Home Finance How Cryptocurrency Like Bitcoin Will Affect The Accounting Profession

How Cryptocurrency Like Bitcoin Will Affect The Accounting Profession

by Nina Smith

Bitcoin and other cryptocurrencies along with blockchain technology have brought significant changes to the financial market and the global economy. Currencies we know about are now considered traditional, while cryptocurrencies are considered modern and innovative.

A completely new approach, concept, and vision are what the creators of the first cryptocurrency, Bitcoin, had in mind 11 years ago, when this was just an idea combined with a lot of creativity and optimism. Today, Bitcoin’s value is higher than ever, and it’s reached an unprecedented price of more than $50k per Bitcoin. Investing in cryptocurrencies is no longer reserved for the richest people on Earth, serious bankers, or rich stock investors. Anyone can own a certain amount of tokens, and mining is not the only way to purchase or get Bitcoin – since more and more companies accept Bitcoin as a method of payment as it gets integrated into our daily life, turning cryptocurrencies into the ‘new normal.

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Cryptocurrencies affect the world around us in many ways, pointing out the importance of security, safety, transparency and financial freedom. The banking system has been slowly changing ever since crypto became popular, and new opportunities are arising from blockchain technology. People who are unable to possess a bank account nor they have access to any financial institutions, now can use a new financial tool that’s been globally recognized and available. As a completely decentralized digital currency, it doesn’t depend on any third parties, and allows its users to control their assets, easily and anonymously.

However, the changes in the global economy were only the beginning of all the changes we were expecting. Inflation control and frictionless transactions are some of the benefits we have seen, but the benefits are not the only thing that seems to occur. There are several issues that need to be solved in the future, and those issues are mostly correlated with the governmental organizations – tax evasion and capital controls are only some of them. On the other hand, widely known professions and businesses now have to adjust to the new financial environment and its dynamics of changing. One of the most concerned professions is the accountancy profession – since cryptocurrencies and Blockchain have a significant impact on the accounting profession and professionals.

The relationship between Blockchain technology and the accounting profession

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One thing is sure – accountants need to adapt to the newest technology trends, stay up to date and continuously learn about all the aspects of blockchain, in order to handle the transactions, tax preparation and finance reporting with success.

Blockchain technology has evolved and outgrown the currently most famous cryptocurrency of them all – Bitcoin, and is now not only being used but it’s also being tested in numerous industries. Therefore, many accounting businesses have indulged in the world of blockchain initiatives in order to understand the challenges and the changes that are currently happening, and that will happen in the nearest future.

A certified public accountant’s such Lear & Pannepacker main job is to audit the books of his clients and if they meet his criteria, he will then provide an auditor’s opinion about the aforementioned financial statements. Other than that, his job title consists of numerous consulting activities, advising about financial planning or other issues, preparing tax returns and litigation services. It is obvious that blockchain technology works differently compared to the traditional approach accountants have.

Up until recently, accountants were record keepers, they were in charge of applying certain rules or setting certain standards. With blockchain implementation, most of their daily tasks could be done in just a few minutes, compared to days or weeks of their hard work. To be able to close their clients’ month-end books and paperwork, they will need less time, but more knowledge and experience about blockchain. Does this mean that the accounting profession is at risk? Should it take notice of the impact new technologies have on the way this business functions? The answer is not that simple.

Will there be a need for accountants in the future?

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If the majority of tasks can be done automatically, will there be any need for audits and accountants? Every time a new technology innovation appears, the same question pops up. However, the audit process as well as the workflow will certainly change, but the need for qualified accountants, now blockchain experts – won’t.

That being said, they need to understand blockchain architecture, cryptography and smart contracts, as the three fundamental concepts of blockchain technology. This will eliminate time-consuming, repeating tasks and help accountants focus on adding value to their interactions and be more efficient in their professional judgment, business planning and advisory.

As a result, we can expect a significant increase in efficiency, security and productivity since there will be fewer frauds and no data errors, or at least less error in data, but we can also expect a certain level of rebranding and repositioning when it comes to the accounting profession.

What this means is that this profession needs to go forward and adapt to the newest conditions. By leveling up their skills and expanding their IT knowledge, accountants and audits will no longer be in charge of keeping records, meeting the standards or dealing with rules. They will now be in charge of auditing smart contracts, controlling the blockchain and performing an arbitration function. Other than that, their role will be administrative, and it will include permitting access to the blockchain.

Analyzing the information rather than collecting

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According to gloucestercitynews.net, the accounting profession will not be replaced by new technologies. But this still doesn’t mean that things will continue functioning the same way as before. It just means that the majority of the tedious work will be done differently – faster, automatically and more efficiently. The rest of the tasks will be focused on ensuring accuracy and analyzing the information about the clients, rather than collecting and verifying both the information and transactions. Since Blockchain is transparent, this means that all relevant parties will have an identical copy of the ledger, so this will revolutionize the accountants’ role, not making it less important than before. Their job will be to help their clients make business decisions thanks to their analysis, as well as supervising payment contracts, capital outflow, prepare invoices and do all the things they would normally do, without becoming irrelevant, but rather – more efficient than ever.