Date posted: 11/12/2017 7 min read

Can accountants become blockchain experts?

Businesses which struggle to take full advantage of blockchain technology can learn from enterprising accountants.

In Brief

  • New types of blockchains are rushing onto the market, with more than 1300 companies already available.
  • Proven use cases for blockchain include reconciliation for internal departments, payment systems and international transfers.
  • New business models powered by blockchains are emerging such as high-volume micropayments and instant payments.

Pity the accountants who work in the online hotel bookings industry. Behind every booking is a winding trail of commissions to wholesalers, retailers and travel agents, each needing their own cut.

The global, labyrinthine nature of these relationships often creates errors – say when a guest calls up a hotel directly to change a booking that he/she has already paid. Consequently, up to 10 per cent of bookings or $10 billion worth of transactions go unpaid, according to Webjet general manager John Guscic.

So in the case of Webjet, it's up to their forensics team to trawl through six months of data to work out what happened and correct the books.

This is a scenario tailormade for blockchain. Where most uses of blockchains are intended to cut out middlemen, Webjet uses it to audit transactions and lubricate payments.

Related: The future of blockchain

Read the Chartered Accountants ANZ whitepaper that reveals the applications and remarkable implicarions of blockchain technology.

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In every 300 bookings, there are four to five discrepancies which each take two to three hours to solve. Webjet, which books 750,000 rooms per year in five countries, created a blockchain to track transactions internally.

Once a transaction is made in blockchain, then everyone participating is aware of the details. The number of nights, the amount the guest paid – the blockchain provides an uncontestable record. Webjet's internal project tracks transactions between its own companies. It has worked well enough to spin the project off as a product for other travel specialists.

Virtual gold rush

Despite this development, Webjet remains one of the few success stories of a commercial blockchain in Australia.

The hype around blockchains and cryptocurrencies they support is driving millions of dollars into research and development (R&D) and highly speculative ICOs (initial coin offerings). It has turned into a gold rush with a few highly publicised winners and millions of more hopefuls. An anonymous trader made US$200 million in one month with Ether, one of the more popular alternatives to Bitcoin.

Blockchains are also having their day in the sun, with many new types pouring onto the market. There are as many as 1,300 blockchain companies and 100 more arrive each month. Each has slightly different characteristics or algorithms, though only the top 10 have a serious amount of usage, say industry commentators.

The reality is that most blockchain projects are still in the experimental phase, says Nick Addison, CTO of AgriDigital, an IT company building a blockchain for the global grains industry. "There are no practical examples today. Most of the stuff in the media is a bit of smoke and mirrors," says Addison. He estimates that AgriDigital is still 18 to 24 months away from full production.

One sticking point is confirming the identity of the person initiating a transaction. Financial institutions have long used expensive, on-premise systems that validate users through cryptographic signing. Microsoft, Amazon and others are working on online versions which will jumpstart broader commercial usage of blockchains.

Accountants as pioneers

In the meantime, there are still opportunities for pioneering accountants to dive into blockchains. Take Jason Atkins, a Gold Coast accountant who runs a virtual CFO service called Biig Trend.

Some of the work currently performed by accountants "is in trouble" according to Atkins. "The blockchain exists to remove intermediaries. Accountants, lawyers and stockbrokers are right in the crosshairs of this technology. It's not to say that they can't pivot, but they are going to need to find ways to mitigate the loss of business in other areas."

(Pictured: Jason Atkins)

Atkins launched the Blockchain Club six months ago to help wholesale and sophisticated investors buy from a booming selection of cryptocurrencies. Investors can buy Ether, Bitcoin or a portfolio of multiple coins which the Club buys on their behalf from different exchanges.

The Club also helps companies make their own cryptocurrency for industry-specific uses. A primary producer, processor, trucking company and wholesaler can create a cryptocurrency to speed up payments, increase liquidity and transparency. "Every step in a supply chain creates reasons for things to stop, because there is a lack of trust. You don't need to check (the status of a shipment) all the time with a blockchain because it tells you whether payments have happened automatically," says Atkins.

The Blockchain Club hasn't released any cryptocurrencies for customers yet. "We are taking our time." He recommends that progressive accountants look at payment systems, one of the proven use cases for blockchain, as a way to reduce transaction costs in client businesses. Today you can buy digital versions of Australian and US dollars which convert easily into Ripple, Bitcoin, Dash and other cryptocurrencies.

New business models

"Say you had a company turning over $10 million and doing $2 million in trades each year internationally. How do I create a business case saying we would be better doing international trades with Dash or Ripple? You need to look at the timing, risk, volatility and cost," says Atkins.

Unlike payments made through the banking system, blockchains pay instantly, even on weekends. Add the very low transaction costs and the technology is well-suited to high volume micropayments.

This has opened up new business models such as the Golem Project, which bills itself as the first global market for idle computer power. An engineer can draw on the processing power of 50 computers over the internet to process a CAD drawing and pay for it. "You couldn't afford to pay people in the past because it was too hard to make the payments. Now it's automatically paid using the Golem token," says Atkins. The future looks bright for blockchain and enterprising accountants.

Related: Blockchain caught between promise and reality

The Chartered Accountants ANZ Library offers a range of further reading and resources relating to blockchain. This includes a recent Deloitte report titled Bitcoin, blockchain and distributed ledgers: caught between promise and reality.

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Sholto Macpherson is a cloud accounting researcher and editor of