Unchaining the blockchain

In June 2016, we hosted an Accountancy Salon on blockchain: an open discussion on the impact of this technology on the profession and opportunities for our members. The event was part of our AuditFutures programme and was run in collaboration with ICAEW’s IT Faculty.

The purpose of the Salon was to provide an overview of blockchain technology, its original vision and current developments. The speakers helped explain some of the concepts and tensions around blockchain and explored the deeper implications for the accountancy profession.

The internet disrupted the distribution of information and blockchain could prove to be as disruptive in the distribution of value. Some of the examples given at the event were the bene ts around cheaper, faster and more secure transaction and operational chains in industries like education, pharmaceuticals, banking and international development. Such innovations would pose challenges to many intermediaries, including accountancy and nance professionals.

We need to further our understanding of blockchain and its long-term impacts. FinTech and blockchain are on the radar for many. In his speech intended for the Mansion House Dinner, Mark Carney focused on the potential of FinTech to deliver a more resilient and inclusive nancial infrastructure and noted that ’the ledger, once stone, wood, or paper – and always centralised – is now digital and may become distributed’.

Trust is fundamental for our profession and there is a need for more understanding and con dence building around technologies like blockchain.

A standard database has an expected taxonomy. You know what you have on the X-axis and what on the Y-axis. For blockchain, the structure

is something that has to be discussed and agreed. You can argue that blockchain is not a database but a data-dump. The real problem
is that everyone is talking about removing of intermediaries. However, before you can even build a ‘blockchain database’, you need to build a structure and agree on common taxonomy. Current discussions on this a quite naive.

It is quite important to think about what metaphors are useful. Especially, what metaphors could help moving the discussion forward.

Blockchain is not removing intermediaries, instead it is creating a different typology of intermediaries. Therefore, we need to rst think about the shared norms that will inform and orient the approaches of creating blockchains. This could be a key role for the accountancy profession to play – in the designing and implementation.

Public bene ciaries organisations will soon be put on a public register and this would be a perfect structure for blockchain. You can create a global database for companies that

Machine learning is another aspect that is often missed in the discussion. If you put all the data in some format and adopt an open culture, machine learning will help systems make sense of data.

We believe that blockchain is not a technological solution – it is cultural and governance solution. Technology should follow the need. Technology opens the opportunities to think about a problem but the use cases should be developed from a number of perspectives.

Most of our business practices are based on very Renaissance notions of seeing the world. We tend to think about objects and entities in isolation. Like thinking about the atom as the indivisible single element. Even today, our institutions are designed by our world views – seeing things in isolation. This is how we think about corporations, about individuals. We approached it like that because it was easily manageable. Now, we see that things are actually interdependent and we are trying to understand systems risks.

The big caution here is how we start to think not only about technology but also world view. In the western world view, the narrative has always been about the individual, about the corporation at both cultural and product level. We can see

this now being challenged because… You could argue that the individual as a discreet method of measurement, the corporate philosophy – are both a product of the existing bureaucracies. This is the true cost of our existing model of bureaucracy structured in the way we say the world.

Now technology is changing the cost of administration. And this will allow to unleash new types of organisations and new types of behaviours.

Blockchain could be as innovative as the double-entry bookkeeping. Or it might not change anything – it all depends on us taking the right approach.

 

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Key insights from the Accountancy Salon on the blockchain, with contributions from Patrick Spens, Cathy Mulligan and Brett Scott