The Frontier: Experts say crypto and blockchain are not yet ready for prime time
News about cryptocurrency and blockchain is practically ubiquitous today, to the point where one might think old-fashioned sovereign money is almost dead. But even though accounting managers generally agree that crypto and blockchain (the technology behind cryptocurrencies) promise a lot for the profession, it is still unclear how they can benefit accountants specifically.
David Cieslak, Executive Vice President and CEO of RKL eSolutions, noted that when it comes to blockchain, accountants are still struggling to figure out what to do with it, let alone implement it in their firms. The profession, he said, is still looking for uses beyond just cryptocurrency mining; although there is some innovation, he believes that “there is still largely nothing on the scale.”
“It’s basically a database in the cloud, in its simplest form, and the applications, the things we can do with blockchain are going to be pretty huge, but I think we’re still looking for compelling uses. So it’s like everything else: It’s the platform, the tool, the method, but what problem are we going to solve with it? ” he asked.
Donny Shimamoto, founder and senior member of IntrapriseTechKnowlogies’ consulting and management team, had a similar view, noting that while blockchain does impressive things in many areas, accounting is not yet one of them.
“I think there is great value in what we see as far as it affects the supply chain and traceability. [of assets], there’s a lot going on there. But from the actual ability to change accounts or the way we do accounting, it becomes oversold, he said.
Joe Woodard, who runs the Woodard Events and Scaling New Heights conference, has a similar view of the cryptocurrency itself: Despite advances in taming the notoriously ungovernable asset class, it remains the “Wild West” and should therefore be treated with caution. Like Cieslak’s view of the blockchain, however, Woodard’s concerns do not stem from the concept of digital currency, but its current implementations. Although he believes the technology is still immature, as time goes on, new cryptocurrencies will emerge that will solve the problems of the current crop.
“I am not anti-crypto, but I think what we are looking at here is, as with all first manifestations, an immature market … which over time, like all new technologies, will mature. But what is missing from crypto now is the basis for value. The only basis now is scarcity; it lacks government support, it lacks asset support, it lacks steady equity portfolio support. It lacks a concrete sense of value, and that’s why we see it fluctuate so violently. is not the problem, it is Bitcoin and its iterations like Etherium that is the problem, he said.
He pointed to recent attempts by governments to develop their own digital currencies, as well as large companies issuing their own tokens; When enough mature players are in the room, Woodard said he would be much less worried.
Shimamoto shared similar views, saying that so much of the market for these assets is largely speculative, and does not have much value base in addition to people’s desire to own them. What exacerbates this problem is the fact that, in his view, most people do not fully understand what it is they are buying.
“I do not think the average consumer understands the risk they take when investing in them – let alone the tax implications, since these are treated as capital gains and losses with each transaction made,” he said.
Waiting for the tools
Woodard added that there are also problems with accounting infrastructure. Although crypto-specific solutions have been issued in recent years, he said that the major players are still not prepared to address digital currencies at the same level as they address sovereign currency.
“The way companies manage customers’ use of crypto is still the Wild West. Plan D applications, implications for accountants – I do not think companies like Intuit or Xero are close to being able to manage it through their bank matching tools as they can with traditional currencies, so we are still a bit untamed, he said.
Shimamoto added that software developers are also not fully capable of addressing internal controls when working with blockchains. To finally do that, he said, would mean a massive effort on the part of the developers, and so he does not think it will happen soon.
“Many of the internal controls are built into existing ERP systems, they simply will not be transferred to the blockchain. Others have said how blockchain will replace accounting systems, but it will not happen. I do not think the level of effort to reprogram all these “The controls on the blockchain, I do not think there is enough of an advantage to that conversation yet,” he said.
Cieslak said that blockchain, and by extension cryptocurrencies, will be most successful, paradoxically, when people are not really talking about them anymore.
“The best days, from a blockchain perspective, will be the days we no longer talk about blockchain …. where it starts to become more mainstream, more common, where we no longer talk about technology, but use it to really solve X kind of thing, I look forward to it, he said.
