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Why accountants are now learning about Bitcoin
The Bitcoin logo is displayed on a smartphone. Photographic illustration by Omar Marques.
SOPA Images/LightRocket via Getty Images
Bitcoin is becoming an integral part of modern finance, and accounting bodies now see it as both an opportunity and a risk. Recognizing this change, AICPA and CIMA are starting to take the lead in training accountants on this new asset class. Last week they hosted the “Blockchain, Bitcoin and Power BI in the Finance and Accounting Industry” event. This marked an important step in the AICPA and CIMA’s commitment as thought leaders in the bitcoin economy.
James Dewar gave a speech on the importance of including bitcoin in accounting education. Dewar, a CIMA qualified accountant with 20 years in financial services, also holds a Research Masters in Finance and Accounting, where his thesis compared bitcoin to gold.
Bitcoin can be described as a network communications protocol, similar to TCP/IP, one of the protocols underlying the Internet. Bitcoin’s design includes a difficulty adjustment algorithm, ensuring a stable issuance rate. This scarcity makes bitcoin unique, unlike fiat currencies whose supply can be increased by private banks, central banks and governments. Its open source and decentralized nature further sets it apart, making it resistant to central control.
Bitcoin’s fixed supply and decentralization distinguish it from traditional currencies and other cryptocurrencies. Unlike betting test financial systems, which mirror existing financial structures, those of bitcoin work test The system provides security and scarcity without a central controlling entity. Creating scarcity in an environment like the Internet, designed to replicate itself infinitely, is a major advance and is now being recognized by accounting bodies.
UK – AUGUST 22: A mechanical calculator made by Bell Punch Company Limited, a… [+] later variant of the popular German Brunsviga lever calculator. Key-operated calculating and adding machines were widely used in accounting and business until the late 1970s, when they were replaced by electronic calculators. Photo by SSPL/Getty Images
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Dewar highlighted the need for accountants to be experts in Bitcoin to identify the strategic threats and opportunities posed by this technology. He said including Bitcoin in accounting programs and risk registers is critical to future-proof financial knowledge. Once this asset comes to the attention of finance and risk teams, ignoring it could be considered negligent.
The strategic use of Bitcoin in business
MicroStrategyled by CEO Michael Saylor, has adopted bitcoin as a primary reserve asset. This astute move demonstrates how bitcoin can serve as a strategic tool for business growth. Other companies are following suit. For example, Metaplaneta Tokyo-based investment firm, recently followed Microstrategy’s lead.
This decision was influenced by Japan’s high debt levels and the declining value of the yen. Metaplanet sees bitcoin as a hedge against these economic challenges and a way to stabilize its financial outlook Scientific Semler also announced plans to adopt bitcoin as a reserve asset, showing the growing trend of companies capitalizing on bitcoin for financial stability and growth.
Businesses in various industries, including energy and waste management, leverage bitcoin for economic benefits. For example, companies now use excess methane to fuel bitcoin mining, turning a waste product into a revenue stream. Bitcoin mining is also helping to develop renewable energy projects acting as a buyer of last resort for excess energy, which can stabilize the grid and make renewable infrastructure more profitable.
Implications for finance
The integration of bitcoin into corporate finance is not limited to MicroStrategy. Pension funds like Wisconsin Pension Fund they are now allocating resources to Bitcoin ETFs. This trend reflects a growing recognition of bitcoin’s value proposition and its positive impact on a portfolio’s Sharpe ratio. The BlackRock Bitcoin ETF has almost reached the finish line $10 billion in assets within 49 days, further highlighting the demand for bitcoin investments.
POLAND – 03/21/2024: In this photo illustration the Micro Strategy logo is displayed on a smartphone… [+] with the Bitcoin logo in the background. (Photo illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)
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The role of accountants
The AICPA and CIMA’s initiative to incorporate bitcoin training into their programs is timely. Forward-thinking bodies understand that knowledge of bitcoin is essential for accountants. Dewar’s presentation provided tangible reasons why bitcoin needs to be taught: both the potential and the pitfalls that organizations need to identify, exploit or mitigate.
Bitcoin’s unique characteristics – decentralization, scarcity and security – make it an important asset for modern finance. Accountants need to be equipped with the knowledge to guide themselves accordingly. Failure to include bitcoin in training programs could leave accountants unprepared for the future.
The efforts of the AICPA and CIMA to educate their members about bitcoin are the first of their kind in this area. With leaders like James Dewar at the forefront, the accounting profession is well positioned to embrace this new asset class. Understanding bitcoin is no longer optional; it is necessary for anyone involved in corporate finance and risk today.
Accountants need to understand Bitcoin to provide additional value to their employees. This landmark event marks the beginning of a new chapter in accounting education, where digital assets like bitcoin take center stage.