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How Blockchain Could Shape the Development of Accounting

Accounting is a constantly evolving field, as it’s closely tied to the world of finances, a field that itself sees constant evolution and active pushes through technological advancements. It’s not rare to see new technologies having a significant impact on the way accounting works and sometimes transforming the field permanently, and at this point, it’s clear that blockchain could very well end up being one of those forces of transformation. How exactly this could all play out is difficult to predict right now, but experts are already seeing some patterns.

How Accounting for Bitcoin Works

Even though some accountants still face issues trying to work with Bitcoin and other cryptocurrencies, experienced professionals have figured out how to work with this type of currency in their own systems. Most treat them as assets, and it’s interesting to note that many jurisdictions – such as the United States – don’t recognize Bitcoin as currency for taxation purposes, but rather as property.

That’s also how accountants usually list cryptocurrencies owned by their clients, and so far, the system seems to be working out fine. There’s one caveat though – any fluctuations in the value of the cryptocurrency have to be treated as capital gains or losses, and therefore reported on a tax return. It’s not too different from store credit cards with bonus programs – one just has to know how to describe them as taxable assets.

How the Future Might Look

Blockchain and cryptocurrency are two terms that keep popping up more and more often in the world of finance, and it’s likely that they are going to lead to actual changes in the way accounting works in general. The popularity of these tools can’t be underestimated anymore, and their impact on the global financial market is going to be significant once their adoption rate reaches appropriate levels.

Accounting for Business Down the Road

This will also have an impact on the way accounting works for businesses, although it’s a bit difficult to predict exactly how this could play out at the moment. Some business owners are apparently worried about the prospects of having to declare entirely new types of assets on their returns, but thankfully, any experienced accountant should be able to sort these issues out without complicating the company’s financial matters.

On that note, it’s going to become increasingly more important to know that you can trust your accountant, but on the bright side, it’s also noticeable that many accounting specialists are now becoming more knowledgeable in this field and related ones.

The important thing to take away from this is that if your accountant still doesn’t understand blockchain and cryptocurrencies, it’s probably time to look for a new specialist. The good news is, someone with a proper insight into the way this technology works could potentially bring other benefits to the table as well, allowing you to see much better performance through your financial operations. All it takes is someone who knows how to work your books properly, and understands the current state of the market correctly.

 

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Amy T

Amy T

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Sedate technology

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This post is from a series of posts in the group:

Innovation in Financial Services

A discussion of trends in innovation management within financial institutions, and the key processes, technology and cultural shifts driving innovation.


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