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In the Accounting World, we haven’t witnessed the full impact of Blockchain as yet. But it is bound to be around us sooner than later. The underlying business models of many Industry-Giants will be impacted with the arrival of Blockchain. Blockchain is envisioned to Eliminate Intermediaries, Reduce Corruption, & facilitate Equilibrium in the Society.
The best way to understand Blockchain is to consider the business model of Uber & Netflix. The key consideration here is that there is no underlying intermediary between the User & the Supplier. You can download an app & start using Uber services, there’s no need to go through any customer service protocols as such. Similarly, with Netflix you could start using the streaming services without having to liaise with any intermediary.
Blockchain is more of a P2P – Peer to Peer Network. In Computing we have WAN-Wide area networks, LAN – Local area Networks, & P2P – Peer to Peer Networks. P2P is where every Computer (node) has authority or their own boss.
The developers of Blockchain aim to ensure that the economy is based on P2P basis. The products & services are built using Blockchain model to ensure there is equilibrium in the society.
As far as Accountants are concerned, we will have to learn the mechanics around Valuation of digital-currency. IAS 38 & 36 comes to mind. IASB may introduced a new accounting standard: should Cryptocurrency (digital currency) becomes an accepted form of currency Globally.
Either way, the accounting profession is about to witness a paradigm-shift. Wherein the Accountants won’t spend precious time on reconciling & building audit trails for filing statutory accounts.
Imagine a Company buying goods & service online via digital-currency. How would you go about recognising an exchange-loss or gain?
As of now, Cryptocurrency is still being regulated in the mainstream economies of the world. In certain parts of the world it is regulated & accepted as a form of currency.
Where would you go to get the exchange rate for Digital-Currency?
Would there be a worldwide regulatory: who will issue the digital-currency exchange rates?
Digital-Currency is just one branch of Blockchain. There’re many other ways & forms that Blockchain is going to be available in the coming years.
These are just few considerations on the part of Accountants; before the digital-currency becomes a reality in the business-world.
It would be fair to acknowledge the underlying considerations, when building Blockchain enabled solutions are to eliminate injustices in the society; whether due to Monopoly or Unfair Distribution of goods & services (Supply Chain).