Blockchain technology is expected to be at the forefront of the fourth revolution when it strikes and it’s no wonder that this novel technology is set to disrupt the existing economic structure, creating some jobs and services and suppressing a few in its wake as well.
Therefore, the question arises whether blockchain, with its efficient and decentralized distributed ledger system, will replace the accounting system as we have known it all these years. We wonder if accountants will be turned out of their jobs when the blockchain wave finally hits full-throttle. The answer to this question is complex.
While we believe blockchain will not completely do away with accounting, it will definitely modify the job description of the profession, giving it a certain subjectivity which a technology is likely to lack. How does that work?
Blockchain, at its very core, is a technology extremely well-suited to accounting. It is a distributed ledger maintained digitally which can track and monitor transactions and asset ownership. Therefore, financial information can be very easily recorded and processed by a blockchain network. Now the profession of accounting involves measuring and communicating information related to one’s financial history. The accountants, more importantly, also analyse all these measured and recorded information. The accountants work on considering what rights apply to a certain property and planning the most appropriate resource allocation model so that they are utilized effectively. While use of blockchain can enhance their ability to track and monitor the underlying information, and use smart contracts to execute deals and make fund disbursements, their subjective perspective with regard to the application of the rules and data to a human world remains important.
Blockchain is expected to COMPLEMENT rather than REPLACE the profession of accounting by bringing down administrative costs of maintaining and matching databases, and tracking accurate information about asset ownership. The network also maintains a list of resources and obligations, assets and liabilities in a trustworthy, factually accurate fashion.
Therefore, the energies of accountants are shifted to be channelised into the tasks of making valuations and planning allocations rather than drably measuring and recording data.Therefore, what this entails for accounting is that this new technology, just like and along with automation systems such as machine learning, will take over lower-level tasks of accounting. It will record transactions and track them much more efficiently than human beings, having eliminated the possibility of human errors. However, more subjective work will remain the domain of professional accountants. Accountants will be required to make assessments how the financial information play out in the real world economy.
Data is nothing unless verified and applied in a human context and this human perspective is something only professional accountants can provide. A blockchain network might record information about which debtor defaulted on a loan, but assessing recoverable worth and planning ways to recover some value would remain the task of accountants. By eliminating basic recording work and reconciliations, blockchain makes factual accuracy possible, and even help measure indicators that are currently not included in measurements, such as worth of the data held by company. However, this doesn’t mean accountants will be entirely eliminated.
Thus, having a greater blockchain adoption does not entail the likelihood of entirely replacing accounting. Instead, it is only expected to transform and channelise the expectations from accountants in a different way so that successful accountants are those who can give a new spin to the bland data.