The term blockchain gets referenced a lot lately. In fact, we wrote a whole piece about it several years ago. The only problem is that blockchain is still poorly understood, and its association with the cryptocurrency Bitcoin only leads to more misconceptions.
Let's start with a basic definition: Blockchain is a form of peer-to-peer database technology that is distributed among users. It can be shared widely and added to endlessly, but once information is entered it cannot be changed. Imagine a digital receipt that continues to print endlessly.
Both the proponents and the detractors of blockchain do a great job of obscuring what this technology actually does and how it benefits users. But the single most important advantage that blockchain offers is transparency – more users have access to more information through fewer filters.
How Blockchain Fits into Accounting Systems
There is a clear link between what blockchain can provide and what various types of financial management software are intended to do. Typically, this software exists in order to streamline workflows, enhance efficiency and productivity, and improve the accounting function overall. The ability of blockchain to accurately record inputs and effectively distribute information is an obvious asset.
The key difference between blockchain and most existing accounting systems is one of scale. Enterprise accounting software tends to focus only on the enterprise itself. Blockchain, in its purest form, strives to create ecosystems that encompass multiple adjacent enterprises.
For instance, in a future filled with Blockchain a company and all of its suppliers may rely on a single public, replicated, and shared ledger. Essentially, every company would have access to all the same accounting and finance information. As a result, enterprises would consider their roles and relationships within economic ecosystems rather than their own financial health exclusively.
Is Blockchain Accessible to Midmarket Companies?
There are already blockchain APIs being added to major financial management systems. And this trend is expected to pick up a lot of steam throughout 2018. So while blockchain may be currently inaccessible to many midmarket companies, it's not far out of reach.
The question is whether blockchain is actually essential or even necessary at all? There are many solutions already on the market that promise to make data distribution faster and easier. What can blockchain do that can't already be done?
The short answer is nothing. But a more accurate answer is that blockchain does what is already possible, it simply does it much better. Midmarket companies can expect blockchain to make transferring money quicker and cheaper. It helps companies with opposite incentives to collaborate productively and transparently. Finally, it keeps more data from being lost or corrupted.
Any midmarket company that understands the value of data and the essential role it plays in the future of commerce should be interested in blockchain too. This technology is still evolving, and the ideal applications have yet to be identified, but its potential is undeniable.
But if you're ready to make the best use of the data you have right now, you will want to seek out a financial management software that has already reached maturity. Contact the team at AcctTwo to learn why Sage Intacct is so popular with accounting and finance professionals.