"Can I borrow $25?" Kerry asks her brother Johnny.
A simple question sets the stage for a complex concept: how to get that money safely and securely to Kerry and back from Kerry. In the future, it'll be accomplished via blockchain.
Blockchain is technology that was originally created as a method of tracking bitcoin transfers, but today promises to disrupt the way companies do business. It’s such a game-changer that experts foresee a change in every single industry as we look toward the future.
So what is blockchain?
At its core, blockchain (minus all the super detailed technobabble) is all about trust. Here's an example:
When Johnny sends that $25 loan to his sister Kerry, that creates a line in a record book in both Kerry’s account and Johnny’s account. It also creates a line in thousands of copies of the same book. This is not to say that thousands of people now have access to view this $25 transfer. That transfer is kept safe by another layer of data that allows only Kerry and Johnny to access it using a very specific key code for each person.
Now, let’s say that Kerry wants another $25, so she claims that she never received the original. With other forms of transactions, it’s possible to fake not having received this money. The same is true of blockchain; it’s possible to delete that line in Kerry’s record book, but Kerry can’t delete it from the thousands of copies made. That makes it really easy to see that Kerry has changed the line since thousands of copies show the original transaction and Kerry’s copy is different. Therefore, Kerry’s copy is illegitimate. This makes blockchain (mostly) immutable or unable to be tampered with.
Let’s go in the opposite direction: Kerry now wants to repay Johnny. Instead of scratching out that original line to indicate that the debt has been repaid, a new line is made detailing the repayment. Then, that line is linked to the original line, thus forming a chain—a blockchain.
Essentially, blockchain is a record book with a bunch of linked lines copied thousands of times and stored in thousands of places. The purpose of the copying is to maintain its legitimacy. Each new line has a specific key that hides Kerry’s and Johnny’s identities and is verified by the entity with the most accurate information: the line writer (which in most cases would be a computer rather than a person). Changing this line is difficult because it’s trackable. Because there are copies, it’s easy to see the original and what’s been tampered with, which means that we can trust the information.
Related Article: The Future of Expense Reports: Our Expense Reporting Predictions For 2037
Filling the "trust Gap"
The reason why blockchain is such a game changer is that the way we do things today is inefficient and can be inaccurate. Records are kept in one place managed by a third party and those records can be changed. This is what Richie Etwaru, a blockchain expert, says in his May 2017 TEDtalk titled “Blockchain: Massively Simplified” is a “trust gap.”
The bank, for example, is the place to go to look for the transaction between Johnny and Kerry. But, the bank’s data could be flawed by human or computer error and they’re the only ones with that data. We have to trust the bank because it’s the only source of data, though it could be incorrect or tampered with.
In the future, blockchain will make information accessible and trusted. That transaction between Kerry and Johnny is accessible through the thousands of copies of the blockchain, so there’s no need to go to the bank or the “middleman,” as Jamie Skella explains in his June 2017 article “A Blockchain Explanation Your Parents Could Understand.”
Therefore, we trust that data to be accurate and unchanged.
The key word here is trust. You might not realize it, but trust is an essential part of business. Not only do we need to trust that a company is doing business ethically, but we have an already-established economy of trust. Consider how we make decisions using trust that we might not have made even 20 years ago through Uber, Lyft, AirBnB, and others that rely on reviews to tell us that we can trust our drivers and travel hosts. Even 10 years, we would think that only a crazy person would hop into a stranger's car to be taken to the bar down the street for just a few dollars. But, because companies like Uber and Lyft (and many others like them) have built an economy of trusted drivers based on reviews, we feel safe enough to take what would have been an unheard of risk.
This economy of trust is changing the way that companies will do business. Companies that don't have an established trust will die off, leaving only those that use technology like blockchain to maintain their security. Trusting in the community of data will streamline our transactions and move them forward more quickly. This is especially true if we consider that, although this example of Johnny and Kerry relies on a money transaction, blockchain can track and link any kind of transaction, including, as Skella explains, a vote, a song, a file, or even the kilowatts of energy in someone’s home. That’s what makes blockchain so revolutionary—it can affect everything.
Predictions For Blockchain & expense reporting
Imagine a timesheet and expense reporting software company in the future, one perhaps like DATABASICS. With traceable transactions established through blockchain, we wouldn’t need receipts because the transaction data comes directly to a record book—or an expense report—with all data history intact. We wouldn’t have to worry about fraud because the transaction is well established. The old trick of fudging numbers or even using one of those sites that creates receipts for you won’t work because the transaction data is not there to back it up. We would rely only on the immutable lines of data, connected to one another through an account or a special kind of chain that recognizes that data as related to the expense report for the conference or for the customer or for the project.
Then, in the future, expense report software could build the expense report for you. After all, the purpose of an expense report is to establish proof that company money was spent in an approved way. This would leave the software with the reponsibility of reading and pulling transactions to compile into a report using trusted data that makes it easy to approve and audit.
For example, let's imagine that data from a blockchain comes in concerning a transaction from an airline website. The software could read that data, recognize its elements, input it under “airfare for Joe Smith for Nashville conference on November 7, 2037 at 3:48 p.m.” and completely fill in the expense report for Joe Smith. Then, an email lands on Joe’s desk telling him that his expense report is ready to submit. He logs in, verifies that all the charges associated with his trip to Nashville are correct, and hits submit.
We’re on the edge of this experience with the latest innovations in expense reporting like OCR (optical character recognition), which reads a receipt and inputs the data into relevant fields, and credit card feed imports, which bring data from credit cards directly into expense reports. However, those still require some degree of effort on the part of the user and a large degree of effort on the part of the manager, and even more on the part of the auditor should the report have some kind of flag or warning. Companies are looking for opportunities to decrease the amount of time all three stakeholders have to spend on their expense reports. They need their data to be correct, accurate, and able to be trusted. Today, that’s a lot of work.
Tomorrow, this same process doesn’t have to entail so much effort. Blockchain comes with a guarantee of trust. It’s this same trust that already is changing the way we do business and will change it even more so in the future.
DATABASICS provides cloud-based, next generation Expense Reporting, P-Card Management, Timesheet Management, Leave Management, and Invoice Processing automation. Specializing in meeting the most rigorous requirements, DATABASICS offers the highest level of service to its customers around the world.
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