Bitcoin: What Accountants Need To Know

The OG whitepaper

The OG whitepaper submitted by estradata to Bitcoin [link] [comments]

Someone asked me Why the Super Wealthy don't Buy Bitcoin - here's my answer

Somebody asked me why the super rich don't generally buy Bitcoin in bulk.
TLDR: There are many layers of complexity that massive portfolios have that make it harder to buy Bitcoin.
Lots of reasons but here are some logistics:
First we have to assume they like the story, believe in Bitcoin and have a buy in.
Basically the super rich do things in a different and more complex way than normal people -- they will have an investment department in thier family office and a Chief Investment Officer, a head for Private Equity, venture, real estate, hedge funds and so on -- when you have $20 billion for example....even if you put half a billion freakin dollars into each investment....that's still a whopping 40 investments you have -- (and no one does that anyway)
That means if there is a monthly board meeting by phone, say twice yearly in person reviews or meetings and say, 10 pages of analysis a month to read on each investment then that's 80 flights and 400 phone calls and 4800 pages of information to read a year.....and that doesn't even include emergencies, a CEO dying, a lawsuit, managing the investment staff, listening to 10,000 pitches etc etc ----- so basically you need a mess of staff.
The investment managers are called all day, every day...not just by Joe Sixpack the local financial advisor, but by Lloyd Blankfein and Henry flippin Kravis. Then JP Morgan comes along with a preferred client fund that only the top management and a tiny number of select clients can invest in....now you have 41 investments.
And this is at $500 million a pop. People don't do that on $20 billion -- even on $700 billion sovereign wealth funds they are often in the $100 million range. That's huge, even for giant investors.
Now Joe the genius hedge fund star leaves Apollo and starts his own fund -- his track record is awesome and you like him and know that if you support him on his first raise you'll always be welcome....so what do you do? Give him $500 million? Hells no. No one would do that -- as Chief Investment Officer you will give $1 mil or 5 or maybe 25 mil to a new fund if they really love the guy...but if it's 25 mil then you will want part ownership in the actual fund and a board seat.....now you have two more investments, the fund and the fund company.
To top this off -- how do you track all this? You have the investments split between the family charity, and some in offshore vehicles for that since its tax free but then mirror funds in the US with taxes some funds are not even originally domicile in the US, many have no daily valuation ....sometimes the investments with XYZ PE Fund are actually over 3-4 funds from that company.
So now you have 200 investment statements coming in every month. How do you organize it? Expensive software that doesn't integrate, data entry etc...another half time employee. They are at different banks, custodians, some are illiquid etc. When the time for performance reporting comes how do you track it all etc. and especially considering taxes. When you need money for the new London townhouse you sell something that has gone down to balance some earlier gains but it's in two different entity ties and three different jurisdictions. You have layers of trusts and corporations and holding companies holding various investments.
Now if you are a family office manager you also are handling everything from jet charters to security personnel to buying junior a new house to suing the reporter who lied about rhe boss to finding the rare part for a 1962 Porsche and auditing the house manager of the home in the Alps because you suspect he's been cooking the books on household expenses. At 10pm on Thursday the boss calls and needs $400k for a rare Beretta shotgun he found on vacation in Itally - here's the auction house number, get someone to call, speak Italian, get it done, get it insured and make sure it's legal to ship from Italy and to the US.
