Traditional financial systems operate with a centralised database, usually with a single point of

authority. Blockchain technology, on the other hand, allows for a distributed database that holds a

growing number of records. Instead of existing in one place, the ledger is continually updated and

synchronised across multiple computers in a network. Therefore, any participant in the network with

the proper authorisation can view the entire ledger – without relying on an intermediary or any one

authority.

Another key feature of blockchain technology is a “smart contract,” which is a self-executing protocol

that enforces a previously agreed arrangement. For example, a smart contract could trigger an

automatic refund under certain conditions or the automatic payment of an agreed commission after

a sale. These smart contracts can eliminate delays in traditional Finance processes, while increasing

transparency and reducing reliance on middlemen to follow through on their commitments.

Moreover, like other parts of a blockchain, smart contracts are immutable, so they can enhance

accuracy in the financial statements.

LO 2, AC 2.1