INTERVIEW 🎙️ Bennett Moore of RSM: What is Blockchain & How Important is to Safeguard Data?
Channel: Beryl Elites
Date: 2023-12-26

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🎙️ Bennett Moore, National Leader Blockchain & Digital Assets CoE - RSM
Derricke Dennis, Anchor, ABC TV

What is blockchain?  
❖ At its very core, you can think of blockchain as a shared ledger that many different people throughout the world and different entities are all maintaining a copy of it, and consistently agreeing with each other as to the state of that ledger. So, instead of relying on one single party to maintain a ledger and ensure that party follows the rules and all participants of that follow the rules, you rather rely on everyone to maintain a copy of that ledger, and everyone has a set of those rules and enforces those rules against everybody else. So, it's a more distributed way of kind of reaching an agreement that someone is following the rules, rather than relying on a central counterparty. 

❖ If you go back to the earlier days you know what blockchain solved was this concept of the double spend issue. So, if you think back to like the days of Lime Wire, or a few these other technologies that were in the early MP3 days, where someone was able to actually download an MP3 file and then put that on the internet and everybody else around the world was able to download it for free, even though that one person paid for it. The problem with that concept is, that's double spending. One person buys it, everybody else can download it. Blockchain solved that issue by ensuring that if I want to send funds from myself to yourself that everybody around us knows that I no longer have the funds when I've sent it.

There's increased risk involved?
❖ When we think about the risks of blockchain, there's a lot of different areas we could look into to better understand that. One of the newer or maybe reintroduced concepts of security that exists as blockchain is this concept of custody. A lot of people talk about this concept of being your own bank, custody your own funds. We see many different options in terms of the custody landscape for digital assets out there. The most important thing about risk with that is really understanding the different associated risks with different custody models.  So when we think about exchanges many of us are aware of what's been going on around FTX and what we've seen how poor controls existed over there. No one had any visibility into that. So, when you think about exchanges as a form of custody for an individual holding crypto or a fund or other institutions, you are relying on their control architecture surrounding how they manage the keys, which are basically like your password to the crypto. There aren't things like insurance or other independent third parties such as regulators or accounting firms coming in there to assess that architecture. There could be significant risk that you're unaware.  You've got what you might refer to as the qualified custodian, or full-service custodian level, usually regulated trust companies.  And then you've also got the self-custody landscape where individuals, such as yourself or myself, might choose to custody crypto ourselves, that can involve a variety of security considerations around managing those private keys and managing the backups to those keys in a secure way.

Without getting into the logistics of security, talk about how important it is to safeguard this data?
❖ It is exceptionally important when we think about blockchain and the way this technology works, it is an immutable ledger. To break it down more simply it just means the inability to be altered. It means that when you actually place a transaction or do an action on a blockchain and is recorded, there's no way to reverse that. All you can do is continue to append new information. So, if my wallet, my keys that custody of the crypto are compromised and somebody moves those crypto out of the wallet that I control or did control to another address that I don't control, there's no way to reverse that transaction. So, when we think about blockchain there is a benefit to that immutability and that it provides a really good audit log, so that we understand exactly who did any given action but it also has a cost in that if you make a mistake from a security standpoint, such as being hacked, there is no way to reverse that.  

Is blockchain accounting impacted by a tough financial market which is what we're seeing now? 
❖ It depends on which areas you talk about accounting. If you're thinking about individual small accounting businesses that are serving the Innovative startups in this space, you might see some significant impacts due to a lack of funding in bear market that we're in currently.  But as it relates to a firm like ourselves, number five in terms of large public accounting / consulting firms, it's actually been a relative boom to us because we've always had a very strong risk management approach to the space. We do a lot of due diligence and vetting in terms of any of the clients we serve.