The web has evolved exponentially since the first website was created in 1991. It’s gone from Web 1.0’s simple static web pages to the dynamic and user-generated content of Web 2.0.
Now, we stand at the brink of a new frontier with Web3, which promises to bring about significant changes to how we interact and transact online. Like many emerging technologies, Web3 will bring about new challenges for accountants. Fortunately, there are ways to adapt and opportunities for those willing to wade into unknown waters.
Web3 refers to a new decentralized and peer-to-peer internet. This new level of the digital sphere uses smart contracts to automate and facilitate transactions between parties without the need for central authorities like banks.
Like the blockchain that uses cryptography to secure and verify transactions, Web3 will create a more transparent and secure internet where users have greater security, privacy, and control over their data.
How Web3 will impact accountants
The accounting profession tends to be slow to get on board with new technologies, so Web3 might feel difficult to wrap your head around.
Web3 decentralizes information and allows peer-to-peer transactions through “smart contracts.” This means users can transfer money, rights, and property securely and efficiently without relying on intermediaries like banks.
For accountants, this might mean confirming digital assets stored in wallets and exchanges, rather than in bank accounts. It also means new risks to clients, so it’s crucial for accountants to stay up to date with the latest tools, security measures and fraud mitigation techniques.
Another challenge for accounting involves lagging regulations and tax guidance. As we’ve seen with cryptocurrencies, accounting and tax guidance tends to trail behind technological advancements. This makes it extremely difficult for accountants to advise their clients on compliance and tax implications. In addition, the scarcity of professionals with expertise in Web3 will present a challenge for accountants looking to hire or partner with experts.
The arrival of Web3 presents an exciting opportunity for accountants to embrace change and remain relevant in a rapidly evolving landscape. However, it’s crucial to pay close attention to areas where our technology, processes and knowledge need to evolve to keep up with the industry.
Some of these areas include:
- New accounting software;
- Regulations and tax guidance;
- Crypto accounting; and,
- Attracting experienced crypto accounting talent.
Here are three steps accountants can take to prepare for Web3.
1. Stay informed. Keep up-to-date with the latest developments in Web3 and its applications. Use platforms like Linkedin Learning that have a variety of classes geared towards Web3 learning. Attend industry workshops, conferences and webinars to expand your knowledge.
2. Partner with experts. Consider partnering with professionals who have expertise in Web3 and can provide valuable insights and guidance. As you’re hiring, look for talent with crypto accounting experience or even a keen interest in learning more about digital assets, smart contracts and Web3.
3. Consider your clients. Think about how Web3 will impact your clients and how they do business. Because Web3 transactions happen outside of traditional banking, accounting firms and small businesses will need new tools for their crypto accounting. This might include digital asset platforms and wallets, and software for handling crypto bookkeeping and tracking tax basis.
A great way to learn while thinking of your clients is to test out some of the available crypto accounting tools and see which ones are the simplest to use for you and your clients. This will help you to better understand how you can support them as they navigate this new landscape.
The internet has been continuously evolving, and Web3 is just another iteration. So embrace the change and be open to new ways of doing things.
As with any new technological advancement, the profession must tweak its systems and standards in response. Of course, there will be good and bad days — just remember, that’s all a part of the process.
Web3 presents both challenges and opportunities for accountants. While this rapid technological evolution of how society conducts business can seem overwhelming initially, don’t get too discouraged. Stay informed, partner with experts and be open to trying out new tools and technologies. You’ll be on the path to preparedness for the arrival of Web3 and remaining relevant in a rapidly evolving landscape.