Configuring blockchain architectures for transaction information in blockchain consortiums: The case of accounting and supply chain systems

• Published date: 01 October 2017
• Author: Daniel E. O'Leary
• Date: 01 October 2017
• DOI: http://doi.org/10.1002/isaf.1417

RESEARCH ARTICLE

Configuring blockchain architectures for transaction

information in blockchain consortiums: The case of

accounting and supply chain systems

Daniel E. O'Leary

University of Southern California, Los Angeles,

CA, USA

Correspondence

Daniel E. O'Leary, University of Southern

California, Los Angeles, CA 90089‐0441, USA

Email: oleary@usc.edu

Summary

This paper investigates alternative configurations of different blockchain architectures that can

be used for gathering and processing transactions in a range of different settings, including

accounting, auditing, supply chain and other types of transaction information. Although there

has been substantial focus on the peer‐to‐peer and public versions of blockchain, this paper

focuses primarily on cloud‐based and private configuration versions of blockchains and investi-

gates use configurations, advantages and limitations as firms bring blockchain‐based market

mechanisms into their organizations. In addition, this paper investigates some emerging issues

associated with blockchain use in consortium settings. Finally, this paper relates some proposed

uses of blockchain for transaction processing to other technologies, such as data warehouses

and databases.

KEYWORDS

accounting blockchain, architecture, blockchain, cloudblockchain, consortium blockchain, crowd‐

managed blockchain, databases and blockchain, hybrid blockchain, private blockchain, private

processes, publicprocesses, reengineering, supplychain blockchain

1|INTRODUCTION

Market mechanisms have been adopted and used in corporate settings.

For example, prediction markets have been brought into enterprise

settings, typically designed to capture information broadly available

from the crowd (e.g. Berg & Rietz, 2003; Cowgill & Zitzewitz,

2013; O'Leary, 2015), in contrast to gathering information from experts

(e.g. O'Leary, 1993). Recently, another market‐based mechanism was

introduced for use in enterprises based on digital currencies.

Nakamoto (2008) introduced two ideas that have had substantial

impact and provide opportunity for additional innovation. The first idea

was ‘Bitcoin’, a peer‐to‐peer and decentralized currency that does not

have any government or other central backing. The second idea

was the notion of blockchain, which is a public ledger that uses a peer‐

to‐peer approach to capture a chronological database of transactions

with an ‘append’only approach that allows immutability of the distrib-

uted databases.

Recently, there has been substantial and almost overwhelming

‘hype’associated with Bitcoin and the related technologies of

blockchain, resulting in comparisons with big data (e.g. Ylijoki & Porras,

2016) and even some suggestions that blockchain can fix the ‘broken

Internet’(Roberts, 2017). In July 2016, ‘blockchain’was almost

at the top of the peak of Gartner's hype curve, located between

‘smart robotics’and the ‘connected home’.‘Blockchainand distributed

ledgers’was also specified as a ‘Top ten strategic technology trend’for

2017 by Gartner. Along with that hype, blockchain has been called

‘a lightning rod for highly charged opinion, confusion, and even fear’

(Carlozo, 2017). Accordingly, there also seems to be a broad misunder-

standing of how blockchain might operate in transaction processing

settings, such as accounting, supply chain and other settings, and

expectations are not well established.

Throughout transaction processing, blockchain has been heralded

as a future trend of substantial impact. In particular, in accounting,

blockchain has been called a ‘game changer’(Deloitte, 2016). Some

commentators have noted that blockchain could make accountants

‘irrelevant’, arguing that the blockchain provides an ‘opinion’on the

accuracy of the financial statements (Ovenden, 2017). Other commen-

tators (Patil, 2017) have suggested that because of block chain,

DOI: 10.1002/isaf.1417

138 Copyright © 2017 John Wiley & Sons, Ltd. Intell Sys Acc Fin Mgmt. 2017;24:138–147.wileyonlinelibrary.com/journal/isaf