In accounting, the transactions are recorded chronologically. The entries made are so done that in the future they do not create confusion or anything in the mind of the observer. As a result, the correct posting of entries is ensured from the very beginning. If this is not done, the error can become larger and more disastrous with every increasing stage. But, despite taking so much care, the degree of precision cannot be one hundred percent. But these errors had to be removed by checking the previous records. But, to avoid favoritism and chances of fraud the records need to be checked by someone independent of the corresponding agency. Then only can the authenticity of the report be considered? Similar is the case of digital currency aka cryptocurrencies. The record of cryptocurrencies is as important as a physical accounting record as the transactions involved are much greater and the figures involved are greater in number. Thus, accounting here is also a must. If you want to invest in bitcoins, you may consider knowing Why you need Bitcoin in 2022.
Auditing can be defined as to be the checking of books or accounting by a person appointed specially for the job. The person so appointed is called an auditor that physically checks the corresponding books and makes sure these are error-free. Every organization that deals in cryptocurrency and digital assets has its own set of rules and regulations. So, to get the transaction completed, they have to follow those conditions fully. An auditor has to ascertain the accuracy of the financial statements of that particular organization. In cryptocurrencies, blockchain provides an easy way to establish the process of auditing digitally.
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Auditing with the aid of blockchain
By default, the blockchain is so designed that no one can make changes to its basic design and structure of the blockchain. The blockchain serves as a fully open and decentralized type of accounting ledger that has the job of recording transactions between any two parties efficiently and with ease. Just like a bank statement that is checked when one needs to verify the entries and so, a blockchain is a basic unit for checking the transactions and records. Traditionally, the records being tested physically are soon going to be a thing of the past as considering the benefits of blockchain almost every organization is considering it a better option than the physical hardships. Also, the scope of checking digitally is large and the level of assurance is also much greater.
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Usual time taken
Blockchain as the name suggests has its building unit as blocks of data and information. The sizes of these blocks of data vary considerably. Some are huge while on the other hand the size of some is small. In the technology-based digital blockchain, the blocks that have smaller sizes usually hold transactions of small value. These transactions of low value can be validated in somehow less than 10 minutes or so. As soon as more blocks are validated and checked, it becomes a chain of trustable and verified blocks of information. On the other hand, a large value transaction finding its place in a larger size block usually takes an hour to get validated and verified. This is much better than traditional auditing wherein despite the values and sizes the information takes around more than a day to get verified sometimes. Also, in the traditional method, the start of auditing comes after every year or so but in the digital space it is just a click away, and you can perform remotely too.
Thus, the benefits of digital auditing are large and many organizations are switching from their traditional ways.