By Joseph "Joey" Ryan, CPA - CFO at Gilded
This week's newsletter is a bit different as we will be diving deep into the nitty-gritty of the Bitcoin blockchain and Crypto accounting. Let's go.
Is Bitcoin Blockchain an Accounting System?
As noted, we have a different format this week, think of this more of a homework assignment. Read and let's discuss.
These two blogs Bitcoin: An Accounting Revolution and Introduction to Crypto Accounting: An Analysis of Decred as an Accounting System get into the details surrounding the Bitcoin blockchain and crypto accounting. There is a lot to unpack in both of these pieces, but I believe these are both very critical reads for accountants to truly understand blockchain and its impact.
My caveat is that the writer, PermabullNino, describes the Bitcoin blockchain as an "accounting system," noting that three characteristics of tamper resistance, redundancy, and transparency are met. While I agree with his theory, I believe that the Bitcoin blockchain acts more like an "accountability system" than a true accounting system. Yes, you have evidence that a transaction occurred between two distinct users (the WHO), however, you do not have other metadata such as WHY the transaction occurred and for WHAT purpose. Without this information, you can not properly record transactions into their respective classification.
Would be great to get thoughts from you all on these two posts. Email me at email@example.com. Happy to discuss.