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ACCOUNTING FOR CRYPTOCURRENCIES
Mirsadikova Dilobar Dilshod kizi
Tashkent Financial Institute Department
"Accounting" lecturer Tashkent, Uzbekistan
Blockchain is a special technology that is used to record information in the form of data
blocks that are interconnected and protected by cryptographic evidence. Most blockchains are
designed as a distributed and decentralized digital ledger whose job is to record all
transactions in sequential order. It stores an ever-growing list of ordered records called
blocks (Ducas & Wilner, 2017, 544). This technology has a fairly wide range of possible
applications and very good development prospects both in the transport sector and in other
industries (Kotsoeva et al., 2017, 67).
Mining or, in other words, "extraction" is aimed at building a blockchain. This is a
process that includes the calculation of a new block to be added to the distributed ledger.
People who are called miners are engaged in such mining. Mining is mainly associated with
bitcoins, since the block generation process differs for different cryptocurrencies. Mining
computers are often powerful machines that are used in generating correct hash values, in
other words, they are required to solve a mathematical puzzle. Once a miner successfully
produces a new block, it notifies the network. Then every miner in the network stops mining
that block and starts solving equations for the next block. (Sayeed & Marco-Gisbert, 2019, 4).
Regardless of the field of application, the blockchain is an accessible technology with the
following functions (Kotsoeva et al., 2017, 68):
1) confirmation of the change, recording and subsequent storage of data;
2) protection against unauthorized data changes;
3) the ability to exchange data directly, without an intermediary and without additional
costs;
4) ensuring transparency between network participants.
The main applications of blockchain technologies (Balashov et al., 2017, 40):
1) payment systems;
2) transfer of ownership rights on an electronic medium through a multicurrency wallet;
3) automation of business processes, the most current trend in most companies and
startups.
The main value of the blockchain is that it allows direct database sharing without a
central administrator. While blockchain was initially recognized as the technology behind the
Bitcoin cryptocurrency, its ability to transform payment processing, invoicing, inventory
information, contracts, and other documentation also has significant accounting implications
(Dai & Vasarhelyi, 2017, 11).
Accounting firms have also shown interest in blockchain technology. As a result, several
projects have been launched. Collaboration between major financial and professional
institutions has led to various initiatives to explore the potential of this technology for
accounting and auditing (Bonsón & Bednarova, 2019, 726). KPMG has also capitalized on the
potential of blockchain, saying it enables faster and more secure transactions, automates back
office operations and reduces costs. KPMG has developed its digital ledger services in
partnership with Microsoft. They are currently focusing on prototyping models to solve
blockchain implementation challenges in the financial services industry, healthcare, and the
public sector. (KPMG, 2017). In turn, Ernst & Young is participating in a blockchain-based
project called Libra. The project is a startup focused on distributed registries. (Allison, 2018).
In addition, a project called EY Ops Chain has been developed that focuses on payments,
invoicing, inventory information, pricing, and digital contract integration (Ernst & Young,
2019). In 2017, a conference was held with members of the Accounting Blockchain Coalition,
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which led to the creation of working groups to collaborate with standards developers and
help develop accounting standards to regulate the use of blockchains (Del Castillo, 2017).
Blockchain can be used by a wide range of industries. In 2016, banks and investment
funds invested about $1.4 billion in this technology. (Nyumbayire, 2017). However, investors
exploring the potential of this new phenomenon and its implications are not limited to big
tech companies and the financial sector. Other industries, as well as institutions such as
central banks and public administrations, are not far behind in research related to the use of
blockchain technology. Thus, there is a widespread belief that the blockchain is capable of
changing the way information is exchanged and stored. (Bonsón & Bednarova, 2019, 727).
in
current financial reportin
g standards. (Procházka, 2018, 162).
Some people believe that Bitcoin is the only cryptocurrency on the market. This opinion
arises from the fact that Bitcoin is one of the first cryptocurrencies in the world, and it also
dominates over fifty percent of the market with cryptographic assets. But apart from bitcoin,
there are more than a thousand different cryptocurrencies today, also called altcoins or
alternative coins. All of them have different properties, and their scope may vary depending
on the need. (Academy Binance, 2018). Today, there are four main types of cryptographic
assets that are based on blockchain technology and are digital coins, or in other words, like a
token. Their purpose and intrinsic value are described in the table below (Table 1).
Table 1.
