By Nick Roquefort-Villeneuve, Global Marketing Director – Amalto Technologies
Five year ago, who did you know still used a physical broker to invest in stocks? Today, who do you know is not using the Blockchain technology? Let me rephrase. Who do you know is not trading cryptocurrencies? If you invest in cryptocurrencies, you are using the Blockchain technology. After all, weren’t Bitcoin, Ethereum and other Ripple at the center of most of your family conversations over the Holiday season? And I’m pretty sure you were able to captivate your audience, when you shared some of your most recent returns on investment: 10x, 25x or even 100x do sound like music to anyone’s ears. How about your Uncle Bob though? You know, this relative who systematically takes great delight in contradicting everybody just for the sake of ruining the mood? Did he rub the Bitcoin’s recent and spectacular crash in your face? Just don’t mind him.
What is Blockchain Technology?
To some, the notion of Blockchain still remains vague or difficult to grasp. So here is a commonly-used definition: “The Blockchain is an incorruptible peer-to-peer digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” In other words, the Blockchain helps create cost-efficient business networks, where virtually anything of value can be tracked and traded, without requiring a central point of control.
Why is Blockchain incorruptible? A blockchain database, for example, is not stored in a single location. It is indeed hosted by millions of computers simultaneously, which makes hacking and corrupting data virtually impossible, since hackers can usually focus on one location at a time.
Blockchain technology is robust. Data is stored in blocks that are identical across a given network. As a result, the Blockchain cannot be controlled by a single entity and has no single point of failure.
Also, a Blockchain network lives in a state of consensus, which infers that it automatically checks in with itself regularly. You can assimilate it to a form of “self-auditing” ecosystem. The network reconciles every transaction that happens in defined intervals, ensuring the systematic validation of the data stored and all incurred transactions.
Blockchain Technology and Finance
“Incorruptible,” “robust” and “self-auditing” are buzzwords that have naturally caught the attention of Finance and Accounting Executives in major industries around the world. Having said that, the choice to embrace the Blockchain technology requires that organizations shift paradigm and transition from a centralized ecosystem to a decentralized environment and, therefore, reinvent or simply deconstruct the way their back-office operations work.
On the flip side, digital technologies and cloud-based applications have transformed Finance departments by enabling the streamlining of crucial business processes (accounts payable and receivable, contract management, reporting, etc.). However, the other side of the coin is that existing accounting systems are centralized, and professionals are fully aware they can be inefficient as well as vulnerable to slow transaction times, errors, misinterpretation, disputes and fraud. Blockchain is a disruptive technology that helps companies address these issues and, ultimately, minimize risks by creating a decentralized environment based on accountability and transparence. A direct consequence of virtually eliminating risk is a decrease in the overall cost inherent to the management of those finance business processes.
The same benefits apply to supply chain, which intrinsically impacts a company’s net income. Blockchain offers traceability and transparency, which are the most important attributes of logistics, and optimizes business transactions and trading relationships, thanks to its robust and secure networks.
Conclusion: Are You Ready?
Blockchain represents an immense potential for truly optimizing all finance business processes. Is it about to become mainstream? Experts give it three to five years. In this day and age, three to five years is already tomorrow. Some businesses will act as pioneers and will certainly benefit from an early mover advantage to set industry standards and gain a significant competitive edge. The question I invite you to start asking yourself is, “Where do you want your organization to be in five years?”