November 2, 2021
Your business is important to you, and you do everything you can to minimize risks at every level and in every department. But so much is out of your control. System failures lost data, and Russian hackers are all coming for you and your business.
So how do you protect yourself, particularly in the all-important area of your business’s finance? Your accounting records are some of the most valuable data sets you own. Banking, payroll, and expenses are all managed in the same place, and if any of that data was stolen, you would have a serious problem on your hands.
What if someone takes control of your machine using ransomware and demands thousands (or tens of thousands) to unlock your computer? These are things you need to prepare for in the digital era.
One solution taking more prominence in the accounting sector is blockchain accounting.
Blockchain has made waves in dozens of different industries from hedge funds to forecasting to supply chains and revolutionizing the way information is stored and shared. The accounting industry is likely to experience the most disruption from blockchain technology, as it changes the way transactions are made and recorded.
Blockchains make it possible to securely write verified transactions to a distributed register without a central authority or untrusted party creating indisputable value in the past, and with nodes that create added value by trusting the transactions. The use of blockchain technology allows users to integrate accounting and business activities without separating accounting from business activities. Each block is linked by creating a so-called “block header,” a hash of the previous block headers.
Blockchain provides the accounting industry with a technology that offers unprecedented levels of efficiency, clarity, and security. Here are three ways blockchain can revolutionize accountancy firm security.
Blockchain can theoretically be used to capture any number of data points. For example, a Bitcoin transaction or a product transfer in Bitcoin can be recorded in a blockchain. So can your accounting data points for your business.
This means a triple-entry system where each transaction and operation is recorded in a decentralized ledger. If your data is breached in one place, you can shut it down and it will continue to exist in another place. Nifty right?
So what happens if you get hacked? Without unique IDs and passwords for your key, there would be no way to access the blockchain and your data. Even if your machine was corrupted or taken over, you could connect to the blockchain where your data is stored from another device and it would all be there, protected.
Thanks to the security and trust built into blockchain ledgers, your business could end up streamlining its services in order to stay competitive in a world of growing data volumes. As an accountant or auditor, you can adapt to stay more competitive in the blockchain.
Implementing blockchain technology involves addressing significant challenges and some upfront time investment, but there are many potential benefits. Like other blockchains, it reduces information risk and builds trust in balance sheet data.
This might seem like a far-off technology that you won’t need to implement for a long time. But blockchain technology is receiving significant investment in the private sector, primarily in banking and accounting.
This will likely accelerate the shift to triple-entry accounting using a blockchain. Stay informed now, and get ready to switch to the most secure accounting system available soon.