The idea of a public blockchain might not sound like something terribly relevant for commercial clients or audit engagements. And would an organization ever want to be affiliated with a public blockchain where — as the name suggests — data linked to the organization is on a public ledger? Even with encryption and security at the heart of every blockchain, such a situation can give even the most prepared organization cause for pause. But though a public blockchain that is permissioned might sound like a paradox or an abstract idea, if one digs deeper, the applications for different iterations of public blockchains become clearer.
A public-permissioned blockchain might operate something like the following: Information published by the organization, which may include both financial and non-financial data, needs to be viewable and available to the wider public. That said, the organization would like to maintain control of the creation, reviewing and updating of the information that is published and subsequently widely available to the marketplace. In other words, the organization needs the data to be accessible to anyone who is interested in reviewing it, while simultaneously maintaining custody and control over that data.
Accountants can, and should, play an important role as assurance provider by having limited or focused access to pertinent information, as well as testing the controls over how this data is managed.
Examples of organizations that might find such an arrangement useful and beneficial to the business include, but are not limited, to hospitals and other health care providers, colleges and universities, nonprofit organizations and governmental agencies. The nonprofit sector is the third-largest segment of the workforce in the United States, only behind manufacturing and retail. In addition, the charitable and nonprofit sector contributed over $1 trillion to the U.S. economy in 2019 — a tremendous potential market for blockchain implementation.
Public blockchains, in and of themselves, might not be particularly well suited for every business, but that does not mean that public blockchains have no role to play. It might be easy to dismiss the business applications of a public blockchain simply due to its name, but there is a broad appeal for different types of public blockchains. Those practitioners and firms willing to continuously educate themselves and their clients on the possibilities of public blockchains will benefit now and going forward.
Accounting professionals looking for more information on blockchain, cryptoassets and robotic process automation should check out NJCPA's Emerging Technologies Conference webcast on Oct. 27.