https://www.youtube.com/watch?v=boz4e6XxFQ8
“The digital economy is moving toward decentralization and a reduced reliance on intermediaries,” explained Mónica Singer—a professor at the University of Johannesburg and ConsenSys’s lead for South Africa—during the online conference “Blockchain 101: Its Impact on Accounting and Other Sectors.”
The event—organized by the School of Business and Social Sciences at Universidad ORT Uruguay the Uruguayan Association of Accountants, Economists, and Administrators—took place on Thursday, June 3, 2021.
Toward a Decentralized Digital Economy
“There are intermediaries involved in every transaction. For example, when artists sell their music, their paintings, or a book they’ve written, they find that the intermediary takes the lion’s share of the profits. That’s the world we’ve created because we don’t trust one another,” Singer said.
The expert mentioned the English term honeypot (a trap or decoy system). She explained that centralized systems create this: “It’s like when bees are drawn to a jar of honey. Hackers, when your data is centralized, come and hack your system.”
Singer noted that blockchain allows transactions recorded in ledgers to be shared in real time, enabling all parties to view the same entries.
“The digital economy is moving toward decentralization and a reduced reliance on intermediaries. Everything is changing. The first major change was Bitcoin. In fact, it has been the most significant development in the realm of monetary policy,” the expert stated.
“The changes are similar to what happened with CDs or VHS tapes. The world of finance is changing rapidly—so much so that society isn’t quite ready to accept it. This technology is pushing us out of our comfort zone.”
The End of Middlemen
“Eventually, we won’t need intermediaries anymore. Technology will provide the trust that buyers and sellers need. In the future, there won’t be any need to consult a lawyer because the software we use will be designed to prevent fraud, ”Singer said.
The expert noted that blockchain has five key components:
- Immutable ledger. It is a database that permanently records every transaction that occurs.
- Cryptographically secure. Uses proven technology.
- With decentralized consensus. There are many copies of the database, and no single participant can manipulate it.
- Smart contracts. The Ethereum blockchain can store and execute data and smart contracts on the blockchain.
- With digital assets. Blockchain can track any file digitally and securely.
This context marks the dawn of a new era for accounting. The expert noted that “blockchain is a technology with the power to transform accounting.”
This does not spell the end of the accounting profession, but rather presents an opportunity. Transactions recorded on a blockchain make it possible to verify all transaction activity, access data in real time, reduce fraud, and link financial data.
“Banks have set business hours. The new world of cryptocurrency does not. It operates around the clock, without vacations or holidays. Transactions will always be processed in real time. Settlements won’t take two or three days. Especially for transfers from one account to another, from one country to another. That will disappear, just like horses, which used to be widely used as a means of transportation in the city and aren’t anymore,” Singer said.
The expert concluded: “These changes will open up new options; it’s not that we’re going to eliminate cash, but it will be used much less frequently. If this technology offers a much more convenient experience, with lower costs, better regulation, and better control, why would anyone want to pay with coins and bills?”