Bitcoin

Why Accountants Are Now Learning About Bitcoin

Published

8 months ago

3 June, 2024

AltcoinUpdates Staff

Why Accountants Are Now Learning About Bitcoin

The Bitcoin logo is displayed on a smartphone. Photographic illustration by Omar Marques.

SOPA/LightRocket Images 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 beginning to take the lead in educating accountants about this new asset class. Last week, they organized the event “Blockchain, Bitcoin & Power BI in the Financial and Accounting Industry”. This marked an important step in the involvement of the AICPA and CIMA as thought leaders in the bitcoin economy.

James Dewar gave a lecture on the importance of including bitcoin in accounting education. Dewar, a CIMA qualified accountant with 20 years in financial services, also has a research master’s degree in finance and accounting, where his dissertation compared bitcoin to gold.

Bitcoin can be described as a network communication protocol, similar to TCP and IP, the protocols that underpin 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 resilient to central control.

Bitcoin’s fixed supply and decentralization set it apart from traditional currencies and other cryptocurrencies. Different proof of bet systems, which mirror existing financial structures, bitcoin proof of work The system provides security and scarcity without any central controlling entity. Creating scarcity in an environment like the Internet, designed for infinite replication, is an important advance and is now being recognized by accounting bodies.

UNITED KINGDOM – AUGUST 22: A mechanical hand calculator made by the Bell Punch Company Limited, a… [+] later variant of the popular German lever-operated Brunsviga calculator. Key-operated adding and calculating machines were widely used in accounting and business until the late 1970s, when they were replaced by electronic calculators. Photo by SSPL/Getty Images

SSPL via Getty Images

Dewar emphasized the need for accountants to be well versed in bitcoin to identify strategic threats and opportunities posed by this technology. He said including bitcoin in accounting curricula and risk registers is crucial to future-proof financial literacy. Once this asset comes to the attention of finance and risk teams, ignoring it could be considered negligence.

The strategic use of Bitcoin in business

Microstrategyled by CEO Michael Saylor, adopted bitcoin as its main reserve asset. This shrewd move demonstrates how bitcoin can serve as a strategic tool for corporate growth. Other companies are following suit. For example, Metaplaneta Tokyo-based investment firm, recently followed Microstrategy’s example.

This decision was influenced by Japan’s high debt levels and the declining value of the yen. Metaplanet views bitcoin as a hedge against these economic challenges and a way to stabilize its financial outlook. Semler Scientific also announced plans to adopt bitcoin as a reserve asset, showing the growing trend of companies capitalizing on bitcoin for financial stability and growth.

Business in various sectors, including energy and waste management, leverage bitcoin to 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 build renewable energy projects acting as a buyer of last resort for excess energy, which can stabilize the grid and make renewable infrastructure more viable.

Implications for finance

The integration of bitcoin into corporate finance is not limited to MicroStrategy. Pension funds like the Wisconsin Pension Fund are now allocating assets 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 US$10 billion in assets in 49 days, further highlighting the demand for bitcoin investments.

POLAND – 03/21/2024: In this photo illustration, a Micro Strategy logo is displayed on a smartphone… [+] with Bitcoin logo in the background. (Photo illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)

SOPA/LightRocket Images via Getty Images

The role of accountants

The initiative by the AICPA and CIMA to incorporate bitcoin education into their programs is timely. Forward-thinking organizations 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, explore or mitigate.

Bitcoin’s unique characteristics – decentralization, scarcity and security – make it an important asset for modern finance. Accountants must be equipped with the knowledge to navigate accordingly. Not including bitcoin in educational curricula could leave accountants unprepared for the future.

The AICPA and CIMA’s efforts to educate their members about bitcoin are the first of their kind in this sector. 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; is necessary for anyone involved in corporate finance and risk today.

Accountants should learn about 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.

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AltcoinUpdates Staff

We are the editorial team of Altcoin Updates, where seriousness meets clarity in cryptocurrency analysis. With a robust team of finance and blockchain technology experts, we are dedicated to meticulously exploring complex crypto markets with detailed assessments and an unbiased approach. Our mission is to democratize access to knowledge of emerging financial technologies, ensuring they are understandable and accessible to all. In every article on Altcoin Updates, we strive to provide content that not only educates, but also empowers our readers, facilitating their integration into the financial digital age.

