Blockchain and Artificial Intelligence – are humans needed in the future?
It was recently revealed in a report at the World Economic Forum that by 2025 10% of GDP will be stored on blockchains or blockchain related technology. In short, Blockchain could revolutionise transactions and business operations forever.
Because of this, I’ve been following the progress of blockchain for a while and its well publicised as having the potential to reshape entire industries - especially the financial sector, and subsequently the accounting profession. Clearly that is getting close to home for me and how my business will be affected in the medium and possibly even the short term future.
I am certainly no expert on the technology and indeed the whole concept and quite what it does is difficult to articulate or understand when you first start to read about it. There seems to be split opinion on whether it will revolutionise or indeed replace the key processes in banking, financial reporting and auditing or whether it will just be an add-on to exiting systems
The proposition is, in a nutshell, services such as processing financial transactions, accounting and audits could largely be standardised via companies writing their transactions directly into a joint register which is then distributed and cryptographically wrapped and automatically verified. The argument is this will replace the need for 3rd party verification of base data and would allow for auditors for example concentrate on areas they can add more value such as complex transactions, judgement areas and interpretation of trends in data etc.
Add in processes that could develop using artificial intelligence or AI and any review of financial reporting using these tools could end up at a very high level analysis of exception reports and interpreting trends and patterns. The counter-argument to all of this, particularly from the well worn professionals like me is a cynicism over the old classic of ‘garbage in – garbage out’. The transactions may be verifiable but what if they are entered incorrectly in the first place? Is there not still a need for human interpretation at a much more basic level than just the final analysis described above?
It’s still staggering to look back at blockchains origins and its rise to prominence given that not so long ago, blockchain was a little-known basement project. Nowadays, it seems, people from all walks of life are getting involved either in buying cryptocurrency or supporting various blockchain projects (Ethereum, Bitcoin, Siacoin and others) aimed at disrupting old, centralised industries. Indeed the technology is not just potentially useful in just theses areas but could also be relevant to KYC, anti money laundering, smart contracts, supply chain management; the list goes on…
Speaking of origins, the genesis of cryptocurrencies started as a side product of another invention – Bitcoin.
Bitcoin inventor, an unknown person or group who go under the pseudonym Satoshi Nakamoto, never actually intended to invent a new currency. His idea was to develop “a Peer-to-Peer Electronic Cash System.”
Satoshi‘s eureka moment came when he found a way to build a decentralised digital cash system - with no server or central authority. Where other attempts failed, Santoshi’s succeeded – similar to a Peer-to-Peer network for file sharing. But also a way to lock in verified exchanges across a network which can be used to record the transaction – opening up to a much wider sphere than just cash or barter transactions.
Last year, you would have been hard pressed to finding a major bank, professional services firm, a large software company or a government that did not conduct some sort of research into cryptocurrencies, publish a paper about it or initiative a blockchain project. Indeed one of the Big 4 accountancy practices has actively entered the world by accepting fees and transacting with staff using Bitcoin.
Blockchain so far has largely been adopted by banking and financial services, however, new pilots from the energy sector, retail, supply-chain, construction are pushing Blockchain further into the spotlight.
While Blockchain technology is far from being the finished product, it has a great potential in improving internal business operations and external transactions for most businesses meaning no one can afford to ignore it. We all need to understand quickly how we can use it and shape our businesses to the inevitable changes that are about to occur.