Blockchain was a favored subject during the 2017 AICPA Engage conference held this year in Las Vegas. Sessions on the technology were well attended, with attendees clearly interested in learning how the technology would affect the future of the accounting profession.
Blockchain technology is essentially a distributed ledger platform that contains, transmits and stores data in such a way that makes transactional activity extremely secure, and removes “middlemen” like banks and clearing houses. Blockchain is already in use, and Big Four firms -- most notably Deloitte, which has several blockchain innovation labs globally -- are already investing plenty of money and talent into the technology. The online currency Bitcoin is the most well-known example of an asset traded on blockchain technology, but smart contracts and general currency movement are some of assets the accounting profession is most interested in seeing come to life on blockchain in the near future.
Consultant Gary Boomer of Boomer Consulting used his stage time at Engage to try and parse whether the promise of blockchain for the profession is reality or hype.
“To understand what blockchain can do for you, you have to stop thinking linearly and locally,” he said. “You have to think exponentially and globally. What would you do if your company or firm were ten times bigger?”
That, he contended, is the promise of blockchain, as the technology would allow for much faster and much safer movement of assets, whether those assets are material goods, currencies or contracts. And the reality, Boomer said, is that “blockchain will not make your firm any money, and it will disrupt you -- unless you invest in it now.”
Amanda Wilkie, chief information officer at WithumSmith+Brown, went one step further and told attendees that blockchain would “change the world” -- especially the accounting world.
She recalled PCMag’s claim that 2017 would be the “year of the smart contract.” Smart contracts essentially take blockchain’s inherent ability to record and store blocks of data securely, and push that into the next step of taking that data and translating them into contracts. This is possible because if all blocks of data communicate with each other (as opposed to existing on different, disparate databases), the need for middlemen to construct contract clauses is removed. According to a recent Deloitte blog post, applications for such blockchain-based smart contracts include validating loan eligibility and executing transfer pricing agreements between subsidiaries.
While the IRS has not issued any new guidance on blockchain since 2014, last year, Congress formed a Congressional Blockchain Caucus; and the Treasury Inspector General for tax administration issued a report saying the United States need to overhaul its bitcoin strategy.
As for accountants? As Gary Boomer says, “Invest.”
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