You may be reading this blog as cryptocurrencies are rapidly losing value. It’s as likely that you’re reading this as crypto is surging in value. Either way, CFOs should base their long-term thinking on the underlying value of the technology for these three reasons.
1. There are use cases for blockchain beyond speculation
“The value of blockchain technology should not be conflated with the speculative prices of tokens and coins,” according to research firm Gartner. In a recent paper, they underline how NFT smart contracts are helping airlines with MRO (maintenance repair and overhead) processes.
The authors claim, “This will also improve passenger experiences with increasing rates of frustrating flight delays and cancellations.”
The South African public and private sector is vigorously testing blockchain use cases. Project Khokha 2, which involves the Reserve Banks and Absa, FirstRand, JSE Limited, Nedbank and Standard Bank, experimented with clearing and settling SARB debentures using blockchain technology. It found that “this has the potential to reduce both costs and complexity.
2. Blockchain could have profound implications for accounting
Monica Singer, the South African Lead for ConsenSys, believes that blockchain’s distributed immutable ledger aspect has profound implications for auditors. “One of the things that is going to change is the audit function that you have in the accounting profession, at the moment it’s based on sampling, you maybe do a sample size of 1% or 2% or something like that but imagine being able to do a sample size of 100%. It just completely changes the trustworthiness of the accounting profession.”
Singer explains that blockchain could remove the silo effect of different entities. “Imagine your regulators, the taxman, the auditor, the counterparties; everybody is looking at the same ledger, so it’s impossible to cheat,” says Singer in a recent Accounting Weekly article.
3. If you ignore blockchain, it could make you irrelevant
“If I have one piece of advice for accountants, it’s to learn programming and understand smart contracts”, says Singer. She hints that without developing tech skills, accounting professionals will lose relevance.
“I predict in future that the CA is not going to be the CEO of the company, the IT guy is going to be the CEO because eventually you won’t know what’s cooking, you won’t understand the language and companies will become more and more technology companies.”