In a world where technology is constantly reshaping our lives, it’s no surprise that the financial landscape is experiencing a revolution of its own. On 19 October 2023, as part of a two day conference on Cryptocurrencies and Digital Assets, I had the privilege of presenting “The Financial World in Flux” to the Institute of Public Accountants on the topic of how digital currencies are set to impact the world of finance and commerce.
The presentation highlighted key trends and developments in fintech, digital currencies, and the tokenization of real-world assets.
Here’s a summary of the topics presented:
Fintech’s Disruptive Force
Fintech is changing how we conduct financial transactions. Mobile payment apps like PayPal and Alipay are revolutionising the way people make payments and share expenses, while peer-to-peer lending platforms like LendingClub are connecting borrowers and investors directly, bypassing traditional banks. Increasing integration of business systems such as cloud accounting, hospitality and accommodation systems and workforce management systems with fintech and now blockchain is creating benefits including higher productivity, improved decision making and improved cash flow management.
Digital Currencies Redefining Money
The rise of cryptocurrencies like Bitcoin and the emergence of Central Bank Digital Currencies (CBDCs) are redefining the concept of money. Bitcoin’s meteoric rise in value, the People’s Bank of China’s digital yuan pilot programs, and the growing use of stablecoins like USDT and USDC are all signs of this transformation.
Stablecoins are becoming the key bridge between the digital and traditional financial worlds. And in particular for rapid “on-ramping and off-ramping” meaning getting funds in and out of digital systems. They provide stability, speed, and transparency in transactions, making them suitable for everyday use. The growth of decentralised finance (DeFi) platforms that use stablecoins for lending and borrowing demonstrates their increasing relevance.
Real World Assets in the Digital Age
Real-world assets like real estate, bonds, infrastructure and art are being tokenized, enabling fractional ownership and democratising investment opportunities. For instance, existing properties and new property developments are being tokenized, and famous artwork is being registered on blockchains for provenance and authentication. A generic thought is that increased liquidity of assets often leads to higher valuations.
Accounting in the Era of Digital Assets
As digital assets become more prevalent, accountants and auditors face new challenges in valuation, auditing, and regulatory compliance. Blockchain technology is playing a crucial role in ensuring transparency in supply chain auditing, and it is essential to stay compliant with tax regulations when dealing with digital assets.
Preparing for Massive Change
Understanding the risks and opportunities associated with digital assets, investing in cybersecurity to protect against hacks and fraud, and staying compliant with regulatory requirements are all vital steps in preparing for the digital future.
Staying Ahead of the Curve
Embracing innovation in finance, adapting to digital currencies, and seizing opportunities in real-world asset digitisation are essential for staying ahead in this rapidly evolving landscape.
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