Main types of cryptographic assets
Type of asset
Target
Intrinsic value
Cryptocurrency
The coin is used as a medium of exchange, for
example
bitcoin.
Calculated on the basis of supply
and demand, indepen-dent of the
central bank.
Asset-backed
token
A coin contains information about the
ownership of a physical asset (for example,
natural resources such as gold or oil).
The value is determined based on
the underlying asset.
Utility token
A coin that grants users access to a product or
service. These tokens do not give holders
ownership of the platform or company assets,
and while they can be traded between holders,
they are not primarily used as a medium of
exchange.
The value is determined by the
demand for the issuer's service
or product.
Security token
The coin is similar in nature to traditional
securities. It may provide an economic interest
in a legal entity: sometimes the right to receive
cash or another financial asset. Gives the
opportunity to vote when making decisions in
the company.
Value is determined by the
success of the venture as the
holder of the coins participates in
future profits or receives cash or
another financial asset.
There are over 4,500 crypto assets at the moment, and they are capable of solving
different problems and have a variety of use cases.
Unlike traditional forms of digital payments, cryptocurrencies do not have
intermediaries, which have a huge impact on the costs that an intermediary typically charges
for each transaction. In the case of digital payments, there are two main costs, the cost of
verifying a transaction and maintaining the network.
Describing the properties of cryptocurrencies, they can be divided into two groups,
these are transactional and financial properties. Transactional properties include (Kishore
Jain, 2020, 2-3):
1. Irreversibility: the operations carried out by the participants in the system are
irreversible. If the user made a transaction and made a mistake with the final address or sent
an amount many times greater than desired, then the money will not be returned back.
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2. Anonymity: neither transactions nor accounts are associated with real identifiers. To
use cryptocurrency, you do not need to disclose your personal information, such as name and
passport details.
3. Transparency of transactions: payment information is stored on the blockchain and is
available to everyone.
4. Speed: transactions are generated on the network almost instantly and are confirmed
in a few minutes. Because they take place on a worldwide network of computers, they don't
care about the user's physical location.
5. Security: Cryptocurrency funds are encrypted in a public key cryptography system.
Only the owner of the private key can send cryptocurrency.
6. Accessibility: You do not need to consult anyone to use cryptocurrency. It's just a
program that anyone can download for free. After launching the application, you will be able
to receive and send bitcoins or other cryptocurrencies.
Financial properties include (Kishore Jain, 2020, 3):
1. Inflation Resistant: Most cryptocurrencies limit the supply of tokens. For example,
Bitcoin has a maximum supply of 21 million coins and they will be mined by 2140.
2. High volatility: the value of coins depends only on the ratio of supply and demand;
therefore, sharp fluctuations in the exchange rate and the complexity of forecasting are
possible.
Many large merchants are willing to accept cryptocurrencies for payment, but most of
them use the services of an intermediary, such as Coinbase, which provides instant and risk-
free conversion to the currency of the respective country. Thus, cryptocurrencies have not yet
been reflected in the accounting of large retailers. Nevertheless, accounting for
cryptocurrencies is important for hundreds of companies whose activities are directly related
to them. In addition, the investment attractiveness of cryptocurrencies means that they can
appear on the balance sheets of companies interested in high-risk, but high-yield investments.
With the digitalization of accounting, the enterprise itself determines the criteria for the
usefulness of information, through the formalization and presentation through a system of
special software products. After collecting data in the blockchain system, there is a need to
create special digital accounting platforms. In theoretical terms, the digital platform is a kind
of accounting policy of the enterprise, as it contains methods, accounting methods that
contribute to the effective functioning of the business.
The main advantages of blockchain accounting technology are:
1. Openness of the transactions performed - the network user is free to trace the history
of transactions on the site - explorer.
2. The presence of a digital record - makes it impossible to forge, change, delete data.
3. Each blockchain participant has a constantly updated copy of the database.
4. High speed and accuracy of transactions, which ensures the speed and reliability of
transactions.
5. Decentralized communication between servers, which gives high security to users and
transactions. With these properties, the blockchain system is one of the most suitable for use
in accounting.
Thus, the digitalization of the economy necessitates the use of digital technologies in all
areas of economic development. First of all, the introduction of digital technologies concerns
accounting processes, which is a prerequisite for the digitalization of accounting, through
innovative technologies of data transfer and storage. Blockchain is the most appropriate
digital technology for improving accounting methodology. The digitalization of accounting
will increase the speed of information collection and processing, increase the reliability of
data storage, and increase the availability and timeliness of information for interested users.
