Impact of Crypto Currency on Accounting Practices: A Detailed Analysis

This report analyzes the impact of crypto currency on the accounting industry, focusing on its role, advantages, and challenges. It begins with an introduction to crypto currency, particularly Bitcoin, and its growing adoption in digital transactions. The literature review explores how crypto currency incentivizes clients, impacts financial reporting, and raises ethical concerns related to money laundering and tax compliance. The methodology section outlines the use of qualitative research methods, including secondary data analysis and interviews with accounting professionals. The research questions address the role, advantages, challenges, and future of crypto currency in accounting. The report also addresses ethical considerations, such as beneficence and confidentiality. It examines the potential for crypto currencies to influence currency management, the need for accountants to adapt, and the benefits of blockchain technology. The report concludes by summarizing the key findings and implications for the accounting profession.

Running head: CRYPTO CURRENCY
CRYPTO CURRENCY
Name of Student
Name of University
Author’s Note

Introduction
The chosen topic for this particular assignment is the role of crypto currency and its
impacts on practices within the accounting industry. Bit coin has been the most commonly
known crypto currency because of its increase in popularity (Kokina, Mancha and Pachamanova
2017). With the usage of crypto currency, the users are allowed to exchange their values in a
digital manner. The industry that has been chosen for this particular assignment is accounting.
This assignment would discuss regarding the impacts of using crypto currencies in the field of
accounting. Accountancy can be described as fundamentally based around various transactions
that are financial in nature (Higgins 2018). Hence any move that would be towards the usage of
crypto currencies by individuals or business and governments is likely to have significant
ramifications for that particular profession. Crypto currencies are growing to great extent since
some years and most of the people have heard of the tem bit coin, though most of them do not
have any idea regarding the fact that how it actually operates. Besides bit coin there are
numerous other digital currencies that are not well known like bit coin (Karajovic, Kim and
Laskowski 2017). These currencies include Ethereum, Litecoin, Ripple and many more.
The usage of crypto currencies for the purpose of buying services or goods is still in the
initial stages but it has been increasing in the form of a particular established form of payment.
An example of this which can be considered include the usage of PwC which has already
undergone its initial payment in bit coin and numerous more retailers that perform their
operations online and some online retailers such as Expedia allows their customers to make
payment in bit coins (Gordon 2018). Various businesses are presently in the state of research as
well as development of adopting crypto currencies. A particular certified finical technical as well
as market analyst along with a trading mentor. The standard bank has integrated he technology of

block chain and they have carried out the initial crypto payment from a particular institutional
bank (Kuhn 2018). They have also proceeded in the verge of launching a particular application
for payment carried out in the form of crypto currencies. This would be done with the help of
Ripple. The usage of crypto currencies has numerous impacts on the industry of accounting.
These impacts have been mentioned in this assignment in a detailed manner.
Literature review
Crypto currency has been used by various industries for numerous purposes. Similarly
the crypto currency has been proved to be useful for the industry of accounting hence this field
has been using it for number of their operations (Moll and Yigitbasioglu 2019). After utilizing it
for a particular span of time, it has been realized that the usage of crypto currency has impacted
the industry of accounting in a negative way as well, besides providing numerous advantages.
One of the obvious areas that contributed in adopting the usage of crypto currency is considered
to be an incentive for various customers to buy or carry out any task. According to Ko, Lee and
Ryu (2018), clients can be incentivized in order to participate in the process of answering various
questionnaires, they are paid reward in return. These rewards were provided in the form of
crypto currencies just after the participants have submitted their questionnaires or by having a
client to receive crypto in the form of a premium for her or his participation to a particular
activity for an entity. An example of this is allowing sharing a particular amount of data and
much more information.
According to Dogru, Mody and Leonardi (2018), widespread usage of crypto currencies
have the chances of implications for the accountants, in the services that they provide to their
clients and the way they operate their business. From a perspective of financial reporting, states

that the best advices that can be provided include ensuring the fact that they keep perfect records,
so that they are allowed to comply with requirements of taxation. As per Gaither and Joanie
Sompayrac (2018), at the time of purchase of crypto currencies, nothing could be expected at the
particular point of sale. Tax is meant to be liable on the amount of profit that is earned when an
individual sells something which has an increased value compared to before. This is known as
capital gains tax. Overall tax free allowance for the asset gained by an individual is around
11,700 Euros for the year of 2018- 2019. In case the profit from selling the crypto currency
addition with other asset gains is comparatively less than expected, the individual would need to
report this and pay the tax on it. in case an individual sells up to four times the overall allowance
of the crypto currency assets, and even if the individual makes a profit of less than 11,700 Euros,
the individual has to report this particular sale to the HMRC. Besides the treatment provide by
accounting, accountants and advisors must also highlight the dangers that might come from the
usage of crypto currencies. The lack of various regulations in the world of crypto currency, has
resulted in significant rise in various criminals that use these digital monies in order to launder
money and hence carry pit various criminal that are financial nature.
As per Avdeychik and Capozzi (2018), accounting firms are responsible for ensuring the
fact that the clients have engaged themselves in the transactions related to crypto currencies and
have been a subject to enhance due to diligence measures. Screening against sanctions that are
high in quality, people that are exposed in the aspects of political issues as well as adverse media
have been minimum level of regularity. This is because of the diligence that should be
implemented as well as accountants must be conducted added checks when the transactions are
inappropriate in nature. In the long term, there have been potential for crypto currencies in order
to help the fluctuations in managing the currencies. According to McKay and Peters (2018), any

