Could Blockchain or AI Replace XBRL?
Mohini Singh, ACA, Director of Financial Reporting, CFA Institute and Campbell Pryde, President and CEO, XBRL US have published a blog on the XBRL US website demonstrating why blockchain and AI cannot replace the XBRL standard.
We sometimes hear the argument that XBRL is old technology and should be replaced with technologies like blockchain or Artificial Intelligence. But can a technology replace a standard? Singh and Pryde demonstrate how blockchain and AI are both exciting, useful new technologies that will need data standards to work effectively but, as they have completely different uses and purpose from the XBRL standard, could not be used in place of data standards.
Blockchain needs data standards – while both are used to communicate, blockchain uses data standards to record and exchange information. Universal, machine-readable standards are especially essential when automating processes, for example in smart contracts.
AI has been posited as a replacement for XBRL as in theory, it could be possible for AI tools to read and analyse financial statements that aren’t in machine-readable format. However, AI is based on machine learning – and for machine learning to develop, an AI system needs vast quantities of machine-readable data. To facilitate the development of AI an open data ecosystem and consistent standards for structuring and labeling the data are essential – better quality data equals more useful AI.
Data standards aren’t technologies – they are, however, essential for new data technologies to develop and improve. The XBRL standard cannot be replaced with blockchain or AI, but its facilitation of machine-readable, consistent, unambiguous data is critical for smooth AI and blockchain applications.
Read more here.