Deloitte eyes global accountancy blockchains
Good karma was the consensus among those watching and in attendance at Ethereum’s DevCon1 conference when big four accountancy firm Deloitte took to the stage in the guise of the technology-focused Rubix Project.
Matthew Spoke, strategy and execution lead from the Rubix project is passionate about the capabilities of this technology and for over a year has been busy communicating that to Deloitte’s clients globally.
And the Deloitte presentation was aptly followed by a detailed showcase of “triple entry” accounting from start up Balance3, which operates out of the powerful ConsenSys stable of decentralised application builders.
Spoke told IBTimes: “We think this technology will be particularly impactful in the accounting and auditing world. We also think of it in terms of a cross-industry situation. So it seems important to me – and I said this on stage – I would love it if this time next year there were many of our competitors around, participating in these types of things because it’s going to be important to everyone.”
Deloitte’s Rubix Project has been kicking the tires of a range of technology offerings over the past year or more. There is a concentrated focus on Ethereum; the team has also looked at Ripple and Hyperledger for example.
Henry Chan, technology leader, Rubix added: “Clients are really looking to us so conceptually they understand the technology, and also looking to us as trusted advisors to provide technology, to be able to code and build out whatever smart contracts or proof of concepts they can think of.”
This is now being taken a step further as Rubix has delved deeper into the technology, leading the way for other parts of Deloitte. Spoke said: “We get pulled into a lot conversations that have to do with this because we definitely took a head start. We have a lot of people within the Deloitte network that are focused on this, but focused from several different angles – from a consulting perspective, from an AML/regulatory perspective.
“We were the first to kind of build a technical capability within Deloitte. That’s an important next step if Deliotte wants to be relevant beyond our traditional service offerings. Technical capabilities are the next logical kind of growth for us.”
Spoke said Deloitte offices around the world that are now looking to hire tech people that may or may not have experience in blockchain technology. “They want to align them with our team so that we can help teach them, train them, collaborate, share resources; essentially a team of developers around the world.”
Rubix is based in Toronto’s technology hotbed. In addition, Deloitte in the US has been very active in the blockchain space, looking at ConsenSys’ Balance3 for instance, as well as Digital Asset Holdings.
Digital Asset Holdings
Spoke said: “We looked at Hyperledger’s original technology from before their acquisition. We know that now it is being kind of reworked so I think it’s changing but we don’t know much about the technology.
“Blythe Masters brings an enormous amount of credibility to this space; that’s obvious to the partners that we have in New York that deal with financial services organisations – she can open any door she wants on Wall Street,” he said.
Ripple
Ripple has been an object of fascination among banks and blue chips almost as long as they have been looking at Bitcoin. Ripple can also claim to have had a regulatory encounter, let’s call it, and has now emerged stronger, arguably setting a standard for compliance conscious financials.
Spoke said: “We have noticed that we do have a lot of clients that are interested in Ripple. It’s a huge one. We have a very close relationship with Ripple especially in our US firm.”
Recently, one of Deloitte’s big competitors KPMG revealed it was hiring anybody that had experience of deploying Ripple at banks.
Spoke added: “I would imagine that there are opportunities in the pipeline, to test or integrate Ripple into some of our financial services clients. So the concept of hiring people that can work with or learn about Ripple seems very relevant to us, as much as it does to KPMG.”
“What I am noticing more and more as I get closer to this space – is it going to be one protocol that wins the day at the end of all this?
“Nobody knows the answer to this, but there could be room in different contexts for different technologies and different versions of this. Ripple could be very meaningful in a certain context.”
In regard to the R3 distributed ledgers for banks consortium he said: “What is also noticeable about all these R3 banks, at least the ones that we know, they are all doing a few different projects on a few different technologies.
“They haven’t committed themselves to one technology cause they don’t know where all this is going so want to equally understand Ripple and Ethereum and Bitcoin and whatever R3 ends up doing.”
Chan added: “I think all in all we can cap it as: whatever the client’s needs are, whatever their requirements are on a technology basis, we want to position ourselves to provide that.
ConsenSys/Balance3
The code has already been written for Ethereum triple entry accounting which was demoed on stage at DevCon by ConsenSys D-app builders Balance3.
Balanc3 uses EtherSign and IPFS – a decentralised data storage platform – and the Ethereum blockchain to construct, store, manage, and digitally sign documents.
Christian Lundkvist, one of the cryptofinancial engineers behind Blance3, said that relative to double entry accounting, which was invented some 600 years ago, triple entry accounting is a recent idea, proposed by Ian Grigg in the early 90’s.
Lundkvist pointed out that in double entry accounting both sets of books are remote from one another, joined only by a common transaction.
He said: “The idea of triple entry accounting is that instead of each firm having their own books, the transaction goes through an Ethereum contract, a smart contract, and this contract includes everything about the transaction: what the product is, what the prices is, who is the seller, who is the buyer. It’s digitally signed. It can have an IPFS hash.”
In this case the accounting entries are sent to the address of an Ethereum contract, so the firms’ accounting books are linked via a smart contract.
He also pointed to digital precedents that will remove pain points from the automation process, specifically XBRL (eXtensible Business Reporting Language). This freely available, global standard for exchanging business information is based on XML and is happily recommended by the Securities and Exchange Commission in the US and the HMRC in the UK.
Lundkvist added: “Now with 15 second block times for Ethereum, you have end to end data machine readable distributed storage and cryptographic sign off all in one.
“Think of this as a business process assembly line so for every little change that you make, whether it’s a spread sheet or whatever, you are committing it to a distributed system so the un-siloed data has the security and sign off of counterparty signatures – lots of benefits, lots of transparency for regulators and for businesses themselves.”
Source: IBT – Ethereum DevCon1: Deloitte eyes global accountancy blockchains
