Paper Example on Blockchain

Block chain was created by an anonymous individual(s) using the alias Satoshi Nakamoto. Their mission was to create a system that will allow people to trust each other with full confidence. Their system gave birth to more systems such trusted time stamping for documents and completely anonymous digital transaction.

One of the revolutionary concepts in the world of technology is the creation of the Blockchain. This is a system that is centered on reducing the hassle that one has to go through when making, tracking and auditing financial transactions such as payments among others. This is a revolutionary concept because unlike other systems, it employs the use of a unique digital signature that is incorruptible, to record and store financial information. When a transaction is completed, it is given a unique digital signature and is stored in a number of computers to ensure that it is safe from cyber-attacks such as hacking. What this achieves is a system that records financial data chronologically then forms blocks of data that are then cryptographically secured.

One of the key selling points of Blockchain is that it is a one-way system, in that the digital signature cannot be used to work back, track the original transaction and alter the details of the transaction. When the details of the transaction are altered, then a different digital signature is produced, thus indicating a mismatch in the data. This is a core step in preventing fraud. This paper aims at impacts of blockchain technology in accounting and how it can be utilized in accounting industry.

Contents

1. Introduction.5

2. Background and context.6

2.1 Understanding the BlockChain .8

2.2 other applications and limitations of blockchain..8

2.3 purpose of study.9

3. Summary of relevant theory..9

3.1 Why adopt blockchain...11

3.2 How does it impact accountants....12

4. Major players that are researching on the benefits of blockchain..12

5. Early blockchain adaptors in blockchain industry.14

6. Developments of blockchain in accounting industry16

7. Blockchain identity..17

7.1 How blockchain identity works.18

7.2 pros of blockchain identity.19

7.3 cons of blockchain identity.20

8. Current situation of accounting industry.21

8.2 artificial intelligence to emerge..23

8.3 globally mobile workforces will spur further innovation..23

8.4 Blockchain will come of age.23

8.5 Blockchain social impact intensify...24

9 differences between blockchain and traditional accounting model.24

10 methodology..26

10.1 Study design.26

11 Data collection26

12 data analysis..27

13. Research findings.29

14. Conclusions and recommendation.......30

15. References .. 32

1. Introduction

One of the revolutionary concepts in the world of technology is the creation of the Blockchain. This is a system that is centered on reducing the hassle that one has to go through when making, tracking and auditing financial transactions such as payments among others. This is a revolutionary concept because unlike other systems, it employs the use of a unique digital signature that is incorruptible, to record and store financial information. When a transaction is completed, it is given a unique digital signature and is stored in a number of computers to ensure that it is safe from cyber-attacks such as hacking. What this achieves is a system that records financial data chronologically then forms blocks of data that are then cryptographically secured. One of the key selling points of Blockchain is that it is a one-way system, in that the digital signature cannot be used to work back, track the original transaction and alter the details of the transaction. When the details of the transaction are altered, then a different digital signature is produced, thus indicating a mismatch in the data. This is a core step in preventing fraud.

Block chain was created by an anonymous individual(s) using the alias Satoshi Nakamoto. Their mission was to create a system that will allow people to trust each other with full confidence. Their system gave birth to more systems such trusted time stamping for documents and completely anonymous digital transaction. (Block Chain, 2016)

Block chain is a distributed database that maintains a never-ending list of record that occurred recorded on a massive amount of computers in the world chronologically and publicly. Each block contains a timestamp and a finger print of previous block. These blocks of chains contain data that resists modification. Once the data is recorded, it cannot be changed. They are the future as they are best method to transact securely online. They are decentralized therefore there are no outside Trusted 3rd party like Banks or Government to facilitate the transaction therefore Banks and governments do not have the ability to control Bitcoin because there is no need for a 3rd party verification system. Every time there is a new transaction on block chain, all of the computers are updated. It allows the digital information to be distributed but not manipulated or copied. Block Chain begins when a user requests a transaction. This request is then broadcasted to many different computers know as nodes. These nodes have the task of validating the transaction using various algorithms. Once the data is encrypted and verified, it is combined as a block with the existing block chain resulting in a complete transaction.

