpful to recognise the different strands of debate around blockchain technology. It may have all started as a political critique against centralised control, and a push for more open and decentralised systems. But the interest of the corporate world is really on private blockchains that are simply more efficient, resilient and secure than systems based on centralised databases.


Linked to that, is the question of why and when blockchains really are the best solution. I can see that where very high levels of integrity are required, the inherent security of blockchains can be very useful - tracing the provenance of food supply chains, for example. Likewise, I can see that a shared ledger between banks could massively simplify inter-bank payments systems and processes, getting rid of lots of reconciliation activity and producing substantial efficiencies. But there were some interesting challenges concerning the specific benefits and drivers for adoption across the broader businesses environment. What is the business case for investing in the substantial technological and process change that would be required?


Another point that merits further discussion is the impact on accounting and auditing. If financial transactions ultimately all move onto a blockchain platform, and are validated through cryptology, what would the auditors do? Panellists suggested that there would still be a need for assurance over the ‘black box’, to build trust that the system is working as expected. There would be a need for assurance over the governance model – who is able to update the blockchain and are the permissions working as expected? There would also still be a need for assurance over the judgements made in the financial reporting process. But the process, scope and focus of audit would be very different, as would the skills required of auditors.


So, it was an interesting debate which raised more questions than answers for me. I haven’t quite bought into the view that the future is all about the blockchain, although I can see how it can be a very powerful technology in some contexts. But if we do move into a world built on blockchain technology, it would be a radical change for the profession and much more thinking about the application and implications are needed.