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Cryptocurrency - The buzzword of the digital age

Published in: TrialBalance | #62

Cryptocurrency is the new buzzword for trading and investment in the digital age.

It’s gained fame – and some notoriety – in recent years as a form of money that’s designed to be secure and anonymous. For thousands of years, people have used objects of value to carry out transactions. The Chinese and Indians used cowry shells as an early medium of exchange. In other parts of the world, gold and silver became legal tender and coins were made from these precious metals. Later, paper money was produced. Anything of value, of course, has been used for trading, relying on trust to determine its worth. Gold in the 19th century became a standard currency. The “gold standard” adopted by many countries held that “fiat currency” (paper money) could be converted to gold at a set rate.

Wealthy countries accumulated gold, but other countries lost it as they paid off debt. The First World War created new political alliances and government finances deteriorated. A new, more flexible system was required. The British pound and US dollar became standard currencies and smaller countries began holding these currencies instead of gold.

At the end of World War Two, the Bretton Woods agreement meant the United States dollar became the international standard, itself being valued against gold valued at $35 an ounce. In 1971, the US dropped the gold standard and the world entered the flexible world of “fiat” money, the value of which is determined by governments. Fiat money has held sway since, as the international means of exchange, but we’re now entering the age of cryptocurrency. As its name suggests, cryptocurrency uses web-based cryptography, which converts traditional data into code to track purchases and transfers. The same sort of code is widespread on the internet to protect private information.

Cryptocurrencies such as Bitcoin allow users to buy things of any value electronically and store money anonymously without going through a traditional bank. No money is ever printed, no coins minted.

There are no fees nor government control, making it an attractive proposition for people tired of bank fees and wary of market manipulation. It’s the decentralised nature of cryptocurrency that sets it apart from traditional banking. No one controls the network on which it runs.

This lack of control worries many central banks, though most admit cryptocurrency won’t go away soon and might well be the future of money. All are studying its implications for the global financial system. Some countries, such as South Korea, have banned bitcoin trading via exchanges in their nation. What are the implications for taxes, inflation, GDP, trading in illegal goods etc? So how do you buy cryptocurrency? You can buy units or “coins” from brokers with traditional money or cryptocurrency. Your coins are stored in a virtual wallet from which you can spend them. You can also earn cryptocurrency by “mining”, which involves solving complicated online maths problems. All transactions are updated and held on a public ledger called a blockchain.

Bitcoin was the first major cryptocurrency and is the best known. It was created in 2009 and last year rocketed in value before diving 30 percent by year end. Even so, it’s a big player that financial authorities have to take seriously as the possible future for transactions of all kinds, including stocks and bonds.

Bitcoin’s market capitalisation was more than NZ$300 billion at the end of 2017. About

17 million “bitcoins” are in circulation. •In New Zealand, Inland Revenue is considering whether profits from Bitcoin and other cryptocurrencies should be taxed just as it taxes trading in conventional currency.

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RSM New Zealand Group

RSM consists of three New Zealand member firms of the global international audit, tax and consulting group - RSM. RSM is represented by three local, long standing firms in New Zealand, RSM New Zealand (Auckland) Limited and RSM New Zealand (Auckland North) Limited and specialist audit and assurance firm RSM Hayes Audit. The legacy of the representative firms spans over 70 years in Auckland and offer local knowledge and worldwide connections which allow us to provide the best possible resources for our clients.

RSM provides a full range of accounting and advisory services and we are committed to helping you grow your business. As well as what you would expect from your accountant, we also provide specialist services in Audit, Tax and Business Consultancy to clients across a diversity of industry sectors.

As a firm we provide strong service benefits to our clients. Our simple structure enhances business efficiencies and underpins our client focused culture, ensuring ready access to our partners and senior team members.

We seek to bring you the best of both worlds. Expert local experience combined with the sixth largest international accounting network of independent audit, tax and advisory firms.

Region: Auckland

Phone: 0800 774 623

Young Read Woudberg

Trust YRW for highly professional accountancy support – as well as for expertise in business development, new business establishment and information technology.  We have a firm emphasis on regional business needs and are particularly close to local dynamics in the property, commercial and horticultural sectors. YRW are well resourced to provide experienced, informed, independent advice while we remain small enough to form long lasting personal relationships.

