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Lecture 19

AFM341 Lecture 19: Blockchain


Department
Accounting & Financial Management
Course Code
AFM341
Professor
Alec Cram
Lecture
19

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Class 19: Blockchain
1
CLASS TAKE-AWAYS
Blockchain is an open, distributed leger that can record transactions between two parties in an
efficient, verifiable, and permanent way.
Examples of blockchain applications span a variety of industries, including supply chain
management, publishing, and voting.
Assurance opportunities for blockchain applications are growing, but many accounting firms are
struggling to find qualified staff to perform engagements and to make sense of the
legal/regulatory environment.
Blockchain
Blockchain refers to an open, distributed leger that can record transactions between two parties
in an efficient, verifiable, and permanent way. In principle, these transactions are stored in
shared, transparent databases that are protected from deletion, tampering, and revision.
Blockchain is a ‘foundational’ technology, rather than a ‘disruptive’ technology, in that it doesn’t
attack an existing business model with a low cost alternative. Rather, blockchain is more likely to
slowly be adopted over time within our economic and social infrastructure.
Blockchain technology was introduced in 2008 as part of the cryptocurrency Bitcoin, but the two
concepts are distinct from one another.
The problem that blockchain solves relates to the private records that each company keeps;
these records tend to be distributed across different internal units and functions that make it
time consuming and expensive to reconcile across different parties. For example, a stock
transaction can be executed almost instantly, but the actual ownership transfer of the stock can
take up to a week to complete, as third-party intermediaries are required to verify ownership
and update individual ledgers.
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