This week, we’re looking at blockchain. But, before we talk about it, we need to deal with the elephant in the room – cryptocurrency. Depending on your perspective, crypto was either the future of finance, or a Ponzi scheme wrapped up in technogarble. The proliferation of "meme coins” – launched by anyone from Z-list celebs to the President of the United States – cemented the suspicion.
Now, let’s travel back to a time when blockchain was thought about the same way AI is today – a genuinely powerful idea, with huge potential, but with a lot of overpromising about how quickly it would change everything. The question is: has it?
What does blockchain even do?
At its core, blockchain is a shared recordkeeping system.
Instead of each organisation maintaining its own database and reconciling differences with others, a blockchain allows multiple parties to write transactions to a single, distributed ledger. Every participant has access to the same version of that record, and once a transaction is validated and added, it can’t be changed. Well, not easily, at least. So, in theory, if everyone is working from the same ledger, discrepancies and disputes should reduce significantly.
It also changes how trust is established. Rather than relying on a central authority or intermediary to verify transactions, the system uses consensus and cryptography to confirm that records are valid and consistent across the network. You place your trust in the computer, which is a good idea because the computer is always right!
On top of this, additional functionality like smart contracts allows certain actions to be automated. Payments, transfers, or approvals can be triggered automatically when predefined conditions are met, reducing the need for manual intervention.
The concept is straightforward. The challenge, as always, is people – integration, governance, scale, and getting multiple parties to adopt the same system are the big problems.
A $250m lesson
In 2015, the Australian Securities Exchange decided to rebuild its core settlement system using blockchain. This was a reconstruction of the entire infrastructure that clears and settles trades across Australia’s financial markets. That’s a lot of dollarydoos!
For years, ASX maintained that the project was progressing well. As late as 2022, the market was being told it was "on track” for launch. As you may have guessed, this wasn’t exactly true. Behind the scenes, serious issues were already emerging. An independent review later revealed the project was only around 60% complete, with significant portions needing to be rebuilt.
At a practical level, the problems were typical for a technological transformation. The system couldn’t handle the scale, the design became increasingly convoluted, and integrating it with existing infrastructure proved far harder than expected. In trying to replace everything at once, the project created a level of complexity it couldn’t control.
The project was ultimately scrapped in 2022, with costs reaching roughly $250 million – not including the additional spend by firms who had invested heavily in preparing for a system that never materialised.
Regulators later alleged that ASX had misled the market about the true state of progress, despite being aware of the challenges internally. The exciting, ambitious technology upgrade ended as so many of them do – a failure of execution, governance, and communication.
When it actually works
Not every blockchain project ends in a write-off. If we can tamper our ambitions, we can use it properly. That’s why IBM focused on the much narrower problem of supply chains.
That’s not to say that supply chains aren’t extremely, extremely annoying – multiple parties with different systems and no shared record of what’s happened to a product as it moves from party to party. When something goes wrong, it can take absolutely ages to figure out where the issue started.
So, that’s why IBM wanted to use blockchain as a shared ledger, where each step in the chain is recorded and visible to authorised participants. Instead of everyone keeping their own version of events, there’s one agreed record. The result is faster traceability and fewer disputes, which is bad news if you love a drawn out argument.
But building it isn’t everything. For a system like this to work, it requires buy-in from everyone involved, and it still has its own hangups. However, when we compare this case to ASX’s, the key difference is obvious – this was a specific problem, with a practical solution, implemented at a manageable scale. So, hurrah for IBM!
Why should you care?
In accounting, blockchain has been positioned as a fundamental shift but, even after a decade, this hasn’t really materialised yet. Theoretically, the blockchain posits concepts like "triple-entry accounting”, where transactions are not just recorded by each party but also written to a shared ledger. This is the kind of idea that makes an accountant feel like Neo at the end of the Matrix.
Firms like EY have developed tools such as blockchain analysers that reconcile client transaction data with public blockchain records, validate ownership through digital signatures, and trace transactions across systems. But, rather than replacing accounting processes, these tools sit alongside existing systems, improving visibility and reducing manual reconciliation in specific areas. Admittedly, it is easy to nod off when reading this stuff as a list, but it is still pretty good news.
Some of the more contentious areas in modern accounting could still grasp the benefits. Audit processes could become faster and more automated, and fraud could be harder to hide due to immutable records. Entire areas of manual work – from reconciliations to parts of bookkeeping – could be reduced or removed altogether. But let’s not hold our breath.
To conclude, the potential is still there, but the transformation is far less disruptive than originally promised. Like when an eight-year-old promises to scream the whole car ride back from his cousins, and he falls asleep in the back seat within the first five minutes.
🧠 Final thoughts
The big lesson here isn’t really about blockchain, but about transformational projects in general. Ideas can fly about during a meeting, and it’s both easy and fun to get swept away in it all. Without people willing to put in the work, though, these kind of ideas are going nowhere.
The stuff that’s difficult is people, and it’s best to talk to ones at the coalface to learn a problem and deal with it. It’s a lot less fun, and some of the people you’ll talk to will be weird and frustrating, but it is the only place to start with a project like integrating blockchain.
But maybe we’re wrong! Maybe you should just go all-in – many people have bet it all on black and come away winners.
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