The blockchain is a disruptive technology, and its implications are not fully understood yet. Here is how the blockchain could change the audit world.
For better or worse, the blockchain is generally associated with Bitcoin. No surprise there as it was specifically developed to support Bitcoin. However, leaving the merits of cryptocurrencies aside for the moment, it is blockchain that is now being identified as a technology that will disrupt all industries, with global companies continuing to invest in new applications.
While IBM predicts that 66 percent of all banks will have commercial blockchain products by 2020, the potential applications are not limited to finance. In fact, according to a Market and Markets report, the blockchain technology market will be worth more than $2 billion by 2021.
What makes the technology so attractive to investors? How does the blockchain work?
“The blockchain is a distributed ledger that is comprised of “blocks” that each have data. This data can be currency information, protected healthcare information, or any sensitive information, and these blocks make up the blockchain. To make this distributed ledger, the data must be mined by a person who sets up a computer to identify transactions and convert them into a digital item called a hash. When the data is converted into a hash, it then provides assurance that it occurred, non-repudiation. The hash also can provide completeness and accuracy of the transaction from one organization to another organization, or person to person,” said Avani Desai, Principal Privacy Leader and EVP of Schellman & Company, Inc., an independent security, privacy, and standards compliance assessor.
It is these qualities that make auditing an ideal use case for the blockchain.
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