Deloitte & Bitcoin
A match made in Hades
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A WORK IN PROGRESS…
Why Is Deloitte Interested in Bitcoin
Bitcoin is best thought of as a natural next step in the evolution of money. Throughout history, many items have been used as a store of value and medium of exchange, such as cowrie shells, clay tablets, coins, and now paper money. Starting in the 18th century, nation-states increasingly used precious metals such as gold and silver to back their paper money, creating a monetary system called the gold standard. The gold standard required governments to hold enough precious metal reserves to support their currency. As the global economy became more complex in the second half of the 20th century, most nations eventually moved away from the gold standard, creating fiat currencies built on laws and trust in government.
As our understanding of money as a store of value, medium of exchange, and unit of account has matured, so have the methods and modes for exchanging it. In this sense, the exchange of money has always been a function of the technology available. We moved from precious metal coins to paper money before inventing checks, then credit cards. Yet credit cards weren’t created for the Internet era. They’ve simply been adapted to meet the needs of consumers operating in a networked and digital world. With the consumer-accessible Internet now 20 years old, the question is not why a currency specifically designed for the Internet has emerged, but what took it so long.
Bitcoin’s cryptography and block chain could also transform identity management. Much of identity management, including passports, still operates on a paper-based system. These documents are frequently forged and stolen. Interpol’s database currently lists 39 million stolen travel documents. But what if there was a way to create a unique, verifiable key that was impossible to forge?
A cryptographic network similar to but separate from Bitcoin could be used to verify individuals’ identities and monitor movement across borders (figure 5). When a person travels through a checkpoint at a border crossing, instead of showing and scanning a paper passport, he or she could present his or her Bitcoin key. A network privately maintained by the government, a contractor, or other entity could verify the key and register the entry into the ledger. This system, based on cryptography instead of paper documents, would simultaneously increase mobility and security. If Bitcoin can be used for travel documents, it could also be used for other forms of identity management like social security numbers, tax identification numbers, or even driver’s licenses.
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In a short paper, Deloitte highlights the shortcomings of Bitcoin, but also points to what can be considered as our archaic financial infrastructure:
"The payment systems in the U.S. and the rest of the world are in dire need of overhaul. Many of today’s payment systems are considered slow, error-prone and expensive relative to performance in other high-tech industries."
The firm proposes different roles for the various stakeholders in government-backed crypto. A central bank would issue the currency and control its supply, as well as regulate the processors of its distributed ledger.
Banks would act as custodians over the ledger, and perform the 'mining' to validate transactions. They would also register 'end-users' on the blockchain and verify their identity, as well as issue the initial public/private key pairing.
End users will use the government-backed currency purely in peer-to-peer (p2p) form, without it passing through financial institutions. Transfers would be instant and free, save for negligible miner fees.
The virtual currency can be converted into other fiat currencies, in 'physical' form, using exchanges designated for this purpose.
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Central Bank Digital Currency
Deloitte says that by combining the best attributes of Bitcoin’s technology with the features of an established fiat currency under the sponsorship of a central bank, “the result may very well just be a new method of handling payments that would revolutionize the current system.”
According to Deloitte, one of the major differences between Bitcoin and a state-sponsored crypto is that the latter would have no cap on supply contained within its protocol. Additions to and subtractions from the ledger could only be done by a central bank. In addition, the ledger wouldn’t be public, instead only viewable by regulated financial institutions and banks. The firm also argues that a CBDC wouldn’t be permissionless, but would require involvement with a regulated financial institution in order to obtain a private key.
Source: https://www.coinbureau.com/news/bitcoins-architecture-can-be-used-for-creation-of-cbdc-deloitte/
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Deloitte Knows Bitcoin Is Not Secure
In recent years, there have been serious questions regarding quantum computing. More specifically, many people wonder how this will affect bitcoin and other cryptocurrencies.
To this date, the answer to that question remains unknown.
Deloitte, however, expresses serious concerns regarding bitcoin in this regard.
The firm claims how up to 4 million BTC may be subject to a quantum computing attack.
All of the pay to public key addresses holding bitcoin can be attacked.
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Deloitte Has A Plan
Deloitte’s digital assets team has released some essential guidance for institutional investors looking to join the bitcoin (BTC) train.
The report has outlined the critical tax, regulatory, and accounting aspects of crypto investing companies must pay attention to, to explore the transformative potential of cryptocurrencies effectively.
The digital assets team at Deloitte asserts that cultural realignment is imperative when entering the realm of digital asset investments.
