Blockchain, cryptocurrencies, digital assets… You may have heard colleagues, clients or others talk about them and wondered what they were. Before going any further, here are a few basic concepts.
What is a blockchain?
A blockchain, or chain of blocks, is a new, secure and transparent data storage and transmitting technology. The general public still knows very little about its possibilities and uses.
On the other hand, many businesses are curious about blockchain and how they could adopt it for their business needs.
Blockchain 101 – How does it work?
Catallaxy, a Raymond Chabot Grant Thornton subsidiary, has recognized blockchain and cryptocurrency experts in its rank who are able to demystify this technology and its uses. To help you gain an understanding of this new tool that will transform our economy, we’ll present a few examples of how it can be used and applied in various industries. Lastly, we’ll see how our services can support businesses that have adopted this technology.
How do businesses use blockchain?
Blockchain addresses a range of businesses issues. “Today, numerous organizations in various fields are faced with product traceability, counterfeiting or manufacturing defect challenges. It’s the same issue for financial and banking institutions when it comes to fraud and international transfers. Blockchain might be the solution.” explains Michel Besner, General Manager of Catallaxy.
He uses Walmart as an example: the world leader in the agri-food and mass distribution sector is already using this technology to improve fluidity and security and ensure better transparency within its production network.
Where today’s information is stored on paper media, the main challenge is to prove its accuracy and authenticity, which may take several days—blockchain provides visibility and precise, reliable and immovable data in only a few seconds.
It’s easy to imagine how this technology might have stopped the romaine lettuce E. coli bacteria contamination scandal last year. The problem could have been dealt with very quickly by locating the infected strains, thereby avoiding a general outcry in the public arena for the producers and chains concerned.
However, limiting the use of blockchain to the agri-food industry might be too simplistic. There are many sectors that could benefit. The world’s leading luxury brands use this technology to trace the origin of their raw materials. Thanks to blockchain, it’s very easy to identify where the fabric was produced, its path, and who is responsible for it in just a few minutes. This process also makes it possible to prevent counterfeiting and detect manufacturing defects.
In Canada, the country’s leading financial institutions have taken steps to adopt this technology to prevent fraud. In fact, with blockchain, some information about clients will be shared between these institutions, which considerably mitigates the risk of an individual providing them inaccurate or fraudulent information. Blockchain serves to secure digital data and reduce digital fraud attempts.
With its many advantages, blockchain goes beyond the currently used processes and methods. Furthermore, it is expected to play a key role in business success. At the service of both the organization and the consumer, blockchain offers more security guarantees, transparency and speed. It is a technology that, from a competitive point of view, could change the situation for companies adopting it in the coming years.
Discover our Webinar on Blockchain: Development and Auditability
How can blockchain content be evaluated? The auditability of digital assets (blockchain audit)
Verifying a chain of blocks involves auditing digital assets (such as cryptocurrencies) stored in the chain. In Canada, digital assets are considered to be property; businesses that own cryptocurrencies and that are in an audit process must provide all relevant information to their auditor, who will then decide to include them in the audit. However, auditing digital assets requires a different approach than a traditional audit. Basically, the audit of any asset consists in verifying whether it exists, who owns it and what its value is.
For digital assets, such as cryptocurrencies or tokens that are on a blockchain, there is the same verification need. Since digital assets circulate on technological platforms, auditing digital assets requires techniques similar to those of an IT audit.
This is where Catallaxy’s expertise comes into play, helping auditors in their work thanks to tools and a methodology that are unique on the market and providing them with the necessary evidence.
Catallaxy has made digital asset auditing its main focus by developing a tailored methodology and solution that meets the new blockchain requirements.
How to secure digital data in a blockchain
The surge in cryptocurrencies has led to an increasing number of organizations to own these currencies. Because of recent government positions on cryptocurrency reporting, it is imperative for auditors to obtain an understanding of these new assets in order to implement sufficient and appropriate audit procedures.This translates into a range of issues in practice. The lack of regulations, immature technologies, security considerations and the quantity of data are major challenges for auditors and businesses alike.
The combination of an exclusive technology and a real-time audit solution developed by Catallaxy gives Raymond Chabot Grant Thornton a competitive edge with a unique service offering specifically designed for digital asset audits that meet the auditor’s needs.
Michel Besner, General Manager of Catallaxy says: “We are aware of the critical lack of regulations regarding everything surrounding cryptocurrencies; we are also working with various organizations to advance regulations in order to reduce digital fraud.”
Talking about the benefits of the digital solution, he adds: “We have developed Abacus™ to help Raymond Chabot Grant Thornton auditors audit digital assets with reliable results that meet the strictest auditor requirements.”
Abacus™ was built on a blockchain data centre that manages dozens of terabytes of data every day and also contains complete archives of blockchains and cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, EOS and Ripple. Thanks to its access to these records, Abacus™ is able to undertake an in-depth analysis of various cryptocurrencies and add to an exhaustive study by Catallaxy experts of the technological risks associated with cryptocurrencies.
“Our goal is to instill a climate of trust in blockchain technology and the digital stakeholders, whether it’s auditors who call on us because of our expertise and product or businesses. Market demand is growing quickly and we have the tools to meet the needs of businesses of all sizes, whether based in Quebec, Canada or elsewhere in the world. In fact, we currently have dozens of digital asset audits in progress internationally.”
Do not hesitate to contact our experts for more information.