How Will Crypto Fit In To the Traditional Financial Reporting Process?

How Will Crypto Fit In To the Traditional Financial Reporting Process?

Cryptocurrency is making a splash in finance and accounting, in spite of its relatively unpredictable path thus far. As an accountant, educating yourself on emerging trends in accounting technology and how it will affect your career is incredibly important.

While Bitcoin prices went up in May 2019, it’s been a bumpy road since it was founded in January 2009. Prices are expected to climb, but predictions for the future state are difficult to pin down. One source predicts that by 2020, Bitcoin will be priced between $16,500 and $17,500. The recent surge in May has been credited to comments made by Microsoft and Bakkt at Consensus 2019 in New York, and some believe that current U.S.-China trade tensions also contributed.

Some, like Tim Draper, CEO of Draper Associates, believe that we are just a couple of years out  from everyone using cryptocurrency.

Others worry that cryptocurrency is a breeding ground for crime.

Still others are leery due to the lack of consistency over the past 10 years. And, Bitcoin is using basic blockchain technology, while competitors are using newer, sleeker technology that gives them a leg up.

In spite of the naysayers, if performance is any factor, Bitcoin could see an increase to $100,000–or higher–in the next five years. At this point it is still a highly changeable, volatile, and difficult to predict animal.

But how do we handle the accounting side?

The past and present of crypto accounting

Cryptocurrencies depend on the internet for the maintenance of accounts and transactions, and Bitcoin specifically has gained relatively mainstream acceptance in today’s markets due to its efficient accounting processes.

In traditional accounting, accounting make double entries in the books–a debit side and a credit side. Bitcoin, however, uses a triple entry method. The transactions are recorded in three separate databases and then distributed across the internet, making the transactions trustworthy and verifiable. This makes Bitcoin a reliable form of currency.

Bitcoin is automated, so its accounting practices are inherently less labor intensive. But, Bitcoin cannot address all of the accounting requirements of an organization, so master’s level accountants will still be in high demand.

FYIsoft keeps you abreast of changing trends

Founded in 2012, FYIsoft has quickly grown into a leading provider of cloud financial reporting software. Over 8,500 finance professionals around the world rely on FYIsoft for a faster close. As technologies advance, FYIsoft has got you covered. Schedule a demo today.

 

 

 

 

 

 

 

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