Accountancy is the process by which financial transactions are processed and recorded, so any move towards using Blockchain and cryptocurrency is bound to have a big effect on the industry as a whole. But what shape and form are these effects taking and will the use of alternative transactions permanently change the way that businesses process their finances?
The use of cryptocurrency to make purchases online is still in its early days but it is slowly increasing. Many major retailers and businesses, including names like Expedia and PWC, have accepted payments in cryptocurrency which has gone a long way towards legitimising it as a form of payment. However, it is true that most major companies are still in the research and development stage of their work with cryptocurrency and they’re being very careful to assess and predict the potential effects of it.
It is also necessary to understand that cryptocurrency and the software that allows it to exist, known as Blockchain, are distinct entities and as such could have separate effects on the accounting industry. So, it’s a good idea to look at them individually.
It’s almost certainly the case that the first time you heard about Blockchain was in relation to the cryptocurrency Bitcoin. The software is a distributed ledger system that allows the use and access to Bitcoin for users around the world. It soon spread to other cryptocurrencies as a means of authenticating transactions. It has huge potential in the world of accounting because of its close association with the profession and how closely it aligns with many of the major processes. So, it’s no surprise to know that many of the world’s leading accountancy chains are already utilising Blockchain in a number of ways.
As usual, the big four are leading the way, processing Bitcoin as payments and investigating other potential uses for the new technology across the board. It seems every few weeks a news story comes out about how they are leveraging this technology in some aspect of their business. And it seems like over the next few years this is a trend that is set to grow even bigger.
Some accountants have even ruminated on the possibility that Blockchain could replace much of the work done by conventional accountants at some point in the future. While this may be overstating the case a little, there is no doubt that accountants of today and tomorrow will need to become much more informed about the technology and its possibilities before it becomes an industry wide standard. Universities and other accountancy training institutions are already offering courses or modules that focus on Blockchain technology and its various uses.
However, it may not be the revolutionising force that some are predicting and is in fact more likely to be yet another factor in a long line of transformational technology. Past examples of this include spreadsheets and computer technology and even the humble calculator. While each of these developments was once predicted to change accounting for ever, they have simply become tools which professionals can use to make their work more efficient and accurate. It looks most likely that Blockchain will simply follow in these footsteps, being assimilated into the general knowledge base of future professionals.
The main reason that more and more businesses are adopting cryptocurrency is because they are using it as an incentive to get customers to make a purchase. Clients can be encouraged to make cryptocurrency payments with discounts and special offers, with cryptocurrency giving them a premium option. All of which is regularising the use of cryptocurrency in retail and other industries. And the more commonly it’s used, the closer it comes to being the norm.
For example, some employers have even considered paying staff in cryptocurrency, and it is not beyond the realms of possibility that major retailers like Amazon will be accepting full or part cryptocurrency payments in the near future
As you might expect, these changes will have a significant knock-on effect on accountants and the work they do in these industries. This will be both in terms of how they conduct their own business and the services they provide for their clients.
However, cryptocurrency remains a fairly untested way to make transactions and it is the role of the accountant to act as an advisor in these situations. They need to be on their guard against clients making bad decisions caused by a misunderstanding of the potential of cryptocurrency and its uses. Accountants must be well versed in the technology and ready to guide clients through potentially choppy waters and to explore new areas of business.
New software packages may or may not become the industry norm, but the role of the accountant is to be fully aware of how they work and can change the financial aspects of any business. In that respect, cryptocurrency and Blockchain are changing the nature of accountancy whether or not they become the accepted standard or simply fade away in the future.
The accountancy industry is by its nature cautious, and as such it means they need to be prepared for any eventuality. So, if cryptocurrency becomes the way we all pay for things or if it crashes and burns never to be heard of again, the profession itself has already changed to accommodate it.
It’s very important, however, in these times of transition when it’s hard to predict the full scale of the effects of both cryptocurrency and Bitcoin, that you have accountants who are up to speed on all the latest developments. If you’re working with people who are behind the times, then you could be at risk if developments pick up pace. That’s why here at Together Accounting, we’re always keeping ourselves abreast of the latest happenings. After all, if this is important enough for the big four to be interested, there are certainly going to be implications further down the line for everyone else in the industry.