Auditing is the process of conducting an independent examination of an organization’s accounts, books and/or documents in order to determine whether the organization’s financial statements present a fair view of the business. It is based on a set of pre-determined guidelines, normally the International Accounting Standards, or GAAP (generally accepted accounting principles). Auditors themselves are normally independent third-party intermediaries who are employed to verify the accuracy of companies’ financial statements. Indeed, the financial statements themselves can be viewed as a summation of what happened in a company’s ledger throughout the accounting period. Ultimately, the auditor then decides that either the…

As data becomes increasingly powerful, meaningful and valuable, concerns over its security are on the rise. Indeed, ‘big data’ has become the recent buzz-term to describe the ever-expanding, often-unstructured nature of important information, and has opened extensive discussions over how to approach ensuring data integrity is maintained. Data Security One of the primary appeals of blockchain is the security it provides, which prevents such data from being hacked. The data is fed into the system, where an encrypted code – known as a ‘hash’ value – is created for each initial transaction. Unique hashes are then combined (which allows…

[vc_row][vc_column][vc_column_text] Blockchain application in financial data and compliance Blockchain makes the top secured financial transactions controllable The financial services industry is another major area in which client information must be securely protected to prevent market manipulation. At the same time, however, compliance divisions must be aware of the identity of trading counterparties in order to mitigate potential money-laundering activity. As such, a system which balances both compliance requirements and trading anonymity is required. Indeed, regulators may find the anonymity of blockchain a challenge to wholly approve, as it makes it difficult for them to conduct their ‘know your customer’ (KYC)…

Blockchain-based Enigma system Researchers from the Massachusetts Institute of Technology, therefore, have developed a guaranteed privacy system based on blockchain, in which data can be stored, verified and shared without ever being revealed to any of the network’s parties. ‘Enigma’, which is powered by the blockchain, is essentially “different computers that are talking to each other, but they don’t do mining, they just provide resources to the network, bandwidth, some of their hard drives, some of their CPU power”, according to co-founder Oz Nathan, a technology entrepreneur with experience working with the Counter Terror Unit of the Israeli Defence Forces.…

Blockchain’s increasing popularity is now being embraced by a wide range of industries. Start-ups are being created by people across the world who have a desire to use blockchain’s revolutionary ledger technology to improve their specialist industry, and to further support causes they are passionate about. Today this is rarely being witnessed more clearly than in the art world, where blockchain is set to have a seismic impact. FinTech start-ups are discovering just how blockchain’s cryptographically secure network can be used to verify the ownership of art and its capability in reducing the number of forgeries and licensing disputes. …

When it comes to blockchain, the immutable ledger technology that underpins bitcoin, much of the limelight thus far has been on its potential to disrupt the finance industry. However, the transformation that real estate may experience from applying blockchain could arguably be just as profound. Unlike financial services, where technological innovation has largely been embraced in the pursuit of profit, much of real estate’s business conduct remains firmly stuck in the past. Many operating methods within the industry have remained unchanged for 50 years, if not longer. What is a land-registry in a blockchain? Land registry systems contain records…

Given that the ‘distributed ledger’ technology upon which Bitcoin has been developed allows a payment system to operate without the need for intermediaries such as central banks, it is looking increasingly likely that the financial system is set to undergo a comprehensive transformation. It also implies that centralized payment systems could begin to be phased out and replaced by decentralized ones, with trading, clearing and settlement being just three examples of processes likely to undergo disintermediation. Whereas a centralized system relies on all parties to trust a third party (the central bank, in most cases) to keep a secure, correct…

In the aftermath of the financial crisis 2007-09, financial regulators across the world implemented tighter controls on the majority of sectors within the financial services industry. One of the reasons for their activism may have been the lot criticism regulators have received for often being ineffective when it mattered most. In any case, the onus lying on regulatory bodies to ensure fairness within financial markets is now greater than ever. And one of the lessons learnt over the last eight years or so, regulators are today more alert to the far-reaching implications of the FinTech industry. The booming industry…

There now appears to be plenty of scope for blockchain to be used for financial purposes beyond simple transactions. Cryptographic ledger technology could end up replacing costly financial intermediaries in financial markets which could have seismic effects on the infrastructure of the industry. The ledger technology, which is basically a distributed database, could potentially underpin the formation of a new type of commodity futures market, for example, whereby it manages both ends of the transaction without expensive fees being incurred or a long settlement process being induced. As for the physical commodities markets, however, further work appears needed in order…

Due to the explosive growth of Bitcoin in recent years, as well as rapidly increasing interest in the cryptocurrency’s underlying ledger technology, the blockchain, regulators have been keen to keep pace with developments to ensure that existing laws are enforced to prevent illegal activity, such as money-laundering. New laws have also been enacted to address the changing FinTech landscape. The State of California became the first state to legally approve the use of Bitcoin – The law AB 129 Nowhere has been more active in regulatory enforcement than the US over the past 2 years. In January 2015, the State…