strategy to manage the fluctuations in management of crypto currency would need to come along
with a warning. An example of this includes the US government to introduce various tariffs on
the import of goods and here the threat of trade wars contribute in escalating various businesses
that usually operates overseas; they might use the crypto currencies as a particular strategy for
reducing their risks. Accountants should be ready in order to help the clients to explore the
potential scenarios (Jayasuriya and Sims 2019). Giving services that are advisory in nature as
well as being proactive with the planning as well as forecasting that has been made is very
important for the profession of accounting. Crypto currencies might be a particular part of the
conversation such that the accountants must be prepared. As per Cocco Tonelli and Marchesi,
(2019), accountants must be benefitted from increased usage of the block chains, which is
considered as the baseline of bit coin. With the usage of crypto currencies accountants would be
allowed to download the entire set of transactional data from block chains, which contributes in
simplifying their work. They also have algorithms that perform their work of accounting in the
end.
Research questions
Various research questions that have been set for this particular assignment are as follows
 What is the role of crypto currency in the accounting industry?
 What are the advantages provided by crypto currency to the users?
 What are the challenges that are provided by the crypto currency to accounting
industry?
 What is the future of crypto currency in the industry of accounting?

Methodology
Methodologies can be termed as description of the methods that would be used in order
to carry out the research. It can further be defined as a systematic plan that can be utilized for the
purpose of conducting a research. Research methods are of two types, qualitative as well as
quantitative. In order to carry out this particular research, qualitative methods would be utilized.
Qualitative methods usually aim in complete as well as detailed description of various
observations; it can also include various contexts of numerous events as well as circumstances
(Omane-Adjepong, Alagidede and Akosah 2019). Research methodology can also be defined as
a process that involves the collection of related data and information for the purpose if taking
informed business decisions. The methodology might include referring to various publication
researches, surveys, interviews as well as other research techniques. They can also include
historical as well as present data (Meng and Qian 2018). The methodology would take about the
logic that stands behind the method that has been used in the provided context of the study and
hence providing a detailed explanation on why specific methods or techniques have been used.
For this particular assignment, descriptive research design would be followed; this would
describe the characteristics in a detailed manner (Khandelwal 2019). Longitudinal research study
of information would be incorporated. With the help of this, the assignment aims in providing
insights into a particular understanding of the detected research issue. For this particular
assignment, the purpose of the study would be to use secondary data from various reports, papers
as well as articles that have been published previously. These papers would help in proving
insights in the research study.
From the literature review, it can be derived that bit coin consists of a distributed opinion
when the future is concerned. There are numerous facts that proved to be against bit coin being

prospect of a long run. The literature review also presents one of the greatest benefits of bit coin
is that it is meant to stay private, untraceable and secured (Zhang 2018). This had provided a
great benefit to the criminals on the web. Crypto currency has very bad reputation after the new
had been received regarding the fact that bit coin is used in order to send money in an
anonymous manner on the fraud websites. It had also been identified as the source of saving a
huge amount of tax. For carrying out this particular assignment and investigate the benefits as
well as challenges provided by bit coins in the industry of accounting, various external sources
have been used (Ramrakhiani 2018). Primary data would also be collected in order to carry out
the assignment. Various professionals belonging to the background of accountancy have been
interviewed in order to receive primary data. They had been asked regarding the impacts of
crypto currency in the field of accountancy and how is it affecting them (Taylor, Bunker and
Johnson 2016). The responses had been stored and recorded for future use and for obtaining
better results. Primary research method would help in getting real life examples and feedback on
the topic without the interference of any third party.
Ethical considerations
The carrying out of research might result in numerous ethical issues; some ethical issues
include interfering into the personal space of interviewees, recording responses without their
consent, forcing them to take part in the research and many more (Raymaekers 2015). For this
particular reason, the ethical considerations are to be prepared. Various ethical considerations
that have been made in this particular assignment are as follows
Not harming the Beneficence: the ethical principle of the beneficence refers to the
principle of the beneficence includes professional mandate to carry out effective as well as
significant research in order to serve as well as promote the welfare of the constituents (Cai