The investment team meets weekly, meetings with the boss are monthly but also many special trips -- visits to the bank, due diligence on companies etc.
Add Bitcoin to this mix-- it's weird, odd, you don't have any custodian that your team recognizes who will accept it. They don't know what department it should be under, who's responsibility to manage etc. They decide to take a position, do some due diligence on XYZ Bitcoin and go with them -- the bean counters go visit XYZ and you hire an auditor and a security consultant to make sure it's as secure as they say ....this all takes a couple months. Then the Chief Investment Officer calls his pals at XYZs lead investors and gets an intro to the CEO and after some paperwork and verification gets XYZ to agree to a million a day instead of $50k maximum....but to do this XYZ needs blah blah legal form and an audit or whatever....this is a pain for XYZ btw because they don't know for sure the client will actually buy and they don't make a huge amount relative to the work but they are great and make it all work out. Your internal legal council needs to change the holding co because he's concerned about obscure liability issue and your tax accountant has a list of other concerns. Your estate attorneys have you in for 7 meetings to discuss if Bitcoin can be added to the Grat or your old obsolete family limited partnership and they determine the cold storage needs multi-sig this needs legal agreements etc. Finally it's all done.
Yay. Now we can buy Bitcoin. We buy a million dollars worth. The bank calls and freaks out because they saw $1 mil and "Bitcoin" - they temporary lock the account. You yell at them, threaten to pull business and finally Mr. Big calls a board member and the CEO fixes it with apologies ....that takes 7 days. Now you start again, you buy a million a day every weekday for three months, we need a trader to do all those buys and it takes hours a day to try to get the blocks without moving the market. You get another $30 mil from big block purchases from Binary, miners etc. You do all this while trying to not be noticed, not have anyone mention your name etc because the boss wants to be low profile.
You bring in accountants and experts and learn about cold storage remembering that everything is bigger, different and harder for zillionaires. Also when you hire PWC to check this out and recommend security systems etc. - they are not going to risk their relationship with a big client by messing around...they will charge $100k and have a comprehensive analysis done.
So now you have $100 million in Bitcoin. Moon! BTC goes to $1200 per coin in a year! Yay! Much win.
Guess what?
On your $20 billion portfolio that gained 12% that year.....even after all this time and this incredible luck of Bitcoin tripling in value.... it has accounted for only 1/12th of your gains for the year....basically a months interest on the overall portfolio.
No manager thinks it will triple. If they estimated a crazy pie in the sky of 50% return then you are looking at a week's worth of interest to buy something that's experimental and very risky.
So -- overall -- Bitcoin has gone from inaccessible, to Dwalla to Gox to now great models like Coinbase & Circle. If you are a rich dentist, no problem. If you are a very rich business owner and want to buy $10 mil worth...a little effort and you can do so.
But for the truest global rich we have a bit more of a ways to go before we will see it broadly in major portfolios.
submitted by bruce_fenton to Bitcoin [link] [comments]

