Digital currencies, here’s how companies will implement them

Digital payments are increasingly a daily reality for citizens, as well as an opportunity for transformation and growth for companies and therefore the entire economic system.
Their next phase of evolution concerns the affirmation of digital currencies and cryptocurrencies as payment systems.

Cryptocurrencies were also included in the latest budget law, which for the first time attempted to bring order to their management and taxation (only partially succeeding, given that interpretative doubts are still on the table).

But the path for digital currencies is still traced and is clear: we must already prepare now for what the digital euro will be for everyone. This digital currency is already in the works at the ECB

And professionals who will be convinced as soon as possible to increase their knowledge and experience of using digital currencies, to provide adequate management and consultancy services to SMEs, will be the future winners.

Knowing and mastering digital currencies will be a rebirth of professionals’ central consultant role for their client companies.
Let’s see why.

Payments and digital currencies

In recent years the world of payments has undergone a radical transformation: with the growing use of mobile devices and widespread access to the Internet, more and more people are relying on digital payment tools to carry out their transactions in a quick and convenient way. Digital currencies fit into this framework.

Digital currencies are a form of virtual money that only exists in electronic format.

Unlike traditional physical currencies, such as banknotes and coins, digital currencies can in fact be transferred, stored, and used exclusively through electronic platforms. These currencies are based on cryptography and blockchain technology to ensure security and transparency in transactions.

Technological developments such as artificial intelligence and the Internet of Things will also continue to improve the efficiency, security, and scalability of digital transactions.

Many central banks around the world are considering issuing their own digital currencies, including the European Central Bank with the digital euro project, which could further accelerate its diffusion.
In the meantime, we can identify the four forces that are driving their use.

Four good reasons to use digital currencies

The convenience: perhaps the main reason for using digital currencies is the convenience that characterizes the so-called user experience.

Digital payments enable instant transactions, which can be made anywhere, anytime, eliminating the need for physical cash or making cash withdrawals.

With just a few clicks you can send or receive money, make online purchases, or pay bills without having to queue or go through complex procedures.

On the same level, there is security: digital currencies offer a higher level of security than traditional payments.

The advanced encryption used in digital transactions reduces the risk of fraud and counterfeiting. Furthermore, blockchain technology, on which many digital currencies are based, records each transaction permanently and immutably, ensuring traceability and transparency of operations.

Then comes accessibility: the use of digital currency makes financial services more accessible to everyone, including those who do not have access to a traditional bank account.

With a smartphone and an internet connection, you can open a digital wallet and access a full range of financial services.

This is particularly important for so-called "unbanked" people, who for various reasons do not have access to banking services, or who in any case live in remote areas where traditional financial services are limited.

Finally, there is the omnipresent globalization: digital currencies facilitate international transactions, overcoming geographical barriers and currency restrictions.

With digital payments, you can send money instantly globally, eliminating the complex currency exchange procedures and high bank fees associated with traditional international transfers.
This stimulates cross-border trade and promotes economic cooperation between countries.

A currency on its way: the digital euro

The European Central Bank has been studying for two years, together with all the national central banks of the euro area countries, the introduction of a digital euro.

It is a digital currency that will complement the banknotes and coins currently in circulation, a means of electronic payment, available to anyone, as safe and easy to use as cash.

As a central bank currency issued by the ECB, it would be different from cryptocurrencies, although it would most likely adopt the same DLT, Distributed Ledger Technology, i.e. blockchain.

According to the ECB, the digital euro would respond precisely to the growing demand for secure and reliable electronic payments and would be an anchor of stability for the monetary and payments system, also strengthening the monetary sovereignty of the euro area and competition and efficiency of the European payments sector.

The digital euro must be accessible, solid, secure, efficient, compliant with regulations, and equipped with the highest level of privacy.

The ECB is still working on the digital euro: the investigation phase began in October 2021 and will end in October this year, when the analysis of the technical characteristics and distribution methods will be completed and a decision will be made how to start the preparation phase for the release of the digital euro. We are unlikely to have a digital euro before 2028, but the path is marked and it is worth preparing.

Professionals and digital currencies, a shared future

Digital currencies are therefore radically changing the way we make payments. Their convenience, security, accessibility, and ability to facilitate global transactions are driving more and more people and businesses to use this financial instrument.

As the world increasingly moves towards the digital economy, it is crucial to be ready and have the right training to embrace digital currencies and their potential, as they represent the future of payments and the financial system.
This also concerns professionals who carry out management and consultancy services for SMEs.

It should be underlined that to become an expert in digital currencies and cryptocurrencies, a professional must commit to consistently following updates regarding technologies, industry trends, and regulations, but this attitude should already be part of of his professional background.

For an accountant, developing knowledge about digital currencies entails several advantages, starting from the expansion of business opportunities: gaining experience in this field allows SMEs to be offered specialized services related to transactions with digital currencies and cryptocurrencies, from accounting to related tax returns. This can attract new customers and allow you to expand your customer base.

Then there is the diversification of the service portfolio: knowledge of the dynamics of digital currencies allows the accountant to diversify his service portfolio.

In addition to traditional accounting, it can offer advice on the management of digital currencies and cryptocurrencies, regulatory compliance, tax planning for transactions, and the assessment of tax impacts of activities.

Not to be overlooked is the growing demand: cryptocurrencies and digital currencies are gaining more and more popularity and attention, both from investors and businesses.

Being an experienced accountant in this industry means you are in an advantageous position to meet the growing demand for consulting services and compliance.

Last, but not least, there are the very important aspects of recognition and credibility. Becoming an expert in this field can lead to greater recognition and professional credibility: it is no coincidence that experts in this field are often requested as speakers, trainers, or consultants at conferences and events in the economic and financial sector.

Original article published on Money.it Italy 2023-10-03 08:08:00. Original title: Valute digitali, ritorno al futuro per il professionista