Without the proper knowledge, it’s easy to make a snap judgment about cryptocurrency. But with some research and education, you might find it has potential for your organization.
“Cryptocurrency and Bitcoin kind of get a bad name,” said Denny Murphy, Jr., CPA, and principal at Skoda Minotti.
That bad name and misconceptions about cryptocurrency are what Murphy and Nick Ward, senior staff, also at Skoda Minotti, are looking to clear up on the most recent episode of The State of Business podcast. This is the second part of their conversation with OSCPA, the first episode covered the history of cryptocurrency and Bitcoin.
Along with the incorrect belief that Bitcoin is mostly used for illegal activities, another misconception the two regularly hear is that it’s anonymous.
“It's pseudo-anonymous,” Ward said. You're known on the network with the public wallet address you're using, and you could make hundreds of wallet addresses. So, you could work in a way that you could act anonymously, but at the end of the day, people can block a wallet, single it out, and if you really did due diligence, you could find the Internet Service Provider address the wallets are coming from. So, it's not anonymous.”
As the use of cryptocurrency continues to grow, the profession will have to evolve to match its requirements. Auditors will have to educate themselves properly to ensure they’re making the right calls.
“As auditors, we're going to have to audit digital assets,” Ward said. “So, what does that mean? How do you prove ownership? How do you prove rights?”
From a tax perspective, there is an administrative burden when dealing with crypto because no 1099 is issued. Although Murphy said they expect this process to become more streamlined, there are growing pains ahead.
For members interested in learning more about cryptocurrency, Ward and Murphy suggested looking into conferences, information online and crypto experts. Even finding videos on YouTube can be helpful, but they advised checking to ensure the source and the information is credible. Crypto’s growing popularity means there are scammers out there, but the two agreed there is a genuine contingent of individuals eager to share what they know.
“It's a great community for the people that really like it,” Murphy said. “And whether you believe in it or not, it's something to keep an eye on.”Listen to the episode here. You can hear more from Murphy and Ward at the Columbus and Cleveland accounting shows where they’ll present on cryptocurrency. Register at my.ohiocpa.com.