Blockchain

Examining new and emerging technologies, while reflecting on their potential implications, is an important facet of this course.

As electronic and mobile commerce continue to grow and evolve, methods and systems to facilitate and record transactions are changing. A blockchain is a record of transactions, collected in blocks. The blocks utilize cryptographic hashes to link it to the previous block through a timestamp and record of current transactions.  This makes it nearly impossible to retroactively change blocks without causing alteration to the blockchain.  The blockchain can be shared across networks using peer-to-peer protocols to provide open and verifiable ledgers.  Blockchain technology, if implemented correctly, can make for a secure, decentralized and fault tolerant transaction system. 

It can allow for individual (peer-to-peer) transactions without the need for third party verification. This eliminates the needs for services such as financial institutions, accountants or lawyers the blockchain can be used to securely track and verify transactions.  Most cryptocurrencies utilize blockchain to track transactions, but blockchain can potentially track anything, including energy, funds for a specific purpose or food shipments.  Another use is in "smart contracts", contracts that can be executed with little or no human intervention.

The following resources discuss fundamental concepts around the blockchain. Watch the videos and read the material before joining the forum discussion.

Based on material in the two videos below and the information on this page, Blockchain explained, answer the following questions.

What might adoption of blockchain mean for business transactions and accounting in the future?

Please see the explanation below.

Step-by-step explanation

                                                                                Effect of blockchain adoption

             Firstly, block-chain refers to continued digital information updated relating transactions and their details, like date, time, and currency value. The information is thus created into a block linked to several blocks to form a chain. Blockchain adoption in business transactions will enhance and improve security. For instance, some irritating inconveniences experienced by clients when dealing with third parties or brokers will be eliminated. The elimination of personal third parties will create room for improved security since some third parties an untrustworthy and scammers.

            Furthermore, blockchain will ensure more significant transparency percentages as long as transactions are involved. With all the information on time, date, and currency values digitalized, and records on transactions kept, transparency will increase amongst cryptocurrency and stoke-exchange traders. Thus, the feeling of fear when dealing with an overseas third party will be eliminated after adopting blockchain (get smarter, 2022). In addition, users will enjoy speedy transactions and reduced costs, something which misses as long as a broker or third party is involved. Automating the transaction systems will fasten the payment process still keeping a digital record and information about the transaction. Also, some third parties demand payment for services rendered or using their links, referrals, and websites, an aspect that will be eliminated if blockchain is adopted and implemented. 

            Consequently, with a new way to record and process financial transactions and information, there is the likeliness of changing and reshaping the accounting ecosystem. Therefore, instead of keeping separate transaction records like price, asset, and ownership, the transactions can only be recorded into a joint register. Unlike previous accounting records, the blockchain transactions will be recorded in a joint register forming an interlocking system of accounting records (Deloitte, n.d.). However, with all the information recorded and cryptographically sealed, destroying or making false changes would be practically impossible. Therefore, the impact on future accounting would be recoding various transactions jointly in a joint register within seconds and protected cryptographically.