When Benedikt Kotruljević postulated the double-entry system of accounting in his book “Della mercatura e del mercante perfetto” [CITATION Dar95 \l 1033] (Of commerce and the perfect merchant) 1458, he set in motion a system that would, eventually, lead to some of the most disruptive technologies of today – like Robotic Process Automation (RPA), Artificial Intelligence (AI) and Blockchain.
The invention of accounting led to better record keeping, and therefore improvising the system of taxation; Bitcoin brought about the disruptive technology of Blockchain, which coupled with RPA and AI, will help change the accounting, auditing and tax landscape the world over.
Let’s understand these technologies
Robotic Process Automation
Though it sounds very technical and scary, we regularly experience and use Robotic Process Automation in our daily lives.
Your run-of-the-mill Amazon order, the pizza delivery application or the ride-hailing app are but simple examples of it. As are the utility bill, the car insurance premium or the automated vacuum cleaner.
Automation of any logical process with the help of a computer application can be called Robotic Process Automation. It works only on the surface and does not optimize the process itself. The basic objective of RPA is to replace repetitive tasks performed by humans with software.
If a task can be performed according to a flow-charted process just by verification of conditions and output data at the end of each process, then such a task is the right candidate for conversion to RPA.
Most widely used and recognized Artificial Intelligence (AI) tech today are Siri, Cortana and Alexa. We routinely use AI without even thinking about it. In 2019, all tax preparers in India got a taste of AI when the online Income Tax Return forms came pre-filled with assessee’s income and tax data – that was the first such use of AI by a tax department globally.
So, what is Artificial Intelligence – It is computer software that has the capability to discern patterns in input data and learn from them. Though AI came to the scene long ago, recent advancements in technology and data manipulation have given it the resources and computing capabilities needed to bring this snippet of automation down to our pedestrian level.
AI is a synergy of many different technologies that feed into a central software. It processes all the inputs (such as recognition of hand gestures and facial features, data from the environment, etc.) and analyses all the data to learn and make autonomous decisions. One can say that AI is the next version of RPA, but one that may or may not need our input in recognizing patterns and define the steps to produce a result.
The following diagram shows the progression of RPA to AI and their distinctions:
One of the most widely used “Use Case” of Blockchain is Bitcoin. We are going to understand the technology of Blockchain using the example of the Bitcoin Blockchain network.
Bitcoin network contains upwards of 9,000 nodes (computers connected to the Bitcoin network) worldwide which collectively form the Bitcoin Blockchain. In a Blockchain network, all the computers on the network have a copy of the ENTIRE database or “Ledger” as it is referred to, so we can say there are upwards of 9,000 copies of the same Bitcoin database with each node in the Bitcoin Blockchain network. Blockchain is also therefore called “Distributed Ledger Technology” (DLT).
In the most simplistic layman’s terms:
- Blockchain is a database that stores data in Blocks that are bound to each other by Chains
- Blocks are nothing but encrypted containers to store data (not physical containers but virtual containers – for example – an Excel file is a container of data that has been written inside the file, once the file is password protected it becomes an encrypted virtual container)
- Hashes are the chains that bind each block to its preceding and succeeding block
- A Hash is nothing but a unique 64-character string created using an encryption technology called SHA256 (256-bit encryption)
Following is the graphical representation of a Blockchain transaction (say the sale of 10 Bitcoins from A to B):
When some data is received in the Bitcoin Blockchain, ALL nodes in the Bitcoin network start to run algorithms to compute the Hash with predetermined characteristics.
Once a node (N1) has been able to compute the requisite Hash, it raises a flag to the other computers in the network and sends across to all the nodes the computed Hash. All the other nodes verify the resultant Hash to make sure it represents the data that was received for storage in the Blockchain. Once ALL the nodes agree that the resultant Hash is correct, node N1 is authorized to seal the Dataset in the encrypted Block and proceed to add it to the Blockchain as the NewBlock.
The NewBlock contains the following:
- Block Number
- Nonce (another mathematical value used in the encryption process)
- The dataset that is to be stored in the Blockchain database
- Hash of the previous Block
- Hash of the NewBlock
The Hash of the previous block stored in the NewBlock creates a Chain that binds the NewBlock to the previous Block and so on. Thereby creating a Chain of Blocks or a Blockchain!
These technologies are here to stay…
RPA, AI and Blockchain are disruptive technologies that will revolutionize the way business and commerce are conducted world over.
RPA with automation will bring efficiency into any process while eliminating human interaction in performing repetitive programmable tasks.
The knowledge of nuances any process or task repeatedly performed by a person is lost when that person moves to do something else – like a machinist on a shop floor moving to be a supervisor. The new operator has to re-learn the nuances of the machining process. AI will store the nuances of any process for eternity. AI will change the learning paradigm forever.
Blockchain is all set to transform data storage for governments and businesses and every other aspect of our life where data is generated and saved. Blockchain also is the backbone for the cryptocurrencies that are already challenging the long-held supremacy of fiat currency issued by countries thus bringing a new perspective to “transfer of value” with a unit of measure – money.
RPA, AI and Blockchain along with other technologies such as the Internet of things (IoT), Machine Learning and Virtual / Augmented Reality present us with so many possibilities and opportunities to work faster and smarter – save cost and derive efficiencies.
- CFB Bots. (2018, Apr 21). The Difference between Robotic Process Automation and Artificial Intelligence. Retrieved from
- Nakamoto, S. (2007). Bitcoin: A Peer-to-Peer Electronic Cash System. pp. 1-9.
- Zubrinic, D. (1995). History of Croatian Science, 15th-19th centuries. Retrieved from Croatian History