Why You Should Care About Blockchain Technology

From Bitcoin to Facebook’s proposed cryptocurrency, Libra, the term “blockchain” has been popping up in the news frequently. But what is it, and why is it important?

What is Blockchain?
Put simply, blockchain is a distributed ledger, which means that multiple parties share access to a single ledger, and therefore share a single source of truth. Blockchain is often associated with cryptocurrencies like Bitcoin because of its origin; however, blockchain enthusiasts and big business are identifying potential blockchain use cases at an exponential rate.

Why is Blockchain Important?
While blockchain has quietly been around for a little over ten years, it is only within the last few years that businesses have begun to view blockchains as a potentially disruptive technology. Large companies such as Walmart, JP Morgan, HSBC, healthcare entities and other organizations have begun to utilize this technology, and many more are spending money on research to identify potential use cases.

Blockchain’s Application in Supply Chain Management
An emerging trend in the blockchain space is its use in supply chain management. “Blockchain can have a significant impact on organizational process,” says Vince LoRusso of TrueUp, a company that specializes in the gamification of accounting and finance skills. “It can create incredible process efficiencies for businesses.”

LoRusso says that while blockchain has often been seen within the world of cryptocurrency, the future of blockchain may lie in these broader organizational process applications. “As the technology matures, we are seeing a great deal of application of blockchain to the business world.”

The Future of Blockchain for Business
While blockchain has been around for a while, it’s slowly gaining traction for business usage. According to LoRusso, the biggest items that need to occur for better blockchain usage are:

1. Education. The more organizations are aware of its potential impacts and benefits, the more likely they will be to apply it. It’s important to review use cases, like the Walmart example, to see how blockchain technology can benefit your organization.
2. Maturity of the technology. As the technology continues to adapt and advance, LoRusso says we’ll see better adoptions as well as huge strides in interoperability within the technology.
3. Regulation. Current regulatory environments don’t lend themselves to how blockchain is being used. The more we can digitize ownership and find ways for blockchain to be compliant with laws and regulations, the better the technology will fair.

Eide Bailly’s Blockchain Expertise
Blockchain is no doubt having a significant impact on the way organizations do business. It’s also impacting organizations’ finances. “There are many accounting implications related to blockchain usage, and the industry is very broad,” says Husar. “The impacts extend beyond accounting and into the heart of business operations and streamlining processes.”

To stay on top of this new technology, Eide Bailly has joined the Wall Street Blockchain Alliance and the Accounting Blockchain Coalition. The goals of these organizations include the promotion and comprehensive adoption of blockchain technology. We understand that this technology is changing the way that our clients do business, and we have been researching the potential tax implications, cash flow management issues, record keeping potential and a variety of other areas.

If you’d like to learn more about blockchain technology or how it may be beneficial to your organization, contact Gary Smith for more information.