Blockchains can be a Boon for Corruption-Ridden Accounting Systems in India and the World
Blockchain has been termed by the World Economic Forum as a Technology Pioneer; many financial experts call it as “the next best thing after Internet.” Several industry leaders think the impact of this new accounting technology could be as significant as the use of double entry over 500 years ago. Besides being faster and agile than the existing systems, blockchain allows transparency as each and every transaction gets captured on a real-time basis. In fact, Governments, the world over, are looking at the blockchain technology as a preferred platform for eGovernance.
India fares poorly on global corruption rankings
India stands at the 76th position out of 175 countries on global anti-graft organization Transparency International's Corruption Perceptions Index. Not only that, India has low rankings on ease-of-doing-business world rankings, which are published by the World Bank. According to the report, India stands at 130 out of 189 countries. So, while China is at no. 90, Nepal and Sri Lanka are at 99 and 107, respectively. Data indicate systemic corruption is striking at the roots of India’s development trajectory; thus, preventing the country from realizing its potential. Therefore, methods to combat graft need to be found for India to prosper and become the No. #1 destination for foreign investments and provide safe haven to budding enterprises. Curtailing corruption will remarkably improve its image as a leader among Third World countries.
How does the blockchain technology work?
A blockchain is a decentralized distributed ledger maintained by a distributed network of computers that doesn’t need any central authority or a third-party intermediary. In this financial technology, each block references a previous block, not by a ‘block number’, but by its fingerprint (hash), which is decided by a block’s content. This makes content completely immune to tampering or revision.
“An organization can benefit in several ways. Data can be processed faster since it doesn’t need to go through several layers. Moreover, with there being no chance of breach of data integrity or data corruption, even my organization is moving on to a decentralized system. Certainly, this enables the software to overcome the bottlenecks that are created due to legacy installations. Consequently, this can unlock capabilities for cumulative predictive intelligence as well as dynamic supply management with multiparty memberships among several other things. This will lead to a truly multidimensional online B2B as well as B2C ecosystem,” says Shashank Dixit, CEO, Deskera, a global cloud software company that is planning to leverage this technology.
Blockchains can be the single source of truth for organizations
Though blockchains are public or private, all blocks are encrypted and can be read only by using the correct decryption key. With its decentralized nature and its inbuilt resistance to revision, blockchain is perfect for retrieving and recording financial data. It can thus become a single source of truth for organizations. Using it, an organization can remove the need for maintaining multiple local centralized databases. At the same time, it can also ensure real-time and a sequential flow of information seamlessly through an organization.
Financial auditors gain due to simplified as well as transparent accounting processes
Through capturing each transaction on a real-time basis, financial auditors can actually avail of real-time access to sensitive information, which can then be retrieved in a matter of seconds. This is different from the present scenario where an auditor only gets access to client data at the end of a financial year. This often results in delays in the closing of accounts.
Governments should leverage blockchains for eGovernance
Blockchains can make a great societal impact in case governments implement it. Honduras—a country in Central America and which was considered one of the most corrupt countries of the world—leveraged the technology to its advantage. The Honduran Government initiated a pilot project using this fintech to eliminate corruption from its property market as its conventional system had been unable to prevent government officials from hacking land records and allocating prime-value real estate to themselves. The transparency provided by the financial technology prevents officials from abuse of power. At the same time, it encourages unofficial land owners to register property.
Using blockchains, every ledger is accessible to public, journalists, police, and the common man. This makes manipulation impossible. Thus, this fintech can give way to a completely open and global database. With millions of copies that get distributed across the Internet, it becomes impossible to forge or destroy the data. Blockchains are a remarkable fintech innovation that can be hugely useful in the fight against orruption.
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