Read now to learn how KPMG may very well be the first of many accounting firms to dive into Bitcoin.
Disclaimer: When not educating about Bitcoin online, I am an employee of KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization. My opinions are my own and I do not speak in any capacity as a representative of KPMG or its leadership.
Blockchain is without a doubt one of the most revolutionary technologies to come out of the current century, with blockchains around the world helping to move trillions of dollars’ worth of assets and boasting an ever-growing list of use cases. And why is blockchain such revolutionary tech? I believe it’s because it can allow large groups of people around the world to transfer money, information, and more without having to know or trust one another. Bitcoin is by far the largest use case for blockchain, and we’re just beginning to scratch the surface on all the businesses and technologies that can be built on top of it.
The simplest description of blockchain is that it is a ledger, or record, of every transfer that has occurred throughout the network’s history. Any participant is able to transact on top of the blockchain or verify prior transactions at any time. Ledgers, like the ones operated by your bank or broker, have been around for hundreds of years. But Bitcoin’s blockchain has taken the concept of a ledger and nearly perfected it by removing all centralized control from the system. The power of information is finally back in the hands of the people.
Given blockchain’s status as a ledger technology, it seems almost poetic to me that the Canadian member firm of KPMG, one of the largest accounting firms in the world, recently purchased an unknown quantity of Bitcoin and Ether for its treasury. After all, when most people think of accounting, they first think of two things: taxes and bookkeeping. And both services essentially boil down to creating a ledger of a person or company’s income and expenses. Is it any wonder then that a company whose bread and butter services revolve around ledgers would be interested in integrating near perfect ledger technology?
This is the part where I, as an accountant and KPMG employee, point out that accounting these days is so much more than just taxes and bookkeeping. But I digress.
Why Buy Bitcoin?
Unfortunately, I’m not privy to the inner workings of KPMG Canada’s decision, but we can make educated guesses using publicly available information to try and understand why KPMG purchased Bitcoin and why other public accounting firms may soon follow suit:
Put Skin In The Game
Perhaps the clearest insight into the decision comes from KPMG Canada’s Blockchain Co-Lead, Kunal Bhasin who said the following:
We believe in the long-term value of crypto assets. We’ve been advising a lot of our clients in terms of how they should be thinking about it. And this is just us putting our skin in the game.
In other words, KPMG has been building a number of blockchain-based services for its clients and the firm decided that if it was going to talk the talk, it needed to walk the walk by actually buying into a blockchain and getting firsthand experience with the technology at the institutional level.
Bitcoin Is Better Money
I could say a lot about why Bitcoin is better money than the Canadian Dollar, U.S. Dollar, or any other fiat currency in the world (and I have said a lot here and here). Suffice it to say that the main reason why Bitcoin is better money than fiat, or any other form of money through history for that matter, is because it can’t be controlled and it can’t be devalued through supply inflation. The first is important because history has taught us that when someone controls society’s money, that person or group uses their control to benefit themselves at the expense of everyone else. The second is important because it means that the purchasing power of your Bitcoin can’t be reduced by someone else creating more.
Blockchain Enables Better Accounting
Blockchain enables better accounting, in every sense of the word. On top of being a record of all transactions on the network, blockchains are also immutable, meaning that a record on the network can’t be changed without breaking the chain of blocks, which could be immediately flagged by any number of internal and external stakeholders. Contrast that with fiat currencies, where peer-to-peer transactions (i.e., transactions in cold, hard cash) usually don’t have a receipt or record at all, and where transactions through the financial system occur on opaque banking records that can be altered or removed at the whim of any institution or government involved in the process.
In summary, Bitcoin allows KPMG to take its accounting prowess to the next level. It comes as no surprise to me that KPMG Canada made the jump into Bitcoin and I fully expect many more accounting firms and institutions in general to make the jump themselves in the near future.
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This is not financial advice. This newsletter and related content are for informational purposes only. Cryptocurrencies and digital assets can be risky. Always do your own research before making any sort of investment.