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References
1.
Academy
Binance
(2018,
5
December).
What
Is
Cryptocurrency?
https://academy.binance.com/ru/articles/what-is-cryptocurrency
2.
Academy
Binance
(2018,
6
detsember).
History
of
Blockchain.
https://academy.binance.com/en/articles/history-of-blockchain
3.
Allison, I. (2018, 3 March). Deloitte, Libra, Accenture: the work of auditors in the age of bitcoin
2.0 technology. International Business Times. www.ibtimes.co.uk/deloitte-libraaccenture workauditors-
age-bitcoin-2-0-technology-1515932 (accessed 3March 2018).
4.
Almagambetov, K. & Tekebayev, Zh. (2020). Accounting for cryptocurrencies in accordance with
IFRS.
Economic
Review
(National
Bank
of
Kazakhstan),
issue
2,
25-33.
https://ideas.repec.org/a/aob/journl/y2020i2p25-33.html
5.
ASBJ Accounting Standards Board of Japan. (2018, 14 March). About the Practical Solution on
the Accounting for Virtual Currencies under the Payment Services Act.
content/uploads/20180315-02_e.pdf
6.
Bonsón, E., & Bednarova
, M. (2019). Blockchain and its implications for accounting and
auditing. Meditari Accountancy Research, Vol. 27 No. 5, 725-740. https://doi.org/10.1108/MEDAR-11-
2018-0406 Buterin, V. (2014).
7.
Мирсодикова Дилобар Дильшод кызы РОЛЬ ТЕХНОЛОГИИ БЛОКЧЕЙН В БУХГАЛТЕРСКОМ
УЧЕТЕ И АУДИТЕ
MOLIYA BOZORI ELEKTRON SAVDO TIZIMLARI VA ULARNING FAOLIYATI
Sharofiddinov Nozimjon O‘ktam o‘g‘li,
GulDU, iqtisodiyot yo‘nalishi
Hozirda moliya bozori yuqori darajada tashkillashgan va uzluksiz rivojlanayotgan,
borgan sari jahon miqyosida globallashib borayotgan alohida bir butun va o‘z muhitiga ega
munosabatlar va institutlar majmuasi sifatida namoyon bo‘luvchi murakkab tizim ekanl
igi
aniq bo‘lmoqda.
Bunda moliya bozorlari na- faqat milliy iqtisodiyot, balki global iqtisodiyot
rivojini belgilamoqda.
Moliya bozori savdo tizimlari
–
moliyaviy instrumentlarning (pul, kreditlar, valyuta,
qimmatli qo
g‘
ozlar) bozor muomalasi jarayonlarini tashkillashtiruvchi shakllar, usullar va
normalar (tegishli tartib-qoidalar, qonuniy
me‘yoriy hujjatlar), traditsiyalar, tamoyillar hamda
ushbu jarayonlarni normal kechishiga xizmat ko‘rsatuvchi professional qatnashchilar
majmuasidan iborat murakkab savdo industriya sifatida tashkillashgan bozor mexanizmi.
Moliya bozorining savdo tizimlarini moliyaviy instrumentlar turi bo‘yicha quyidagicha
ajratish mumkin:
-
qimmatli qog‘ozlar savdosi tizimlari;
-
pul vositalari (masalan, plastik kartochkalarning turli hillari) va valyuta (xorijiy EKV)
savdosi tizimlari;
-
kreditlar savdosi tizimlari;
-
sug‘urta instrumentlari (polislari) savdosi tizimlari;
-
moliyaviy (valyuta) qiymatga ega bo‘lgan antikvariat va yuvelir buyumlari,
qimmatbaho metall va toshlar hamda noyob (kamyob) elementlar (radiaktiv) savdosi
tizimlari.
Pul vositlari savdosi banklar tomonidan amalga oshiriladi. Bunda banklarning
mahsulotlari savdo markazlari (uylari) ham bo‘lishi mumkin.
Valyutalar savdosi tizimi misolida
FOREX
xalqaro elektron tizimini va valyuta
almashtirish shahobchalari majmuasini keltirish mumkin.
Kredit resurslari banklararo kredit bozorlarida savdo qilinadi, banklar va kredit
tashkilotlarida (ittifoqlarida) oldi-berdisi amalga oshiriladi.