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Deloitte, the international accounting part of the reputed “big four,” released its Bitcoin guide earlier this week on the back of enterprise business analytics firm MicroStrategy putting out its own “playbook” for companies considering investing a part of their treasury funds in the asset.
It started off its guide with a mention of the risk involved in punting on the infamously volatile and “risky” crypto sector, “Tolerance for risk, depending on the stake and type of digital asset, may well have to be modified and periodically adjusted.”
Some of these risks, the firm pointed out, were the amount of free cash on hand after a business purchased Bitcoin and the range of risk a firm was comfortable with. On the other hand, some considerations for firms were the use of digital assets in everyday operations, such as payrolls and vendor payments, and even cross-border transactions.
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Deloitte & NYDIG
Since both Deloitte and NYDIG have been attracted to Bitcoin, their partnership is expected to speed up blockchain adoption while ensuring compliance with the existing crypto regulation.
The leading global provider of audit and assurance, consulting, financial advisory, risk advisory, tax, and related services Deloitte has announced a strategic partnership with New York Digital Investment Group (NYDIG), a Bitcoin (BTC) company that offers technology and financial services to businesses in a broad range of industries. Within the deal, the companies will collaborate on making Bitcoin a universal option for banking, loyalty and rewards programs, employee benefits, as well as other services.
Source: https://www.coinspeaker.com/deloitte-partners-nydig-implement-bitcoin-banking/
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“We envision a world where traditional financial infrastructure works alongside digital asset infrastructure to deliver clients a best-in-class experience with the highest standards of regulatory compliance,” said Yan Zhao, president of NYDIG. “We’ve already started the journey of bringing bitcoin to all by embedding bitcoin wallets into existing user experiences, powering bitcoin rewards programs, and enabling bitcoin-secured lending. Deloitte is the perfect collaborator to help companies take the next step to efficiently execute on these types of projects and meet customer demand with a high level of rigor.”
Notably, Deloitte provides nearly 90 percent of the Fortune 500 and more than 7,000 private companies.
With NYDIG vast Bitcoin trading platform designed for business operations. Their alliance is not only strategic but also critical in keeping the United States ahead of other countries in Bitcoin adoption.
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“The future of financial services will center around the use of digital assets, and we are focused on advising our clients on ways to engage in a regulated and compliant way,” said Richard Rosenthal, Deloitte’s digital assets banking regulatory practice lead.
Last year Deloitte conducted a survey finding that 78% of respondents believe that digital assets would be very or somewhat important to their sector within 24 months. A separate Deloitte survey of retailers in conjunction with PayPal found that 85% anticipate digital currency being ubiquitous within five years.
Source: https://www.ledgerinsights.com/deloitte-nyidig-bitcoin-including-banking/
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Who is NYDIG?
Coming soon…
Deloitte’s Vision Of Our Future?
The multinational accounting services firm, popularly referred to as the “Big Four” accountancy firm, Deloitte, is testing the real-world usefulness of Bitcoin by allowing its staff to buy lunch with Bitcoin at the cafeteria for a practice run, reports Luxembourg Times.
That said, the firm clarifies that they do not have micropayment or cryptocurrency payment solutions in the pipeline yet.
Source: https://www.cryptopolitan.com/craig-wright-and-kleiman-estate-settlement/
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Is Deloitte Already Spying On You?
Blockchain data platform Chainalysis and accounting giant Deloitte are announcing a new partnership to help governments with blockchain surveillance.
The partnership, announced during the Chainalysis Trace DC event, targets government agencies facing hurdles in fighting crypto-related crimes.
The team-up will see Chainalysis’ blockchain dataset, analytics software and training program merge with Deloitte’s risk, compliance and investigation services. Says Chainalysis President and Chief Revenue Officer Thomas Stanley,
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Blockchain As A System Of Control
Deloitte's work in blockchain technology goes back several years. In 2019, it unveiled a plug-and-play product for enterprises to develop blockchain-based services for clients. Earlier this year, the company became one of several participants in fintech firm Digital Asset's interoperable network providing a decentralized infrastructure for institutional clients, alongside BNP Paribas (BNP), Cboe Global Markets (CBOE), Goldman Sachs (GS), among others.
Shipping giant Hapag-Lloyd will be the first to implement KYX, followed by telecommunications giant Vodafone. Hapag-Lloyd is said to be equipping some 1.5 million containers with devices that can tracked to show that they are secure and have not been opened.
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Who Is Deloitte?
More Info On Bitcoin
Source: https://majorkalhoun.substack.com/p/bitcoin
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