BAP62 Issues in Financial Accounting: Bitcoin Assessment Answer
Issues in Financial accounting
In order to consider something valuable, there is required to have definite properties that can have possesses. Bitcoin is considered as valuable thing for several reasons. It works at international level having network globally and hence can also be called as decentralized. Bitcoin is available to everyone across the universe.
As per the perception of Glaser, et. al., (2014) it is revealed that Bitcoin is valuable due to its transferable nature which transfers the funds anywhere around the world without any involvement of middleman. Bitcoin can be considered as digital asset as it held electronically. The Bitcoin as currency is a big issue as its value is unstable. Bitcoin has been a speculation run. In the year 2016, the value of Bitcoin rose to 140% and this boost in value can be said as Bitcoin as a credible currency which is a sign of strength of crypto currency. Bitcoin is more like a speculative asset. Bitcoin as currency will have two major problems; one is instability in value and slow process of transaction. Due its uncertainty in value, it attracts less investment. The value of Bitcoin changes frequently than a US currency and Euro dollar (Glaser, et. al., 2014). Bitcoin is considered as more inconvenient way of transaction. For instance if one wants to buy groceries without any need to sell economic services to the supermarket then it is more convenient to people and that is why people shifted to currency system then barter system. Bitcoin is secured in terms of security in blockchain but there can be limited number of transactions which can take place in order to complete simple transaction. There is resistance to change which discourages people to widely use it as currency.
Key finding and recommendation
Therefore, Bitcoin are not used in terms of currency rather used as a speculative asset which values changes with shield of transactions from others. Without stability, Bitcoin can never be called as currency and rather it is called as a commodity which can be traded like gold and silver in the commodity market (Corbet, et. al., 2018). There can be speculation on the values with the hope that value will rise can yield a trading profit. Speculation is not considered as wrongful activity as it enhances the liquidity in the market and also demonstrates the market value of assets. Thus the asset which can be valued can also hold an underlying value with it just like a person who can invest in gold and then further can make electronic components and jewellery from it (Bauret, et. al., 2018). Bitcoin has no use other than allowing people to make or lose money.
Hence, from the above discussion it can be said that Bitcoin is a financial asset which values moves up and down. If a person buys it a low price then it can wait for future as a long term investment because there will be good returns on such investment. Many Companies invest in Bitcoin for investment purposes and to get good returns on it. Amazon is one of the leading e-commerce which has bitcoin investments in its investment and Company is earning good returns out of it.