Hope or hype? Blockchain and accounting

Abstract

Gartner’s hype cycle of technology famously progresses from the “peak of inflated expectations” to the “plateau of productivity” via the “trough of disillusionment”. Accounting researchers and practitioners—like researchers and practitioners in many other fields—have jumped onto the blockchain bandwagon for fear of missing out on what has been hailed as a world changing technology. Unfortunately, there is a pervasive lack of understanding of what blockchain is, and misconceptions about what it can do. A fundamental problem is that blockchain was derived from bitcoin and there is a great deal of difficulty in defining what blockchain is, and how suitable the methodology for a trustless, public cybercurrency application is to a public blockchain between trusted partners. It is time, we believe, to look at blockchain in accounting with more objectivity. We undertake a detailed exploration of blockchain and identify several key factors that will defines the uses of this technology, namely, the distinction between public and private blockchains and the importance of processing costs as a validating mechanism.