Bitcoin, also known as the e-currency of the deep web, the black online market where criminal transactions are made, has recently gotten quite a lot of press, since Deloitte opened a Bitcoin ATM in Toronto, Canada.
However controversial it may seem that one of the world’s big four would endorse such an industry, Deloitte’s move is mostly symbolic, as BTMs which exchange digital currency into hard cash have been around for quite a while without ever really taking off. The company’s interest is not so much in the currency itself, but rather in the technology it runs on.
Bitcoin runs on an automated ledger system, which logs every transaction that has ever taken place. Each transaction is validated with a time stamp for every block of data, and powerful encryption tools protect the system from tampering.
Deloitte is interested in applying this “cryptocurrency” system (Blockchain) straight to accounting. The idea is to use the database as its own proof of authenticity, so there’s no need for companies to keep separate records of their transactions, and there’s no need for third-party verification.
Deloitte also sees the potential of linking the Blockchain database to different accounting software, so to automate entire transaction systems. Called ‘smart contracts’, different programs linked to the system would be able to automatically issue invoices when data log conditions, such as goods received or sufficient funds are met.
The possibility of ending arduous bookkeeping and auditing work is exciting as it would free accountants to offer their expertise and advice to add value to their clients, instead of focusing on compliance and regulation work.