What is Blockchain and How Might it Impact My Small Business?

By connecting a user to a transaction, Blockchain can play a larger role in identifying risks and fraud. Blockchain is similar to an audit trail but uses technology instead of physical paper as documentation. Therefore, individuals within the finance department need a solid basis and understanding of technology and Blockchain technology. Additionally, it is even more important that the entity has efficient cybersecurity systems in place to prevent cybercrimes because Blockchain and other technologies operate online.

Blockchain is developed by adding a unique code, also known as a hash, onto the existing block before the current transaction (Dunn et al., 2021). It is like connecting the blocks of numbers that are associated and linked together to form a chain of blocks, hence the name blockchain. As Blockchain advances, it can support entities and auditors with managing and reducing fraudulent activity, which can also prevent material misstatements.

One of the most common ways Blockchain is already being used for business is by conducting transactions, like purchasing goods, through Cryptocurrency, which is considered virtual currency. Virtual currency essentially “eliminates the need to exchange one type of money for another” (Simkin et al., 2018.p. 45). This also eliminates the need for a centralized financial institution but leaves the Cryptocurrency to be processed through a method called data mining (Laverdure, 2021).

Some other ways that Blockchain technology is changing the way business is conducted are through the use of inventory tracking (an example would be tracking consumables from farm to table), legal agreements like copyrights and payments (an example would be photographed), and financial transactions like automatic payments being made upon the terms being met, reducing the time needed to send invoices or receipts (Patterson, 2018).

As technology continues to advance, it brings a whole different opportunity for businesses to grow and become more efficient while allowing owners and managers to focus on other key components that are critical to the foundation of their business. There is still much more to learn about Blockchain technology; however, many firms are available that provide
Blockchain services in case one is interested in exploring this area to see what opportunities may exist for their business.

References:
• Dunn, Jenkins, & Sheldon. (2021). Bitcoin and Blockchain: Audit Implications of the Killer Bs. Issues in Accounting Education, 36(1), 43–56.
• Laverdure. (2021). Crypto chronicles: bitcoin 101 for the community.
• Patterson, L. (2018). 7 Uses for Blockchain that have nothing to do with Bitcoin.
• Simkin, M., Worrell, J., & Savage, A. (2018) Core concepts of accounting information systems (14th ed.). Wiley.