There’s nothing more intriguing to forward-thinking accounting professionals than the impending integration of blockchain-based technology and cryptocurrencies into their jobs and practices. In the past, the interest in blockchain has been largely speculative, with companies wondering what the blockchain revolution might look like.
Acccounting Today states that while that speculation will continue for many years to come — we’re still at the early stages of this transformation — the conversation now includes plenty of discussion about how practices can begin implementing blockchain elements in their work today to better learn the technology.
However, unless you’re a Big 4 firm, you’re not going to have millions of dollars to invest in R&D — but that doesn’t mean there aren’t ways to begin dipping your toe into the blockchain waters. The race to familiarize yourself with the impending changes to the profession has already begun. Those who seek out ways to use the new technology for the benefit of their clients stand to grow as both thought leaders and trusted advisors.
With that in mind, let’s take some time to think about ways you can can start taking your first steps toward the future.
1. Know the lingo
Despite the overwhelming number of blockchain-related conversations and media around the technology, many people still need to learn the fundamentals surrounding the tech so they can use the terminology correctly, avoiding accidental slip-ups. You shouldn’t feel pressured to become fluent in “blockspeak” overnight, though consulting a glossary is definitely a good idea.
What you must do is understand the basic terms and concepts so that you can deploy them confidently. Many people interchangeably use “bitcoin” and “blockchain.” Bitcoin is built on blockchain technology, but blockchain can be more than bitcoin. So let’s take a moment to define three important terms in the blockchain lexicon, from most specific to most general.
● Bitcoin is the world’s most well-known cryptocurrency. It’s decentralized, running on a peer-to-peer (P2P) network and is not authenticated by a central banking institution.
● Cryptocurrency is a digital asset that functions similarly to a traditional currency. The biggest difference is that rather than relying on a centralized third party (a bank, government, etc.) to secure transactions, cryptocurrencies use decentralized, incorruptible storage via a blockchain as a verification mechanism.
● Blockchain is the technology at the heart of cryptocurrencies like Bitcoin. It’s a shared ledger where entries (blocks) are permanently recorded and unalterable. As entries are added over time, the blockchain grows larger. While blockchain is most associated with cryptocurrencies, its potential uses range far beyond that alone.
Learning and researching more about these terms will help you feel comfortable discussing them in a more natural way. Without some foundational understanding, you’ll find trying to follow a conversation on blockchain a more difficult.
2. Try it out for yourself
Both Price Waterhouse Cooper and Ernst & Young already accept Bitcoin payments for certain services. Following their lead is a great introductory step into the the world of cryptocurrency and blockchain. Doing this is useful because it allows you to gain first-hand experience surrounding the tech, including following the accounting trail and how to record everything properly. It’s also a convenient and valuable service, as the client pool interested in using Bitcoin for payment only stands to grow larger. Accepting Bitcoin as payment also shows that you are a forward-thinking.
There are a number of ways to mitigate the risk of accepting payments from such a volatile currency. You can use a payment processor, sometimes called a merchant account, like Coinbase or Bitpay (there are many more options, as well) to instantly convert all Bitcoin payments into dollars. nominal conversion fee most likely will apply, but it means you won’t ever hold Bitcoin for longer than the conversion takes. If you’re more of an investor in the future of Bitcoin, you may not want to take this step at all, but it’s an excellent precautionary measure.
3. Don’t get complacent
Some may have a pretty good handle on how to process Bitcoin and other cryptocurrency payments, but that’s just the tip of the iceberg when it comes to the ways that blockchain-based technologies could disrupt the accounting profession. The blockchain services you’ll be able to offer a year from now may be entirely different than what’s usable today.
An example of a firm already putting this into play as a service line is PwC. They recently began offering a service that audits a company’s use of blockchain and cryptocurrency. The service will make sure a client’s implementation meets all standards of excellence. You may decide to hire a firm that is doing services like this to review your own implementation in your practice to help you with the learning curve. As we will be seeing more firms getting into this space, following the stories about how they are putting this into play will help craft ideas for your own practice on how to design future offerings for your clients.
As you begin the journey of blockchain and cryptocurrency implementation, the most important thing you can possess is an open mind and a desire to stay informed. There’s no denying that blockchain could radically alter the way accounting is performed. The people that are willing to do the research and gain understanding are the ones who’ll benefit most in the coming years. There’s no better time than now to get acquainted with it and make the future your present.