Ep. 2: Dr. Sean Stein Smith – Types of Blockchain

[Applause] welcome back to count me in I'm your host Adam Larson joined as always by my co-host Mitch Roshan today we have another episode about the captivating topic of blockchain and who better to listen to about this topic than dr. Shawn Stein Smith Mitch you talked to Shawn how did the conversation go thanks Adam yes dr. Shawn Stein Smith is an assistant professor at Lehman College in New York but he is also on the advisory board for the Wall Street blockchain alliance he does countless talks on blockchain and recently received the NJ CPA 2019 ovations award in innovation and our conversation we talked a lot about blockchain but we also talked about other technologies and innovation which we'll get to in future episodes let's take a listen to the first part of our conversation blockchain is a very hot topic when it comes to emerging technologies and is being brought into accounting very frequently however many do not fully understand the different types and options for blockchain can you please explain that to us sure thing so obviously the the whole topic of blockchain crypto currencies and that whole sort of blockchain space is arguably the the hottest topic in accounting and finance for the last 20 years right but it's always important to to know sort of what exactly is being talked about whether it's being talked about internally inside a firm or externally right offering advice or some services to our external clients and partners and sort of the term blockchain is is is tossed around a lot but it's really more of a umbrella term than one point of data right because a blockchain can be a public blockchain it can be a private blockchain or it can be a consortium block change or basically sort of a joint venture right and so a public blockchain basically is the true idea of a blockchain it's totally open source decentralized model of storing and then sharing information in a encrypted manner and it's the type of the blockchain that is probably what most of us are going to think of in our conversations and is also the type of blockchain that underpins Bitcoin and ether so on top of being the biggest option out there right now in terms of active users in terms of individuals and and and all the rest it's also the probably the most high-profile one now from a enterprise point of view though having all of the corporate data on a blockchain right and because don't forget even though the blockchain is unhackable well or it has been unhackable as of right now having your information stored on a public blockchain is gonna give some corporations pause right so on and on top of that though the actual way that blocks of data are added onto the blotch and the proof of work model is awfully tough to actually do because it takes a lot of hardware software and also power right so so really from a enterprise point of view public block chains are moving out of favor and it's pivoting towards more of a private model or a consortium model so a private blockchain is basically it's almost like a traditional erp or a application hosted inside a a firm right because it has the traits of a blockchain meaning that it's a group based model basically that it's immutable in nature and that it's a permanent record basically after data is added onto this blockchain it's a permanent record can't be altered on that block-by-block basis and sort of the best example to highlight this is the joint venture right or the joint venture model built up by Walmart and IBM so basically in in that context of Walmart is the organizing firm and so has organized the actual blockchain hired the programmers and all of the coders to actually build it out and is that pushing that out to to network and so that's that's almost like a hybrid model but it's more like a traditional ERP augmented by some blockchain traits and sort of the third big bucket is a consortium model and the best way to sort of think of this or to highlight this is through almost think of it like a industry-focused option right and it can be retail it can be healthcare it can be food safety it can be finance or accounting right and so the big four firms have actually partnered up to form a consortium model or a joint platform basically to help them audit information out of banks and so this consortium model currently is being used and tested with 20 banks headquartered in Taiwan so it's gonna be interesting to see sort of how this whole field evolves right because all of us have got interested in blockchain probably via Bitcoin right and so that's a public key blockchain model totally open source for any company to join or to be a a part of but from an enterprise point of view again from a accounting and a audit point of view that's really not as helpful as a private blockchain and again a hybrid blockchain is more like a traditional ERP system augmented by some traits of a blockchain but the area that I'm most interested in going forward is this idea of a consortium model we're basically a industry group or a energy or a focused type of blockchain for a certain industry again be it accounting healthcare or finance is not really as important as the idea of a common platform to to store and to actually transmit data in a matter that is encrypted and safe right both for the institutions involved and their end users that's great thank you Shawn now artificial intelligence or AI is another major focus in accounting when it comes to technology but what is the difference between AI and RP a in terms of accounting purposes mm-hmm so so the field of AI right it's it's it's been talked about in the media mainstream since the fifties right there there are whole movies you know focus on the applications of AI for good and for bad right but a but as far as a accounting focus goes and I really is not very yet for most firms but but the idea of our PA or or barukh process automation is actually more tangible and more I think sort of currently useful for firms so sort of the best way to illustrate the difference between our PA and AI is to almost imagine a pyramid or a ladder right and so the sort of the first step there is basic automation of processes using your current ERP systems be it you know Oracle s AP Hyperion zero QuickBooks whatever you are using that's sort of baseline automation or PA though is that extra layer right where where it builds on that baseline automation and baseline some documentation and then helps firms automate either entire processes or pieces of of processes now a interesting point to keep in mind there with our PA is that even though we are having a conversation on the counting and on Finance our PA that idea and that process it's actually being used in a whole host of industries right so HR right HR every person who is hired is obviously a individual and is hired as such but that underlying HR process right the onboarding process benefits process all that stuff is is actually pretty consistent from person deferred from that other is actually uh consistent from person to person and from firm to firm right so then automating those processes and then really sort of thinking of how are PA can be used in a much broader level be it in the hiring of people inventory counts bank recs obviously all of those types of things really unlocks sort of the true upside of it and also versus AI are PA actually has software tools and firms that have been out there in the marketplace for the last 15 20 years be it uipath automation anywhere blue prism there are a whole host of firms out there who are focused in this RPA space have products that work and actually have a actual track record of a vaatrik of client service over the last 10 15 20 years so ai is one of that ultimate and goal right where all of us want to be and so that's basically where the data is is automated its processed and then on top of that those tools and processes that are put into place by us actually can help us analyze that information on a continuous basis right but just a quick point to analyze on AI is that Anil is that a I like blockchain is often tossed around but it's more of an overarching term than a one focused data point right so there's computational AI there's all sorts of a is out there so for our conversation probably computational is the most important but there are all kinds of AI options out there so an important point to keep in mind on top of ensuring that your underlying processes via your documentation via automation via our PA tools are actually ready for for AI it's important to also be able to have a conversation as to what kind of AI is actually most important for you the firm and for your external clients and sort of a last point here is that firms want to often sort of jump ahead right to AI just a full-blown AI project but it's not really possible to actually go from here to AI right it's important to make sure that your your processes and your controls and your data flow is actually built and then controlled in a way that is actually gonna help you use the AI tools right I mean cuz AI is a fantastic tool and there are great software programs out there but if those underlying processes and that data aren't you controlled aren't cleaned or normalized it's gonna be awfully hard to actually get the benefit out of AI that you are going to want so to sum up probably the best way to envision the RP a versus AI is is to sort of think of it as in part one is automation part two is RP a and then the ultimate end goal part three is that AI or that if self learning type of software but it's important to make sure that as you're having conversations both internally and externally your processes and your controls are actually moving upward to this has been count me in i amaze podcast providing you with the latest perspectives of thought leaders from the accounting and finance profession if you like what you heard and you'd like to be counted in for more relevant accounting and finance education visit ama's websites at WWE MA Network you

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