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1. Introduction and background
The internet, a complex global network, has changed our world and revolutionized the way we exchange information. However, it has proved to be less useful when it comes to exchanging values (Warburg, 2016). The unstoppable digital evolution led to the development of blockchain, a peer-to-peer (P2P)-based distributed network, which makes the exchange of value possible by registering and transferring it in a tamper-proof way. Indeed, blockchain seems to be the next step in the digital era, and it is expected to have an impact on business and society. Thus, it attracts the attention of both academics and practitioners.
Blockchain is a distributed digital ledger that is used to record and share information through a P2P network (Ducas and Wilner, 2017). Identical copies of the ledger are maintained and validated collectively by the members of the network, with approved transactions added in blocks that are added to a chronological chain of previously validated blocks, using a cryptographic signature (hash). Each new block is marked chronologically – a temporary coding process that corresponds to the creation of new and immutable data – and contains information that refers to the block that preceded it, ensuring that any attempt to alter the blockchain would require the alteration of each block previously created, something almost impossible given the decentralized nature of the technology (Buterin, 2014).
The main feature of blockchain is decentralization, which occurs because the records are stored at different nodes instead of at a single location; they are accessible to every authorized participant, and they are immutable. The final result is a highly efficient, transparent and secure method of performing transactions, and it serves as an online ledger that keeps a record of transactions and cannot be modified (Buterin, 2014).
Although blockchain initially gained recognition as the technology that underpins the cryptocurrency bitcoin, its ability to transform payment processing, invoicing, inventory information, contracts and other documentation has significant implications for accounting too (Dai and Vasarhelyi, 2017).
The Big Four accountancy firms have also expressed their interest in blockchain technology. As a result, several projects have been launched. Collaboration between major financial and professional institutions has led to various initiatives that aim to explore the potential of this technology for accounting and auditing. For example,...