CPA Practice Advisor

SEP 2018

Today's Technology for Tomorrow's Firm.

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6 SEPTEMBER 2018 ■ FROM THE TRENCHES ■ It focuses on providing extremely fast and nearly free transactions throughout its network. Some transactions can be processed and verified in under a second. ■ There is a hard supply limit of 84M Litecoins with approximately 55M currently in circulation. Other Notable Cryptocurrencies ■ Dogecoin, which was named after a popular meme. ■ Golem, an open source, decentralized supercomputer. ■ Basic Attention Token, linked to ads on the Brave web browser. ■ Dentacoin, which aspires to be the “blockchain solution for the global dental industry.” ■ Kyber Network, a token affiliated with a cryptocurrency exchange. How? So how do Cryptocurrency app-roaches work? ■ Miners are independent users, worldwide, and disinterested of each other. This ensures that collusion or fraud cannot occur in the processing. ■ Miners verify details of the transaction by processing the transactions. ■ Transactions are held to strict cryptographic standards. If a transaction does not meet those standards, then it is immediately discarded. ■ Transactions are initially verified by a single miner, then verified by thousands of miners within hours. ■ Once verified, the block is added to the chain. The chain is a permanent, non-editable, transparent record of every transaction that ever occurred. ■ Once the transaction is independently verified many times over, the Bitcoin is deposited in the recipient’s wallet. ■ The system is always in perfect balance as it is mathematically not possible to be out of balance. The Exchanges: Kraken, Coinbase, Bitfinex ■ Exchanges are where users exchange traditional funds (e.g. fiat currency) for the cryptocurrency of their choice. ■ Not every exchange sells every crypto. Generally, they sell the major currencies (e.g. Bitcoin, Ethereum, etc.). They may also sell specialized coins and tokens as well. ■ Exchanges are generally NOT regulated by any government but are subject to banking regulations. ■ Funds are deposited and withdrawn by ACH or wire transfer via the exchange’s local bank. Wallets: Jaxx, MyEtherWallet ■ A wallet is where cryptocurrency is stored and can be online, hardware or paper. ■ An online wallet is a wallet that is stored with an exchange. ■ A hardware wallet is a physical device that stores the user’s private key. ■ A paper wallet is an offline backup of the user’s private key. ■ It is recommended to use multiple wallets and have backup copies of the private key. This is for the user’s safety, integrity and security. The key should always be confidential. Block Chain Mining ■ Mining is the process of calculating a block, validating the transactions, and adding them to the blockchain. ■ For their effort, miners obtain new cryptocurrency as a reward. They are welcome to keep their new cryptocurrency or sell it on the open market. ■ Rewards can vary depending on the blockchain and the current demand. If there is low demand than the reward is typically lower. ■ There are two main types of mining: o Proof of Work (PoW): Blocks are validated by miners through complex calculations and consensus is required. o Proof of Stake (PoS): Blocks are validated by the user’s that actually use the system. User’s stake their current investment similar to a security deposit. What does this mean to the practice of accounting? ■ QuickBooks Online payment processing o You can accept Bitcoin right inside of QuickBooks Online. o Low Fees. Starting from 0% to get paid in settlement currency. No additional surcharges or foreign transaction fees. o No Chargebacks. Bitcoin transactions are irreversible. It guarantees on-time funds availability and reduces fraud. o Quick Deposits. Bitcoin transactions are completed instantly, and local payouts occur the next-day. o No Exchange Risk. You can choose to receive the exact invoice amount in settlement currency. No currency conversion risk. o ■ Credit Card Transactions by Monaco (MCO) o A real-world credit card backed by virtual cryptocurrency. o It will allow you to purchase real world items using cryptocurrency holdings. o They will offer a variety of cards for every budget and spending habit, from high rollers to budget spenders. o Low fees and cash back on purchases. o ■ Predicting and forecasting by Augur o Augur combines the magic of prediction markets with the power of a decentralized network to create an accurate forecasting tool - and the chance for real money trading profits o ■ Digital Storage by Sia and Filecoin o Sia and Filecoin are decentralized storage platforms secured by Cryptocurrency technology. o Sia and Filecoin leverage hard drive capacity around the world to create a data storage marketplace that is more reliable and lower cost than traditional cloud storage providers. o In a nutshell, you can rent out part of your hard drive space to Sia or Filecoin and get paid for its use. o Alternatively, you could store information in either Cryptocurrency and have it available on any other device. o or ■ Digital Identity Management by Civic o Civic’s Secure Identity Platform (SIP) uses a verified identity for multi-factor authentication on web and mobile apps without the need for usernames or passwords. o Civic creates a digital identity of a user and stores that information on a public Cryptocurrency. That identity can then be used to interact with other 3rd parties. o That identity can be used to sign contracts, purchase goods online, sign up for websites, store medical records and much more. o Marketcap at 6/29/2018 Currency Symbol Rank ($MM) Dogecoin DOGE 41 $269 Golem GNT 43 $247 Basic Attention Token BAT 50 $202 Dentacoin DCN 74 $111 Kyber Network KNC 78 $102 Gas GAS 86 $92 Source:, 6/29/2018, 7:45A EDT

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