Blockchain distributed ledger technology: An introduction and focus on smart contracts

Published date01 April 2020
Date01 April 2020
AuthorMarc Hamilton
DOIhttp://doi.org/10.1002/jcaf.22421
BLIND PEER REVIEW
Blockchain distributed ledger technology: An introduction
and focus on smart contracts
Marc Hamilton
Masters of Tax Accounting, University of
Alabama, CFO & Treasurer, CDG Engineers
and Associates, Inc.
Correspondence
Marc Hamilton, CFO & Treasurer, CDG
Engineers and Associates, Inc., Andalusia,
Alabama.
Email: marc.hamilton@cdge.com.
Abstract
The rapid evolution of the blockchain and distributed ledger technology and the
associated applications will require many changes in the way business is transacted
and how transactions are recorded. Significant R&D investments in blockchain
environments and the maturation of application uses of smart contractsand other
types of self-executing tools are establishing frameworks for expanded use, infra-
structure growth, and further development. The realization of the impact of these
investments is currently changing entire business processes, transforming indus-
tries, and impacting governments globally. This global disruptive impact is a major
technology evolution and will be transformational to society over the next several
decades much as the Internet has been over the last 30 years. As these changes will
be especially transformational to fundamental accounting processes, tools, and
methodologies of today, accounting and finance professionals would be wise to
embrace the technological challenges associated with blockchain technology.
KEYWORDS
blockchain, smart contract, transformational technology
1|INTRODUCTION
Just over ten years have passed since Satoshi Nakamoto
released the original Bitcoin whitepaper, Bitcoin: A Peer-to-
Peer Electronic Cash System and introduced the world to one
of the most promising technologies for the futurethe
blockchain distributed ledger technology (Nakamoto, 2008).
The impact of blockchain technology has alreadyand will con-
tinue to change the accounting profession and corporate
finance in many ways. Specifically, the rapid evolution of the
blockchain and distributed ledger technology (DLT) as well as
associated applications will require many changes in the way
business is transacted and how we account for transactions.
Most importantly, due to the trustless or self-governing nature
of the blockchain network structure, many of our professional
job roles and responsibilitiessuch as auditing and assurance
services, banking, finance and treasury management, logistics
and risk managementare likely to be completely redefined.
Currently, according to Forbes, five of the top 10 companies
investing in blockchain are from the United States and include
JPMorgan Chase, Berkshire Hathaway, Bank of America,
Wells Fargo, and Apple (Del Castillo, 2018). With the recent
announcementof a majorinvestment in blockchain by Ernst &
Young (Multimillion-dollar investment in EY Blockchain
Analyzer 2019), all four of the top accounting and audit firms
are now heavilyinvesting in DLT developments.
2|BLOCKCHAIN: AN ADAPTABLE
DATABASE TOOL
In its simplest sense, blockchain technology represents a
new adaptable database that offers a method for creating
transaction ledger entries, vetting and validating the transac-
tion entries, and storing them in a tamper-proof ledger. The
unique value created by use of this tool is that after posting
an entry to the blockchain ledger, the technology transforms
what is required to trust the validity of the change in the bal-
ance in the ledger. Historically, accountants and finance
Received: 7 October 2019 Accepted: 13 October 2019
DOI: 10.1002/jcaf.22421
J Corp Acct Fin. 2020;31:712. wileyonlinelibrary.com/journal/jcaf © 2020 Wiley Periodicals, Inc. 7

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