What kind of problems do ordinary people face when they try to purchase cryptocurrency?

The Ubcoin Market team prepared a new article on how difficult it might be to buy cryptocurrency for the first time. We made a short analysis of exchanges, ICOs, P2P platforms and mining as means of purchasing cryptocoins for the first time. The analysis concluded that all these methods have drawbacks. Ubcoin Market is designed to be a platform that facilitates the process of becoming a crypto investor by giving the ability to people to sell their possessions for cryptomoney.
If you need to buy some greens for your dinner, you go to the grocery store. If you need some fish you go to the fish market. If you need a book you go to the nearest bookshop or shop online using Amazon. But what if you want to buy cryptocurrency? Where do you go?
2017 appeared to be the year of ICO. Unlike most predictions the cryptocurrency hype train is still on the rails. One can see that the fluctuations of Bitcoin are keeping the whole topic on the boil with increasingly more people becoming interested in cryptocurrency. Many people consider cryptocurrency as an investment tool or believe enticing stories of an easy and lucrative investment. The new aspiring crypto investors often are not only from the upper or business class or so called active ‘classical’ investors, but also includes non-classical grassroots investors. Many people from various backgrounds keep wondering how they can jump on the cryptocurrency bandwagon and become part of the new trend. Alas, there are more questions than answers.
Exchanges
The first and most probable choice an aspiring crypto investor might make is choosing an exchange. An exchange is where one can buy cryptocoins for fiat money. The mechanism seems pretty easy and similar to the typical trading on mainstream fiat exchanges. However, with cryptocurrency various difficulties arise.
First of all, the boom of cryptocurrencies over the last few years induced the establishment of numerous exchanges all over the world and they keep rising in number. A number of such exchanges are fraudulent and may close without notice, taking all your money. The main problem here is that for now in many countries there are no external regulators for these crypto-exchanges. In the worst scenario you won’t be able to address your loss to any governmental body to obtain your money back.
Therefore, choosing a safe and appropriate exchange to store your cryptocoins is not a straightforward task. Moreover, in many countries cryptocurrency in general and crypto-exchanges remain a grey area for legislation. Although, some countries have already articulated their attitude towards cryptocurrency negatively or positively.
For example, China keeps shutting down everything related to cryptocurrency. The government has already banned ICO and ordered to close all domestic Bitcoin exchanges, what BTCC did. The authorities go further and shoot down the access to any overseas exchanges and platforms. One of the local banks of Hong Kong even suspended a company account of Hong Kong-based cryptocurrency exchange. If authorities shut down an exchange, very little can be done for customers of the exchange platform. Meaning the customers may irreversibly lose their cryptocurrency due to the closure of the exchange by authorities. Barely anything can help a private customer to escape the same destiny if his or her account is somehow related to cryptocurrency transactions.
Japan in the past has had a much less hostile cryptocurrency environment compared to other Asian countries. Nevertheless, Japan appears to be reconsidering its policy towards exchanges after a massive breach in one of the biggest Japanese cryptocurrency exchanges.
Initial Coin Offering(s)
The second feasible way to obtain some cryptocurrency is to participate in an ICO.
According to statistics nearly 350 fully completed ICO were carried out in 2017. The number of ICOs this year so far stands at 92. In addition to the previous stated amounts of ICO, there were also numerous ICO that either failed or never intended to fulfill their projected promises in order to steal investors’ money.
The first question is how to navigate through the ocean of ICO and how to decide whether an altcoin is worth your investments. Even if you’ve researched and studied about cryptocurrency there are many dynamics and unknowns. For example, as a small private investor you cannot bear all the risks as a big investment firm can. On the other hand you will still need to use an exchange to procure altcoins since they are usually not traded for fiat money. After the first step, you then have to exchange your tokens for fiat money or the cryptocurrency that is actually accepted through the exchange of fiat money. Unfortunately, the convoluted process is only one of the issues of exchanges.
For example, China banned ICO. Furthermore, Japan is not particularly friendly towards the new way of raising capital for startups. After a series of fraudulent ICO in Austria, the authorities in Vienna are now trying to involve Interpol to track down dishonest crypto-entrepreneurs. Austria is working on the restriction of transactions and any activities in the field of cryptocurrencies. The USA has a generally friendly regulation policy towards cryptocurrency. However, since the US Securities and Exchange Commission equated ICO to an IPO, the companies issuing tokens and also exchanges trading them are subject to the same laws. That implies that that all transactions must be registered as transactions with stocks or securities. The US neighbor, Canada, holds the same positions on policy. Canadian authorities are considering the potential applicability of Canadian securities laws to cryptocurrencies and related trading and marketplace operations. The overall result for ordinary people, willing to purchase and trade tokens, is that all these transactions have to be registered with corresponding governmental or regulatory bodies, but no such procedures have been adapted for the crypto market yet. Additionally, such transactions are going to be taxed in the future similar to security transactions.
