Blockchain has, since 2016, become the most commonly discussed and debated accounting technology tool across the board. Whether an individual is employed in audit, tax, advisory, works in industry, or is associated with the non-profit space, blockchain is a tool that surely has come up in conversation. With of all this discussion, or even partially because of it, there remains some confusion as to what blockchain is, what it’s not, and what CPAs actually need to know about as 2020 begins to peak over the horizon.
Let’s break down blockchain and analyze what CPAs should be paying attention to as blockchain becomes increasingly mainstream:
- Blockchain is not an accounting system. Even though blockchain is discussed in accounting circles on a continuous basis, and even though it is often referred to as a distributed ledger, blockchain by itself is not an accounting system. It can, and is, being used to augment or supplement accounting technology, but is an augmentation and supplement rather than an accounting platform in and of itself.
- Every blockchain is different. Blockchain has been discussed so often that many practitioners may automatically assume that it represents one thing or one type of technology. This could not be further from the truth. Hundreds of blockchains have been implemented by organizations, and each one is coded and operates differently. Such differentiation ties directly into the next thing CPAs need to know.
- Blockchain will not get rid of the audit. In some circles there is an opinion and viewpoint that, as blockchain becomes more integrated into accounting practices, audit and audit practices will become automated with margins near 0 percent. While it is true that there are going to be changes in how the audit functions and how audit practitioners engage with professional colleagues, the audit is not going away. Many accounting firms, including some represented in the NJCPA's Emerging Technologies Interest Group, have integrated blockchain into both audit and advisory practices.
- Crypto is here to stay. It is impossible to say in what final form cryptocurrencies and cryptoassets will go mainstream, but it does increasingly look like we have reached the tipping point and broad adoption is now simply a manner of “when” versus “if.” As accounting and tax regulations continue to trickle into the marketplace, additional opportunities will inevitably arise for proactive professionals and firms.
- Every CPA will need to know the basics of blockchain. Linking back to the opening paragraph, blockchain continues to permeate virtually every aspect of the accounting and the non-accounting business landscape. CPAs are not going to have to become computer science or programming experts overnight, but every accounting professional will need to have a fundamental understanding of what blockchain is, and where it fits into different business models.
Whatever the destination of blockchain turns out to be, it is clear that 2020 will continue to be an exciting and fast-moving year for the blockchain and accounting ecosystem.