Jessica Fino 20 Nov 2017 04:17pm

Blockchain likely to replace bankers and lawyers

Bankers and lawyers could soon be replaced by blockchain, ICAEW has warned

A report by ICAEW, titled Blockchain and the Future of Accountancy, argued that smart contacts using blockchain could disrupt financial systems and threaten central authorities like banks, clearing-houses and lawyers.

However, it added that this could save firms the cost and effort of doing business with a ledger owner, at the same time as increasing transparency and security against financial crime.

This is because instead of having one single owner, blockchain records propagate identical copies to all their users.

Participants in the ledger can trace all previous transactions, which improves transparency and makes the blockchain ‘self-auditing’ and transactions permanent.

“Blockchains mean organisations can work together without an intermediary, but no longer need to have institutional trust in one another,” ICAEW IT technical manager David Lyford-Smith said. “This is potentially a seismic shift in how we do business.

“It will have knock-on effects on everything from record keeping to supply chain management and accounting and audit.”

Lyford-Smith believed that blockchain could potentially remove middleman institutions, gain transactional certainty, reduce cost and bias and “open up access to more participants.”

However, he warned that there were still some logistical challenges surrounding it in areas relating to computing power and encryption and added that new legal frameworks would need to be created to enforce contracts.