2018). In the case of qualitative research that is being carried out in this particular assignment, it
is very difficult to predict beneficence.
Respecting the anonymity as well as confidentiality: maintaining the anonymity as well
as confidentiality is considered as one of the most important ethical consideration. This is
because in numerous cases, the employees or participants of the primary research do not want
their identities to be revealed. Hence this sort of ethical consideration helps in carrying out
effective as well as appropriate research (Azarova, Moroz and Zhalin 2017). In this particular
assignment, this ethical consideration has been considered as well. The participants, who have
helped in carrying out the practical research, were kept anonymous. The research team had
ensured their identity would not be disclosed and it would be kept anonymous until they want it
to be disclosed. This data is kept anonymous in order to maintain a moral duty of protecting
society.
Respect for privacy: this ethical consideration is also considered as an important one
because the matter of privacy is considered to be an important aspect. The employees or
participants who had been a part of this research would be asked regarding their responses and
them their responses would be kept privately and must not be shared with any other participant
or with any other external sources (Woodside, Augustine and Giberson 2017). The participants
must be ensured that their responses or results would not be disclosed with any of the sources.
For this purpose the participants that were approached along with a form which mentioned that
the data that would be provided by them is completely private.
Consent of the participants: this ethical consideration is also one of the most important
because people who have participated in the research must provide their consent in order to
continue their participation. For this particular purpose, a consent form is provided to the

participants along with mentioning the terms and conditions involved in the research (Sapovadia
2015). The participants are told to sign the consent form in order to provide their consent with
the research. This provides a proof on the fact that participants have agreed to participate in the
research.
Harming personal emotions: while carrying out the research it has to be considered that
none of the participants are asked questions that would harm their personal emotions. Their
personal space is not supposed to be intervened. It is an ethical consideration that the participants
are nit asked any sort of personal questions that they feel uncomfortable to answer.
Discussion of data retrieved
After carrying out the primary and secondary data, there are various findings that have
been received. The impacts of using crypto currencies in the field of accounting have been
derived from this research proposal (Taylor, Bunker and Johnson 2016). The findings include
advantages as well as disadvantages provided by the usage of crypto currencies in the accounting
industry. These findings have been mentioned below.
 Fewer fees: usage of crypto currencies have resulted in reducing the transaction
fees, these fees are lesser than the usage of credit cards. When the crypto
currencies have not been exchanged it eliminates the need for charges in bank.
 Fraud reduction: a payment that is carried out with the help of bit coin could not
be reversed after have been carried out. This process is actually different from the
payments done through credit cards which could be reversed using chargeback.
Chargeback is considered as a feature which is exploited by various fraudsters.

 No barriers: crypto currencies make various international trades that are
accessible with the help of removing numerous barriers as well as restrictions to
the trade; this lastly makes it easier to accept payments in various currencies.
 Attract various new customers: bit coin is a new concept which is still evolving,
offering its payment option as a better one for the customers helps the
organization in bringing new businesses.
Limitations of crypto currency in accounting industry
 The issuers in crypto currency claim zero number of responsibilities in order to
stabilize the overall price of crypto currency. As a result, it is open to a huge
number of fluctuations. The price fluctuations in bit coins had established the fact
that it is not meant for any individual but only the hard core gamblers and
gamblers.
 Bit coin is completely based on software. There is nit safety or cross check
outside the software. Once when a college student had hacked into the computers
of NASA, he had said that the internet as well as the software is vulnerable.
 Being a digital technology, crypto currencies might be a subject to cyber security
breaches and might get attacked by hackers.
 Huge amount of price fluctuations usually exacerbate the fears. The fluctuations
make it very challenging for the business to take crypto in the form of a payment
for the purpose of services and goods.

Conclusion
From the above assignment, it can be concluded that crypto currencies has numerous
impacts on the operations going on within the industry of accounting. Crypto currency has been
described as a particular encrypted as well as peer-to-peer network which is utilized for the
purpose of facilitating digital barter. This technology has been developed around eight years ago
and it has become even more advanced since the time it was introduced. Bit coins has been the
most popular as well as the first crypto currency which is contributing in paving the way in the
form of a disruptive technology to unchanged as well as long standing financial payment
systems, these systems are being used by people since more than decades. While crypto
currencies do not have the ability to replace the traditional currencies, they have the ability to
change the way numerous global markets that are connected through internet interact with each
other. They might contribute in cleaning the barriers that surround the normative national
currencies as well as rates of exchange. Technology has been advanced at rapid rate and the
overall success of the provided technology is solely dictated by the market on which it tends to
improve.
Crypto currencies have the ability to revolutionalize trade markets that are digital in
nature, this is done with the help of creating trading systems that are free flowing in nature; this
is done without any fees. Bit coin has been described as the world’s most common as well as
popular crypto currency. It has increased the popularity by advancing even more since the time it
has been introduced. It has basic structures as it had done when it had created in the year of
2008. Crypto currencies works on the theory of solving various encrypting algorithms in order to
create various unique hashes that have been finite in number. This particular assignment

discusses regarding various ways by which the crypto currencies have impacted the industry of
accounting.

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