Block Chain Technology Opportunities for CA’s

Steve Jobs said “Technology is nothing. What's important is that you have a faith in people, that they're
basically good and smart, and if you give them tools, they'll do wonderful things with them.”
You've probably heard the chatter. Technology is poised to transform the accounting profession. Artificial
intelligence, robotics, and blockchain are on the verge of automating many traditional core CA tasks. The
profession is at a critical moment, one from which it will emerge in a far different form.

What will that form look like? When will these changes take place? And what should CAs be doing now to
prepare? Those are among the questions that need to be addressed. We need to paint the picture of a
profession that does not need to be in panic mode but does need to be learning about and preparing for a
tidal wave of technologies likely to reshape the accounting landscape over the next decade.
Breakthrough innovations in areas such as artificial intelligence, and blockchain technology are
eliminating a number of the tedious and labor-intensive manual processes traditionally associated with an
audit.

The idea that once came in, to incorporate Digital timestamps in transactions in 1991 was formally taken
up in 2009 to invent the infamous Bitcoin by Satoshi Nakamoto, blockchain technology was finally born.
The term "blockchain technology" typically refers to the transparent, decentralized, publicly accessible
ledger that allows us to store any kind of information and securely transfer the ownership of units of value
using public key encryption and proof of work methods.
Blockchain is a technological breakthrough being evaluated as a way to enable a wide range of financial
transactions that, in theory, may be reliable and potentially streamline the audit for certain financial
statement assertions. But nobody really understands how it works. This can be sorted out in 4 simple
steps.

1. A transaction must occur.

(For example purchase of An Audi by XYZ )
2. That transaction must be verified. :

After making that purchase, the transaction must be verified. The job of vetting this data is left up to a
network of computers. These networks often consist of thousands (or in the case of Bitcoin, about
5million) computers spread across the globe.
(When XYZ makes the purchase from Audi, that network of computers rushes to check that the
transaction happened in the way it did. That is, it confirms the details of the purchase, including the
transaction’s time, dollar amount, and participants.)
3. That transaction must be stored in a block. (After the transaction has been verified as accurate, it gets
the green light. The transaction’s dollar amount, XYZ’s digital signature, and seller’s digital signature are
all stored in a block. There, the transaction will likely join hundreds, or thousands, of others like it. )

4. That block must be given a hash. Once all of a block’s transactions have been verified, it must be given
a unique, identifying code called a hash. The block is also given the hash of the most recent block added
to the blockchain. Once hashed, the block can be added to the blockchain

When that new block is added to the blockchain, it becomes publicly available for anyone to view. If we
take a look at Bitcoin’s blockchain, we will see that we have access to transaction data, along with
information about when (“Time”), where (“Height”), and by who (“Relayed By”) the block was added to the
blockchain.
A technology this complex needs security too and it is secured in 2 ways:
• Hashing Technology; every block in the chain contains its own unique Hash (a complex
mathematical algorithm) which gives a unique identity to the block. If any extruded tries to tamper
 with the data, the hash of the block changes, thus making the chain invalid and intimating this
malicious intrusion to other users in the network.
• Proof of Work Methodology, that’s followed under blockchain. In the proof of work system,
computers must “prove” that they have done “work” by solving a complex computational math
problem. If a computer solves one of these problems, they become eligible to add a block to the
blockchain. But the process of adding blocks to the blockchain, what the cryptocurrency world
calls “mining,” is not easy in fact, the odds of solving one of these problems on the Bitcoin network
were about 1 in 5.8 trillion.

Professional services network Deloitte recently surveyed

• 1,000 companies across seven countries are already planning about integrating blockchain into
their business operations.
• Their survey found that 34% already had a blockchain system in production, while another 41%
expected to deploy a blockchain application soon.

Just think of the extent of revolution it can bring to Banking Sector, Health Care Services while blockchain
is already the bedrock of cryptocurrencies.