Region: Bay of Plenty

Phone: 07 578 0069

Duns Limited


Founded in 1980 and based in Christchurch, we offer a complete service with industry expertise in Property Investment and Development, Construction and Trades, Professional Services, Hospitality and Tourism, Retail, Motor Vehicles Dealers and Services and Transport and Logistics.

Region: Canterbury

Phone: 03 365 0768

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NZ CA Limited

Region: Hawke's Bay

Phone: 06 835 5299

Naylor Lawrence

At NLA we believe that a good accountant will ensure your compliance and tax is completed to standard and on time. However, a great accountant will take the time to understand your vision for growing your business and help you plan the journey to achieve it. With some checks along the way!

Our team has the expertise to assist your business, whether it’s big or small, just starting out, or needing some fine tuning. We don’t just offer services – we offer personalised solutions for each of our clients.

Region: Manawatu/Wanganui

Phone: 06 357 0640

Wallace Diack Chartered Accountants Ltd

With over 50 years combined experience in New Zealand, Wallace Diack is committed to providing a comprehensive range of practical accounting services for today's economic environment that help you realise your goals.

We appreciate that selecting a firm to entrust with your accounting requirements is an important decision, intensified by rapid economic changes, increases in competitive pressures, and resource availability. With our benchmarking, cash flow forecasting, and other tools, Wallace Diack is well placed to help you make an informed decision.

Region: Nelson/Marlborough

Phone: (03) 578 7389

Whitelaw Weber Limited

Whitelaw Weber is the largest business advisory and accountancy firm in New Zealand's Far North. They have had the pleasure of working with hundreds of businesses and families for more years than they care to remember.

They have a large team of accountants and business specialists based in offices in Kaikohe, Kaitaia and Kerikeri. Their expert hubs consist of the following;

  • Technology, systems and processes
  • Business consultancy and marketing
  • Financial and investment planning
  • Compliance and administration

Region: Northland

Phone: (09) 407 7117

G S McLauchlan & Co

GSM is a Dunedin based Business Advisory and Chartered Accountancy practice founded in 1957. 

GSM pride themselves on our specialist knowledge, our ability to keep fresh in today's ever changing environment

Region: Otago

Phone: 03 477 8192

McIntyre Dick Limited

McIntyre Dick is a vibrant, driven, and people focused firm of Business Advisors and Chartered Accountants leading the industry in Southland, New Zealand. They’re dedicated to delivering exceptional service and strive to put time, mind and money back in their clients’ hands.

Region: Southland

Phone: 03 211 0801

Harris Taylor Limited

The Accountancy world is constantly changing and highly competitive. At Harris Taylor their challenge is to stay ahead of the competition by providing the best possible service, whilst ensuring that client satisfaction remains our primary motivation and ultimate goal.

Region: Taranaki

Phone: 06 278 5058

gfa Chartered Accountants

gfa Chartered Accountants Ltd was formed on 1 April 2018 by Merv Gyde and Lance Fielder, two experienced Chartered Accountants based in Te Awamutu.

The name is an acronym for Guidance, Friendship and Acumen and reflects Merv and Lance and their teams approach to working with our clients.

It is based on the philosophical concept of Friends first, business later and forms the basis of the relationship between advisor and client, that in turn then allows the advisor to better understand the client's position and work with them to achieve their goals.

Region: Waikato

Phone: 07 872 6444

Southey Sayer

Offering a full range of accounting and business development services, tailored to meet the needs of each individual client. The wide range of expertise and experience within the firm is shared amongst the partners and their teams for their clients benefit. Services and products offered are fully flexible there will be no expectation to conform to a certain product or pricing structure.

Region: Wairarapa

Phone: (06) 370 0811

BW Miller Dean Ltd

BW Miller Dean Ltd was formed on 1 April 2016 with the merger of two long standing Wellington chartered accountancy practices: BW Chartered Accountants Ltd and Miller Dean Chartered Accountants Ltd. 

BW Miller Dean pride themselves on building relationships based on trust with clients through personal, individual attention, and always being available to help their clients with specialist Accounting or Finance functions when needed.

Region: Wellington

Phone: 04 910 3340

Marshall & Heaphy Limited

Central to the culture of the team that has been developed over their history, is the belief that successful and sustainable businesses are the backbone for the West Coast community. Great businesses create jobs, keeping people and family together on the Coast, building a sustainable community.

Region: West Coast

Phone: 03 768 7186