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

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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

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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)

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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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