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Bitcoin

Bitcoin (BTC), Stocks Bleed as China’s Surprise Rate Cut Signals Panic, Treasury Yield Curve Steepens

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

Bitcoin (BTC), Stocks Bleed as China’s Surprise Rate Cut Signals Panic, Treasury Yield Curve Steepens

Risk assets fell on Thursday as China’s second rate cut in a week raised concerns of instability in the world’s second-largest economy.

Bitcoin (BTC)the leading cryptocurrency by market cap, is down nearly 2% since midnight UTC to around $64,000 and ether (ETH) fell more than 5%, dragging the broader altcoin market lower. The CoinDesk 20 Index (CD20), a measure of the broader cryptocurrency market, lost 4.6% in 24 hours.

In equity markets, Germany’s DAX, France’s CAC and the euro zone’s Euro Stoxx 50 all fell more than 1.5%, and futures linked to the tech-heavy Nasdaq 100 were down slightly after the index’s 3% drop on Wednesday, according to the data source. Investing.com.

On Thursday morning, the People’s Bank of China (PBoC) announced a surprise, cut outside the schedule in its one-year medium-term lending rate to 2.3% from 2.5%, injecting 200 billion yuan ($27.5 billion) of liquidity into the market. That is the biggest reduction since 2020.

The movement, together with similar reductions in other lending rates earlier this week shows the urgency among policymakers to sustain growth after their recent third plenary offered little hope of a boost. Data released earlier this month showed China’s economy expanded 4.7% in the second quarter at an annualized pace, much weaker than the 5.1% estimated and slower than the 5.3% in the first quarter.

“Equity futures are flat after yesterday’s bloody session that shook sentiment across asset classes,” Ilan Solot, senior global strategist at Marex Solutions, said in a note shared with CoinDesk. “The PBoC’s decision to cut rates in a surprise move has only added to the sense of panic.” Marex Solutions, a division of global financial platform Marex, specializes in creating and distributing custom derivatives products and issuing structured products tied to cryptocurrencies.

Solot noted the continued “steepening of the US Treasury yield curve” as a threat to risk assets including cryptocurrencies, echoing CoinDesk Reports since the beginning of this month.

The yield curve steepens when the difference between longer-duration and shorter-duration bond yields widens. This month, the spread between 10-year and two-year Treasury yields widened by 20 basis points to -0.12 basis points (bps), mainly due to stickier 10-year yields.

“For me, the biggest concern is the shape of the US yield curve, which continues to steepen. The 2- and 10-year curve is not only -12 bps inverted, compared to -50 bps last month. The recent moves have been led by the rise in back-end [10y] yields and lower-than-expected decline in yields,” Solot said.

That’s a sign that markets expect the Fed to cut rates but see tighter inflation and expansionary fiscal policy as growing risks, Solot said.

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Bitcoin

How systematic approaches reduce investor risk

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

How systematic approaches reduce investor risk

Low liquidity, regulatory uncertainty and speculative behavior contribute to inefficiency in crypto markets. But systematic approaches, including momentum indices, can reduce risks for investors, says Gregory Mall, head of investment solutions at AMINA Bank.

July 24, 2024, 5:30 p.m.

Updated July 24, 2024, 5:35 p.m.

(Benjamin Cheng/Unsplash)

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Bitcoin

India to Release Crypto Policy Position by September After Consultations with Stakeholders: Report

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

“The policy position is how one consults with relevant stakeholders, so it’s to go out in public and say here’s a discussion paper, these are the issues and then stakeholders will give their views,” said Seth, who is the Secretary for Economic Affairs. “A cross-ministerial group is currently looking at a broader policy on cryptocurrencies. We hope to release the discussion paper before September.”

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Bitcoin

Bitcoin (BTC), Ether (ETH) slide as risk aversion spreads to crypto markets

Published

6 months ago

25 July, 2024

AltcoinUpdates Staff

Bitcoin (BTC), Ether (ETH) slide as risk aversion spreads to crypto markets

Ether, the second-largest token, fueled a slide in digital assets after a stock rout spread unease across global markets.

Ether fell about 6%, the most in three weeks, and was trading at $3,188 as of 6:45 a.m. Thursday in London. Market leader Bitcoin fell about 3% to $64,260.

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