The block chain also provides full transparency by storing the ledger on all of the computers on the network. Block chain cannot be corrupted because altering information would require insane computing power. William Mougayar compares block chain to the Google docs with Google docs; one copy of the document is shared with multiple users. These users are able to add or subtract their own data to the document. Similarly, block chain shares one never ending ledger with all of the computers in the network. Every transaction that occurs gets stored on the ever growing list. Anyone can easily look up the list and the transaction to verify its authenticity without revealing the parties identity. (Blockchain, 2016)

2. Background and Context

Different technologies have impacted the accounting profession and the business processes. However, the Blockchain technology is also met with both and caution; admiration due to its perceived usefulness and perceived ease of use and caution due to the consequences of technology on profession and insecurity. Blockchain technology is one of the many disruptive technology trends that have impacted the way accounting entries are implemented making it one technology that accountants and auditors should learn to use as the rate of adoption and the users intention to adopt the technology is high. Blockchain technology is a one distributed ledger that enables real-time recording and verification of transactions without the need for trusted central authority.

Bitcoin, one of the successful forms of digital currency, relies on this Blockchain technology to create bitcoins. This has attracted a number of key financial sector and other industry players that aim to harness the potential of Blockchain in creating a more robust financial system. These include banks, insurance companies, national governments and even diverse industries such as the shipping industry. This diversity of Blockchain is at the core of its success wherever it has been applied, seeing as it can be tailored to meet specific goals of the end user. In addition to making transactions secure and public, Blockchain also serves to enforce smart contracts and make auditing of finances fast and simple.

The Blockchain technology it self-updates as the list ordered records (blocks) grow. Each of the blocks in the Blockchain has an accompanying tie stamp as well as a link to the previous block that uses the same fingerprint. The most noticeable feature of the Blockchain is that they are resistant to data modification and retroactive alteration. According to Martindale (2017), Bock chain is mainly used in accounting and audit to trace audit trails, automate the audit process and well as authenticate transactions.

The manual accounting process or accounting cycles involve collection and analysis of documents, posting the information on journals, posting to the ledger accounts, creating a trial balance, and adjusting entries after which the financial statement is prepared, and post-closing entries are made. The Blockchain technology would highly disrupt these accounting cycles.

Among the numerous problematic innovation patterns affecting the way we work, blockchain is one lesser known in the bookkeeping industry. Nonetheless, given its potential effect, blockchain is unquestionably a pattern that bookkeepers cannot bear to neglect any more. Characterized as an open, appropriated record, blockchain innovation records and checks exchanges with no confided in focal expert. The innovation itself exists as a document that keeps up a consistently developing rundown of requested records called pieces. Each square contains a timestamp and a connection to a past piece utilizing a "unique mark". Blockchains are impervious to alteration of information and can't be modified retroactively. While a significant number of us connect blockchain with advanced accounting, as Bitcoin, its potential effect is substantially more extensive. From medicinal records to management of identities to issues of land rights and worldwide exchange, blockchain goes as a crucial record a main issue of truth. Rather than organizations keeping and accommodating records of a similar exchange in their different, secretly oversaw databases, or records, the two sides of the exchange are recorded all the while in a mutual record. As a result of this capacity, and its capacity to record exchanges progressively, blockchain is ready to up-end customary techniques for invoicing, documentation, contracts, and installment preparing for organizations and ventures both vast and little.

2.1 Understanding the BlockChain

A BlockChain is "an innovation that permits individuals who don't have any acquaintance with each other to put stock in a common record of occasions". This common record, or record, is dispersed to all members in a system who utilizes their PCs to approve exchanges and subsequently expel the requirement for an outsider to halfway.

-1905001771650Data hung on a BlockChain exists as a common and constantly accommodated database. This is a method for utilizing the system that has evident advantages. The BlockChain database isn't put away in any single area, which means the records it keeps are really open and effectively obvious. No brought together form of this data exists for a programmer to degenerate. Facilitated by a great many PCs at the same time, its information is available to anybody on the web.

2.2 Other applications and limitations of Blockchain

The Blockchain is also used to track ownership of assets and develop contacts. The Blockchain technology has a registry and inventory systems for all types of assets that have proved useful to the accountants. However, the main problem posed by the Blockchain technology is that not most accountants are competent on adopting the new technologies and must be trained on how to use the Blockchain tech...