Blockchain: From buzz to mainstream
Q Is blockchain buzz or reality?
A Since blockchain technology was introduced, there has been much promise, speculation, success, and failure around various projects. Our 2020 Global Blockchain Survey revealed that 83% of respondents believe their company will lose competitive advantage if they don’t adopt blockchain technology. The evolution of the technology from peer-to-peer payments to a transformative trust technology coupled with the evolution of thinking by companies directing investment dollars toward real transformative applications could create the pivot to mainstream adoption. Most survey respondents have blockchain in their top five strategic priorities, and of those, most have brought blockchain into some level of production. In the short term, blockchain technology is moving into the mainstream.
Q What are areas of concern over blockchain reliability?
A A key feature of blockchain technology is immutability of its records. This is a compelling benefit of using information from a blockchain for operations and financial reporting. However, the reliability of information on a blockchain not only depends on its data inputs but also the design effectiveness of the consensus mechanism and the roles of those involved in the blockchain network. This reveals many factors to consider, including methods of consensus for validation of transactions, integrity and distribution of network participants, the governance structure that aligns incentives with desired behaviors, and processes for addressing issues and implementing changes that benefit the network. It is critical to consider these factors when evaluating blockchain’s reliability and, by extension, the information recorded on it.
Q How will blockchain change the auditor’s role now and in the future?
A Today, auditors should endeavor to be informed about blockchain technology and the use cases or deployment by the companies they serve or within their broader industry. These may vary from nonfinancial information sharing to automated financial transactions. Not all auditors need to be blockchain experts, but they should develop enough understanding to consider its impacts on financial reporting and audit. As blockchain technology is deployed and digital assets become more commonplace, there will likely be new demands for trust and confidence in information, networks, and systems. In response, future auditors will likely develop new methods and tools for providing assurance and become, or interact with, blockchain experts.
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