Lots of people speculate about the next big innovation that will take their industries by storm.
In the realm of accounting and finance, there is a major technology often misunderstood by professionals that could dramatically change the game for the financial services industry.
That technology is blockchain.
What Is Blockchain?
Blockchain technology can be hard to understand at first. Is it a niche hobby for tech geeks? Is it the same thing as bitcoin?
Blockchain is the technology that underlies bitcoin — the cryptocurrency — but it is not synonymous with bitcoin.
At its core, blockchain is a ledger of transactions similar to a database. Everyone in the financial industry is familiar with ledgers. This is just a more high-tech kind of ledger.
A blockchain ledger is a distributed ledger, meaning no one party has control over (and therefore the ability to manipulate) the ledger. Blockchain technology is open source and decentralized. All transactions are locked in, and the “blocks” are essentially immutable.
So why does this matter, and what are the future implications of this technology on the finance and accounting world?
I’ll go through some of the biggest accounting-related implications.
Movement Of Money
Currently, the movement of money is still pretty slow given all of the technology we have available. Transactions still take a few days to process, and bank accounts rarely reflect exactly how much money is actually in the bank.
One of the biggest potential implications of blockchain technology on finance and accounting is for instantaneous movement of money, or real-time financial transactions. That means no more waiting for transactions to hit your bank account or for checks to go through before seeing your financials.
Status: Happening now. Cryptocurrencies like bitcoin allow for real-time, peer-to-peer transactions.
Source: Forbes / Levi Morehouse
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