Despite the volatility of cryptocurrency – and the tax status of the so-called “altcoins” as a digital asset rather than currency – two of the Big Four accounting and audit frms already accept payment in bitcoin. Should you too accept payment in cryptocurrency, or are the risks too great?
By Nina Hendy
Founder of Adest Trading
The best answer depends on the nature of your business – its clientele and your business costs.
If you’re an accountant in Brunswick, Melbourne, specialising with generation X and Y, you may find a lot of your clients use and trade in cryptocurrency. In this case, you may well consider taking cryptocurrencies and, to limit your risk, find ways to have costs billed in cryptocurrencies as a hedge. If you are an accountant in outback Broken Hill – where the level of technology and ‘hipster’ thinking is more limited – it makes no sense to take cryptocurrency because most of the [general] population and your clients will not want to pay with it.
From a simple transactional perspective, it may make sense on a case-by-case basis.
For many international businesses using cryptocurrencies as a medium of exchange [is justified] because the transactions can be fast, very cheap, clear, simple and much easier than 'standard' bank payments. The exception was at the end of 2017 and early 2018, when the costs of transacting with bitcoin became very high. Of course, cryptocurrencies do fluctuate a lot, which they call “fluctuation volatility”. You must be prepared to manage that volatility risk if billing in cryptocurrencies. The other downside is [the potential for] increased complication and whether your accounting system carries capacity for bitcoin.
“You must be prepared to manage that volatility risk if billing in˜cryptocurrencies.” David Hunt
Another riskis a bank deciding not to accept your business because it is crypto-related. However, this happens more in the United States than Australia. You need to weigh up the benefts versus the risks and costs.
Co-CEO and co-founder of Chozun
There’s a real opportunity for businesses to innovate with blockchain and cryptocurrencies in a great number of industries, but it won’t be right for every business or every type of business application.
Businesses interested in implementing the technologies should get the right advice from experts and understand what they need to do for a successful integration, before leaping in blind. Seek out people who are actively working in the space; while academics are fantastic there are often too many theories and not enough actionable insights to make any real progress. However, this technology is already disruptive and catching on fast. From food and fashion to logistics and travel, blockchain and cryptocurrencies will have lasting impacts on industries across the spectrum.
“From food and fashion to logistics and travel, blockchain and cryptocurrencies will have lasting impacts...” Teresa Truda
It will also force businesses to be more transparent, accountable and open, while giving power back directly to operators, creators and producers by cutting out a lot of middlemen – so, if you are not willing to operate that way, you may get left behind. The accounting industry will play a large role in the adoption of blockchain technologies and cryptocurrencies over the years to come. The immediate challenge for the accounting industry is how to account for the currency, and how to handle clients with different cryptocurrency standards and regulations across the globe.
Managing director and founder of Impressive Digital
Accountants and business owners are often hesitant to trade in cryptocurrencies because of their volatility and value fluctuations. However, by being smart, businesses can [reap] many benefits from accepting cryptocurrency payments.
I’ve been investing in cryptocurrency for a few years, and when one of my clients caught me off guard and asked if I would accept payment in cryptocurrency, I worked to convince my accountant that I should agree.
Our cryptocurrency sits in a dedicated wallet, which was set up for the business. I understand the volatility of cryptocurrency, but eventually it does even out.
We are very selective about the clients we offer this [option] to, and we limit how much we accept to mitigate our risks of losing too much.
In order to move forward, business owners and accountants need to to embrace change. Accepting cryptocurrencies is a great way to stand out from other businesses in your industry and showcase the forward-thinking, innovative nature ofyour company.
Bitcoin and other cryptocurrencies are a way to save money, too. Fees are non-existent – or at least much lower than banking fees. Processes are decentralised, so they don’t require a bank for verifcation. This means businesses don’t need to pay for a middleman, and can save 2-5 per cent on every transaction.
“Accepting cryptocurrencies is a great way to stand out from other businesses in your industry...” Robert Tadros
While there are well-documented risks regarding the value of bitcoin and various digital currencies, other risks are eliminated. There can be no fraud or tampering, and people are unable to spend more than they own. Transactions are also faster than via banks.
Cryptocurrencies are available worldwide, so there's no need to worry about conversion fees.
It is a learning curve, but businesses willing to adapt will be rewarded.
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David Hunt is the founder of Adest Trading. He offers financial advice in shares, commodities, forex and cryptocurrencies, using cycles and technical analysis.
Teresa Truda is co-CEO and co-founder (with business partner Zia Word) of Chozun
, the world’s first travel ecosystem to be powered by cryptocurrency and blockchain technologies.
Robert Tadros is managing director and founder of Impressive Digital, a digital marketing agency specialising in search engine optimisation, search engine marketing and Facebook advertising.
Bitcoin taxation: a global challenge for tax authorities