Another overview of blockchain technology; time to start figuring out this stuff.

Buzzword Bingo: Blockchain” by planeta is licensed under CC BY-SA 2.0

Sure does look like this blockchain technology is going to be a big deal. Might be time to start getting our minds wrapped around the concept.

For starters, check out this short overview:




For a bit more detail:

8/4/17 – Bill Sheridan at Business Learning Institute – Block chain might remake accounting. The opportunities are huge. – Introductory article is one of the better overviews I have read. It introduces the video shown above.

One sentence description of Block chain, quoting from the article:

In its simplest terms, blockchain is a decentralized, transparent ledger of transactions across peer-to-peer networks.

Blockchain started with bitcoin. The basic technology carries forward to a wide variety of applications.

Consider the possibility of having an unalterable public database of property titles to all parcels of land in a county or even a state. Consider having an accessible database of all mortgages on a property.

Now step up to another level: consider the possibility that the entire purchasing system and inventory of a company like Wal-Mart or Target could be in a blockchain database. Every vendor of Target could see a database that has every transaction between the vendor and the company. The concept is it would be extremely easy to reconcile sales and receivables.

The article continues with the more outrageous claims you will see, specifically that a company’s records can be audited daily making it unnecessary to audit public companies.

I think the claim of replacing audits is way over-the-top. More realistically, there are massive numbers of processes and reconciliations performed by companies every day which would be unneeded if there was an external database a company and its customers or vendors agreed is accurate.

I am struggling to see how blockchain will affect the typical audit for a small company and don’t yet “get it” for larger companies. I am starting to see that internal procedures, reconciliations, and audit testing will be dramatically changed.

Check out the article for yourself for a great introduction.

Article also links to the following 30 minute lesson. Check it out. It would be worth your time:




Here is a more nuanced article describing actual applications:

About 7/27/16 – Financial Executive International Daily – Building the Future of Finance with Blockchain –  Applications currently in place or visible in the near term will reduce the amount of manual reconciliations and increase speed of accounting & finance functions. This article paints a picture of having a wide range of discrete blockchain databases in use, each of which will make a particular process easier and faster.

Here are a few applications I am able to wrap my brain around:

  • Basic contracts (both parties to a contract have an unalterable copy, with a complete history of all changes and all related contracts, with the contracts signed electronically)
  • Smart contracts (the brain stretcher here is to add coding and conditions to a complex contract which would in turn allow self execution of financial transactions when certain conditions are met; an escrow agent or intermediary would not be necessary to carry out the terms of a contract)
  • Property title (imagine having a searchable database of every title change ever recorded on each specific piece of property in a county)
  • Syndication (imagine being able to having one database with details on every individual loan that went into a large loan package, how the loan was sliced up to all of the participation owners, and how every distribution payment was allocated to each slice of the syndication)
  • Supply chain management (picture a company having all of their purchasing and inventory management in one database which is accessible to each of their vendors)

Further down the road the immediate payment capability could lead to disintermediation. Some banking features could be done away with. Notary Public services would be unnecessary. Many other service providers whose job is a go-between or some sort of escrow provider could be replaced with a blockchain.

A far more realistic view of block chain, which is when I can get my arms around, would be to automate, or make more efficient, or make more timely many procedures which have to be done manually.


Here is an article that hints at the payoff from blockchain and some possible serious pushback from intermediaries who face financial loss from the technology:

5/22/17 – Reuters – Commodity traders, banks face hard realities with game-changing blockchain – In addition to various technical challenges, like common legal rules, a company that developed a ‘proof of concept’ trade of commodities with blockchain encountered resistance.

Apparently traders whose jobs just might be eliminated are reluctant to participate in the grand experiment. Companies who might realize some efficiencies (i.e. laying off traders) are still hesitant to engage because of the risk of losing their intellectual capital, trading contacts, and market share.

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