Cryptocurrency has worked its way into the mainstream in the past few years. It is made up of digital tokens that are distributed over the blockchain, and it is designed to be a form of exchange. Its adoption will have an impact on accounting as more people become involved. Take a look at how it impacts accountants and what to do to prepare for it.
Adoption of Cryptocurrency
In 2009, Bitcoin was hardly known outside of the tech industry. However, it started to gain the notice of the public, and other cryptocurrencies followed, such as ethereum and ripple. This medium of exchange began to expose the flaws in the current exchange systems, and it became clear that cryptocurrency and its underlying technology has the potential to transform accounting.
Many businesses are starting to use crypto, including PayPal, Overstock.com, Expedia, and Shopify. As major businesses allow customers to use crypto as a method of payment, more smaller brands are expected to follow. For this reason, it is critical to understand cryptocurrency and how it works.
Why Do Companies Invest in Crypto?
Many different companies are choosing to enter the crypto market. There are a number of reasons for this, including the following:
First, the payment takes place instantly. The transactions are all peer to peer with no middle institution, so there are no delays. As long as the funds are there, the crypto is transferred from the buyer to the seller in minutes.
In addition, cryptocurrency has lower transaction fees and often costs nothing to send. There may not be many small businesses using crypto yet, but as they learn that the cost is low, they may start accepting it.
Finally, crypto transactions are secure. When a customer uses a credit card, they are sharing a lot of confidential information. If anyone gets ahold of that information, it can be a nightmare for the customer. When they use cryptocurrency, they don’t need to give any information. It’s a matter of sending payment to a crypto wallet address. That is the only information needed.
What This Means for Accounting
Governments are trying to come up with regulations and methods to regulate and tax cryptocurrency, but there are no common standards yet. This means that accountants have to prepare for what may come. Learn about blockchain and understand the process. The best way to prepare is to gain knowledge and experience to stay ahead of it.