One should be extremely cautious when taking part in an ICO. One can very easily find himself involved with a scam ICO resulting in a loss of funds. One also must keep in mind that even if the entrepreneur you trusted with your money is, in fact, honest, your activity can become subject to taxation or other laws, which could render your venture illegal. However, there is a third way.
Peer-to-Peer Platforms
With the spread of cryptocurrency and as the number of people wanting to purchase cryptocurrency grows, the demand has led to the rise in platforms that conduct crypto-to-fiat exchange offline. Most well-known platform is Local Bitcoins.
Usually, if you are interested in the topic and join various crypto-related chats and forums, they find you on their own. The most commonly exchanged coin on such peer-to-peer offline platforms is Bitcoin, however sometimes they offer transactions with other popular altcoins. If you decide to use such a service, you may find yourself entering some real life detective or thriller film.
The scenario may unfold itself something similar to this: your online counterpart suggests an offline meeting place, hopefully, a public one. The location is where you will exchange your fiat money for some crypto-tokens. Now you have to use some muscle and drag a big sports bag stuffed with fiat cash, across the city to meet your contact. Once you meet, you verify each other’s identity and signal the successful transaction through numbers or QR codes on your mobile devices. In the end, if you are a fan of thriller films with briefcases stuffed with cash, this would be a decent way to roleplay such. However, in reality, the security and safety of your money and your own self are extremely questionable when employing this method of buying cryptocurrency.
Moreover, if the transaction wasn’t fraudulent and everything went smoothly, then you still will face the question ‘what do I do next?’. And the paths are more or less the same. You either go to an exchange and have to cope with all the previously stated problems, or you wait some time to switch sides and become a ‘dealer’ yourself.
Mining
The last, and for many reasons, the least feasible way to obtain cryptocurrency is mining. Mining was the initial way of getting tokens. It was a bonanza for early miners, but nowadays the entry threshold is too high.
The mining boom a few years ago hugely impacted the market of graphics cards pushing the prices to their highest points resulting in doubled or tripled prices for the most popular devices. Some of the biggest producers on the market even launched new series of specialized hardware tailored to mining certain cryptocurrency. The costs per one ‘mining farm’ and electricity now are covered, at best, within 6–9 months, compared to 3–4 months at the beginning of the more recent ‘mining fever’.
Moreover, it is hard to compete with ‘mass-mining’ in countries like China. Over the last year Chinese bitcoin miners made up over 50 percent of the worldwide mining population, building farms with high capacities. So as for now, this hype-train is way out of reach for private aspiring crypto-investors.
Up to this moment, everything related to cryptocurrencies was more about it’s first part — ‘crypto’. But how can one actually derive value and use it as means of exchange for benefits in everyday life? Our team understands all the risks and issues in addition to the interests of aspiring crypto-investors. Therefore, we decided to create an advanced platform that is transparent, easy to use, easy to understand and ultimately a simple way into the world of cryptocurrency. Our project is called the Ubcoin Market. A platform where people can purchase and sell real goods in a secure and simple manner using our specialized eretheum based altcoin.
submitted by Ubcoin to u/Ubcoin [link] [comments]

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Triple entry accounting is the third iteration of a practice that’s been around for more than 5.000 years. “So what” you ask?! Well, this gets big! Single entry accounting basically gave us money and debt. It was the single entry in a ledger of an event like «Ali ows the King 4 acres of land in exchange for 2 gold coins.” If you couldn 2005, Ian Grigg, Triple Entry Accounting Records stored by payer/payee and in a central list. Primitives & Concepts Pooled Miner Bitcoin as an industry: Bitcoin as triple-entry • Alice debits her wallet, and credits Bob’s (double-entry) • Ivan audits transaction • Ivan commits it to the public ledger (third e… - Scenario, in the Bitcoin network, where someone tries to send a bitcoin transaction to two different recipients at the same time. - However, once a bitcoin transaction is confirmed, it makes it nearly impossible to double spend it. - The more confirmations that a particular transaction has, the harder it becomes to double spend the bitcoins. Blockchain technology is based on triple-entry accounting, which removes the need for transactions to be processed by a financial institution. 6. #3. How Secure are Bitcoins Bitcoin is a cryptocurrency that uses Cryptography to create and transfer bitcoins. It prevents any tampering and double spending of the currency.

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Blockchain Accounting/Invoicing Application Demo

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