For Ivan: Why accountants will not use Bitcoin


#1

Hi Ivan :slight_smile:

I watch all your videos and I really like that you are educating us.

You recently mentioned something about how accountants should learn to use the coins and blockchain.

Let me introduce myself and explain you why no accountant will use Bitcoin in the current state.

I work in the IT since more than 20 years. I’ve worked for many financial projects with many accountants.
I know the accountants. I know how they think and how they work.

An accountant would never convert any assets into cryptocurrency unless there is some kind of assurance that this currency can’t be lost/deleted by a bug or just mistyping.

How an accountant sees the current Bitcoin:

I go to buy a bicycle. I “have” 100 coins in possession because someone has sent 100 coins
to the public address “Dani” and I have the key for this address.
So, I see this bicycle and I want to buy it. The seller says that the price is 20 coins.
I shout loud in the air that I am now giving “Bob” 20 coins and I will also give 0.01 coins
to all the guys who witness me. I sign this with the key associated with my address.
All the guys around us, which have heard me, write down in their notebooks that “Dani” said he
is giving 20 to “Bob”. I write it myself too. The address “Bob” now has 20 coins more because all those guys
witness how I shouted and they wrote this in their notebooks.
Nice. Now I have my new bicycle.
_
Next I go to buy a phone. In the store they have the new model and I want it.
The price is 50 coins. The guy in the store says that the address where I have to
send the 50 coins is “PålPhoneCompany_Co_Ltd”.
I go out and shout loud: I give 50 coins to “PaulPhoneCompany_Co_Ltd” and I will give 0.01 coins
to all the guys who witness me.
I see lots of people taking note and happily go back to the store to take my new phone.
Yes, but the guy in the store says that he does not have the key for the address I just shouted.
So he can’t give me my phone and I have lost for ever 50 of my coins.

Now, explain this to an accountant that practically you just have deleted 50 coins.
In theory, somewhere somebody could have the key for the wrong address… or not.
You can go out and shout: “Guys, please help me. I just said wrong address”.
But, no one can help you as once written it can’t be removed from the notebooks.
So for the accountant you have spent them. For you is a clear loss.
Maybe you will even pay taxes for this lost 50 coins. /Many countries do this. You can’t just destroy money/

So, every accountant sees this as very insecure.
Unless this is fixed no licensed accountant will ever allow your company to work with those coins.

One way to add some kind of security would be to add signed confirmation from the receiver and
time to live for the transaction.
In the case above, I would send the transaction with short TTL value as the seller is in front of me.
The seller will sign a confirmation that he accepts the payment.

Other case: I receive my salary in coins. My boss sends me the salary with TTL 25 days.
Maybe I am in a long vacation and I can’t use my phone to confirm.
25 days later our accountant will see that this transaction was not confirmed and the coins are returned to the company. He can call me and ask: “Hey, Dani. Have you lost the key for this address? Would you like my to send your salary to other instead”.

Also, multi-signature addresses are a must. Computer + phone, website + phone, etc.

I don’t say this is the solution. But something which prevents normal people and companies from losing their coins is very needed.
Byteball’s “send if condition” is a very good idea and can be worked on similar approach.
I suppose any coin can have such a feature added.

Thank you, Ivan :slight_smile:


#2

While your example is correct, it only applies to Bitcoin and some of the earlier coins, if you look at Raiblocks for example, they use the double-entry accounting principle.

Also, and highly important to accountants, is the immutability of record, there is a clear and precise audit trail in every single blockchain.


#3

Exactly!
My point is that whenever a coin can deliver security - this can lead to corporate and mass adoption.
Bitcoin is very insecure and if they don’t update no company will use it.
Raiblocks is a new and not yet popular. So, being secure can lead to mass Nano adoption and eventually to a secure and used for everyday life coin.
My post is specially for Bitcoin as an answer to Ivan why accountants will not use Bitcoins.


#4

I will now share a “secret” with you :wink:
Immutability is important for the government and the revenue service, not for the accountant.


#5

Hahaha, well I work in fintech and even though we are neither a government nor revenue service, immutability of records is extremely important to us. We cannot under any circumstances misplace customers’ funds so having a clear, unchangeable trace of data is key.