Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
Over the years there have been countries that due to their military and industrial and commercial power have placed themselves at the head of the rest of the world. To have control of one of their premises is that their currency is the currency with which they trade in the rest of the world.
For most of us, we have only lived in a system where the dollar has been the world currency since it was imposed by the United States after the First World War.
Because we have grown with this premise, we think that it will always be like this for the rest of history, but we see in the graph how the world reference currency lasts on average 100 years and is exchanged for another one either because another nation takes economic and/or military power or may be due to technological advances, according to this for the reign of the American dollar the period of 100 years is coming to an end. In the current conjuncture, of pandemic and fall of the economy and the American and world stock markets, the conditions for this change may be taking place. Furthermore, technologically, we have advanced a lot for 100 years, the question is, this was created precisely to achieve this change? Or are there countries or leaders that will take advantage of this situation to pressure the exchange of world reserve currency? If so, I do not doubt that the change would be towards a system based on the blockchain architecture and digital currency will emerge with which we pay from the mobile.
Blockchain is a technology that is reaching maturity and is like the evolution of the internet. When the internet appeared in the 80s the information was stored on servers and the hard drives of personal computers, then everything was migrating towards the cloud, which are large databases with thousands of servers in very well-protected sites with a lot of protection and security, the blockchain is the atomization of this information that will no longer be stored in these databases but rather a file will be saved by parts in different servers or different databases, so it will be more difficult to copy, damage or steal the information. When we move to this decentralized technology for storing and processing information, we will have some important changes and that is that many middlemen that still exists in the normal processes of our society since many of the institutions that we have today are like intermediaries that attest or they manage processes to give trust and security … but if thanks to the blockchain, the information is stored in blocks of information and programs are created that make these data chains public so that no one can change, alter or copy or delete them, thus improving blockchain security. Because the data is atomized and registered in these blockchain programs, the reliability of the information is very high.
Let’s take a simple example. Music, many years ago the songs were recorded on discs, it was information recorded on a digital medium, a CD, and there were the music labels that were the intermediary between the musician and the final public. What happened with the advancement of technology that this data stored on a CD was copyable to some other PCs, for example, when we went to the cloud, the control of the intellectual property of these files (songs) became unmanageable since the information was I could transmit very easily from one device to another. Apple came and its iTunes to put some order and with a new system, I create a new model where they had the songs on their servers and people could download them for a price very cheap, a dollar, so we all went to those servers through the cloud and we had the files, but there was still the possibility of copying these files, so the business for the musicians was not yet ideal … what would the model be in blockchain technology? The songs (data) are on different servers which makes them impossible to copy without paying, since a platform is needed that brings all the parts together and sends them to your mobile, in this model the artist would protect your copyright since we would all have to pay for each song since the information is not duplicable.
At the moment, another example is bitcoin, which thanks to blockchain technology, assures members of the ecosystem that the information is atomized, protected on thousands of servers and the blockchain is incorruptible and unchangeable, making it ideal for transferring money from one place to another in the world, person to person, without the need for intermediaries who charge high commissions and do the process overnight. For example, cryptocurrency trading platforms can support a great number of arbitrage strategies. With bitcoin, the transfer is in minutes and the cost is cents, the transmission is safe and universal. Now other cryptocurrencies make the process faster and more economic such as Ripple, Monero or Dash, and other currencies to which conditions can be placed to deliver money (smart contract) such as Ethereum, we talk about bitcoin because it is The most popular and well-known, at the same time that due to its high capitalization has been the most lucrative investment in this decade, if someone bought 100 dollars in bitcoin in February 2011 they would have received 100 bitcoins (since on that date the parity was 1 to 1) and if he had sold them in December 2017 (where the price was 20 thousand dollars for each bitcoin) he would have received 2 million dollars, no other financial asset gave that valuation in 7 years. So bitcoin has not only been a technology to transfer value from one person to another, no matter where you are, but it has also been a valuable asset that is available to anyone, which democratizes profits thanks to the growth of its adopters, its community.
As more and more people come to invest in this community, it is the people who are giving it the place as a world money transfer and storage currency, since it still escapes from many government controls, and this growth will surely continue its exponential growth. In the coming years, which makes its value rise more and more, large investors predict a price of $ 100,000 x a bitcoin by the end of 2021. This is a challenge and a novelty for us accountants because we are going to have to be aware of this technology, knowing what accounting and tax management will be given, how it will be accounted for, due to its price fluctuations that management will be given, practically that today it is difficult to trace the true owner of bitcoin. After all, it requires a lot of regulation, so there is much to be learned because it will be a part of the accounting of any person and company.
The accounting itself will use blockchains to process the information in the same way to give it more security, reliability, being able to access it from anywhere in the world, etc. The accounting information will not be on the hard drive of people’s PCs, nor in the cloud as many companies have it today, but in the blockchain of some currency that has this purpose. The coins or coins as the algorithms used in the blockchain are not always mean of payment, but rather software that processes decentralized information and information in blockchains.