But Blockchain is much more than Bitcoin. While many people in finance departments might mistake
Bitcoin for blockchain, they are two very different things. While invented to help transact in Bitcoin,
blockchain is the digital global ledger that not only records cryptocurrency transactions, but also provides
a home for documents of all sorts. Everything from property deeds, to birth records, to money such as
Bitcoin and various alt-coins resides on a blockchain backbone

Bitcoin and blockchain have triggered a new technological gold rush. If we’re to believe the hype, there’s
no problem that can’t be solved by putting it “on the blockchain”… the challenge is to cut through the
noise and understand what new capabilities are implied, what new solutions are enabled, and what
solutions are beyond the reach of the new technology. It could reshape the business of recordkeeping
and business itself. As scalable applications are deployed—and if they live up to their potential—
blockchain will profoundly change how records are kept and transactions are processed

THE PERFECT EXAMPLE

ASX-Under development
• Pursuing blockchain technology to reduce the reconciliation related expense of keeping multiple
data records.
• Looking at using blockchain in a number of areas, including internal transfers between subsidiaries
• The ASX is testing blockchain solutions to see whether it has the potential to replace its existing
settlement systems.
• It has made a significant investment in blockchain, putting $14.9 million into US firm Digital Asset
Holdings to develop these solutions for the Australian market.
• The aim is to enable near real-time settlement of equities trades and reduce administration costs.

Questions that arise…..

• Will Smart Contracts replace us?
• Will we be able to pay taxes through blockchain?
• Should we give up Tally based accounting?
• How to make financials for transactions on the blockchain and not converted into Fiat ?
Blockchain is becoming a powerful way to do business. Because blockchain allows for the
transacting and securing of digital data, it is beginning to realize its potential to aid in a wide range of
areas, from compliance to data management.
It will bring enormous efficiency in business transactions besides making them military-grade secure,
Hence, there is massive interest in experimenting with the technology and applying it in every business
process.

Blockchain technology is really referring to the use of the public ledger where anybody and everybody can
view the transactions, resulting in true transparency. Theoretically, this type of technology could be very
useful in a lot of areas.

Greater transparency could mean that individuals are able to understand which organisations have used
their data and under what circumstances. Blockchain solutions could allow information to flow both ways;
for example, individuals might be able to better understand the provenance of goods and services that
they buy. This could allow more informed consumer decision making. In addition, there is likely to be less
cost and time involved in tracking product sources, thus adding more benefits to businesses.

Many organizations have already gone through one dramatic shift from on-premises solutions to the
cloud. Blockchain represents an even more dramatic shift—a whole new way of processing virtually any
type of transaction, on a distributed, shared, immutable ledger.

As the business use cases of blockchain technology grow, there are avenues for professionals to
understand and contribute in their way towards the upsurging disruptions that are brought about by this
technology. It throws open interesting debates for tax regimes for such blockchain development,
regulatory frameworks, point of incidences of tax, valuation and intellectual properties and much more.

Blockchain offers an enormous opportunity to significantly alter many facets of what we do and how we do
it, whether it's Wall Street or the banking sector, the Big Four, across industries and disciplines.
If a speculation is to be made

A Chartered Accountants work is a world of recordkeeping and verifying and reconciling and transactions,
and the accounting profession is a prime place for a major impact. CAs need to be looking for ways they
can bring value because the reality is, at the low end, much of what CAs have historically done is being
commoditized.

There are so many ways that technology is transforming the landscape that we're all navigating together
so that's where all of us need to be asking, "Where's the value opportunity in that for us and how CA’s
stand to gain or lose from it?"

Disrupting Industries:
• Trade settlement,
• Trade Finance,
• Regulatory Reporting,
• Digital Identity,
 • Customer onboarding,
• Land Registry,
• Supply Chain,
• Loyalty Programs & more

What Auditors need to do?

• Re learn audit analytical procedures
• Upgrade tech skills for global competitiveness
• India A Tech heavy Country – Blockchain development jobs
• Service Market from India
• Traditionally democratic
CHALLENGES

• Scalability ( Sharding – Test Check)

• Privacy anonymous
• Governance & Regulation
• Cyber Security
• Nascent
• Disruptive changes in audit methodologies

THE FUTURE
• There lies a sea of new opportunities waiting to be grabbed to bring in the greatest efficiencies
possible. Blockchain is a major leap, the wind that will usher in a new era where businesses, their
working, related tertiary, the overall outlook towards our technology driven lives will change.
• All we need to focus is on concentrating our energies and working towards a responsible, effective
and a sustainable future, which is driven by human intelligence and the newly curated technologies