When talking about disruptive technologies with the potential to change the world forever, it is impossible to ignore the impact of blockchain technology and how millions of people are eager to purchase bitcoin and cryptocurrencies.

This unique technology is based on an immutable ledger capable of controlling, registering, and securing cryptographic transactions, in which all exchanges of data or money are peer-to-peer (P2P).

Hence, blockchain technology has a huge potential to take accounting to the next level, especially when it comes to updating the way accountants deal with documentation, billing methods, and tax payment processing.

In this article, you will have an exclusive overview of how blockchain technology has the potential to change the future of accounting.

Blockchain Technology & Accounting – Understanding the Correlation

Even though many accounting professionals are not feeling the impact of blockchain yet, it is crucial to be open to this new trend and adapt to what this unique technology has to offer.

The term blockchain has become known worldwide in recent years. Since 2013, when Bitcoin had a boom and achieved mainstream success, more segments started to realize the real effectiveness behind the advantages brought by blockchain technology.

Nowadays, several conventional companies around the world already adopted cryptocurrencies as means of payment, allowing customers to choose between different digital assets when paying for products and/or services.

Also, big players such as Visa, PayPal, Mastercard, and Tesla have just entered the crypto game, increasing the valuation of digital assets both as hedging and as a valuable form of currency.

According to a recent SEC announcement, billionaire Elon Musk and the Tesla company was investing US$1.5 billion worth of Bitcoin, which contributed to an instant appreciation in the cryptocurrency price of several digital assets (e.g., Bitcoin, Ethereum, Dogecoin, etc.).

Consequently, accounting professionals need to stay up to date with the innovations brought by blockchain technology, especially when more and more companies are incorporating cryptocurrency in a way or another.

Plus, there is a great potential for blockchain technology to help, for example, in accounting processes, facilitating the work for both clients and accountants.

Blockchain Technology and Immutability – Next-Level Accounting Performance

The blockchain is an open and distributed ledger that can record transactions between two parties (peer-to-peer) efficiently, verifiably, and permanently.

When used as a distributed ledger, a block is managed by a peer-to-peer network that is collectively inserted into a protocol to validate new blocks.

Once registered, the data of any block make up a chain in which they cannot be modified retroactively without the alteration of all subsequent blocks, avoiding fraud and evasion.

Accounting professionals could utilize blockchain technology to secure data and accounting records as never seen before, with no chances of forgery, counterfeiting, or other problems that harm accounting activities.

Nowadays, a series of double-checks and data control mechanisms are required in all accounting and tax-related activities. However, even though the current system is significantly effective, these mechanisms make daily transactions much more bureaucratic.

It is in this scenario that blockchain technology allows information sharing processes to be thoroughly and efficiently verified. When an accountant inserts data in the blockchain, all data sharing processes are fully traceable, allowing them to be tamper-proof.

Blockchain Technology Considerably Reduces Potential Errors

Additionally, blockchain technology makes accounting proceedings much easier and more reliable, since once inserted in the decentralized ledger, all accounting data cannot be modified.

For instance, this exclusive technology reduces the possibility of error when performing an audit, permitting easier and seamless security management, since all information inserted in a blockchain is encrypted.

Blockchain Technology Permits Real-Time Accounting Processes

The data contained in the blockchain is updated in real-time and made public automatically, becoming permanent in the decentralized ledger for anyone to verify the information.

Another essential factor when associating blockchain technology and accounting is the fact that users can verify and audit transactions without the need for any intermediaries, meaning it is possible to automate specific parts of audit proceedings.

How Will Cryptocurrency Affect Accounting?

Currently, there is an ever-growing number of companies adopting cryptocurrencies as means of payment for products and/or services.

Consequently, as more businesses join the crypto-based economy, accounting services will be forced to include cryptocurrency transactions in their accounting processes.

Logically, they will need to understand the fundamentals of blockchain technology, peer-to-peer (P2P) transactions, altcoins, exchanges, crypto-trading, and other basic concepts.

Plus, professional accountants who adopt cryptocurrency as a payment for their services will open their portfolio for millennials looking for crypto-friendly companies.

Final Thoughts

It is safe to state that blockchain technology will play a key role in the accounting field in the near future.

Nowadays it is still difficult to measure the real impact blockchain technology will bring in terms of benefits for accountants, but considering all the bureaucracy and slow processing methods most professionals are exposed to at the moment, the novelty will surely be positive.

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Source: https://datafloq.com/read/future-accounting-blockchain-technology/15033