The Bitcoin Debate: CPA Skeptic vs. CPA Believer

In this issue, Noah Buxton and I debate Bitcoin's true value amid its historic $100,000 surge.

When Bitcoin hit $100,000 in December, I knew it was time to explore this controversial asset further. So, I invited Noah D. Buxton , co-founder and CEO of The Network Firm , onto the Earmark Podcast for a fascinating discussion about Bitcoin's true value.

As a CPA who first learned about Bitcoin when it was worth just $1, I've always approached it with healthy skepticism. Call it a professional habit—we accountants are trained to question everything.

Why Should Bitcoin Be Worth Anything??

Here's what keeps nagging: Bitcoin produces no earnings, pays no dividends, and seems mainly useful for speculation (and sometimes less-than-legal activities). So why should it be worth $100,000, or $1,000, or even $1?

Noah acknowledged my concerns about speculation driving prices. But he made an interesting case for Bitcoin as "digital gold," arguing that its fixed supply and independence from central control make it appealing in our inflation-prone world.

The Network Effect Is Real

One question I often hear is: "Why Bitcoin? Can't anyone create a cryptocurrency?"

Noah pointed out something I hadn't fully appreciated – the massive infrastructure built around Bitcoin. We're talking thousands of businesses facilitating payments and billions invested in mining equipment. That's not easily replicated.

But here's the thing: being first doesn't guarantee staying first. (Remember Myspace?) While Bitcoin has a strong lead, its dominance isn't guaranteed forever.

The Government Bitcoin Play

Here's where things get interesting. Crypto lobbyists are pushing for the U.S. government to start buying Bitcoin as a national reserve—billions of dollars worth annually.

As a skeptical CPA, this makes me nervous. It's like early Bitcoin hold are pushing for taxpayers to become their exit liquidity. When you consider that roughly 10,000 wallets control a huge portion of Bitcoin, this starts looking like a massive wealth transfer waiting to happen.

The Real Promise: Blockchain

Despite my Bitcoin skepticism, I'm bullish on blockchain technology. Noah called it "the biggest accounting innovation since double-entry bookkeeping," and I think he's onto something there.

His firm, The Network Firm LLP, is doing fascinating work in digital asset auditing. They've even built their own software called Ledger Lens to tackle the unique challenges of verifying blockchain transactions.

What This Means for Accountants

As CPAs, we're in an interesting position. While we need to maintain our professional skepticism about Bitcoin's value proposition, we can't ignore the growing importance of blockchain technology in our field.

The skills needed to audit and verify blockchain transactions will only become more valuable. Whether Bitcoin remains the dominant digital asset or not, the underlying technology is here to stay.

My Take

After my conversation with Noah, I'm still skeptical about Bitcoin's current valuation. But I'm also more appreciative of the complexity of the debate.

As accounting professionals, we need to tread a careful line: maintaining healthy skepticism while remaining open to genuine innovation. The future of our profession might depend on achieving this balance.

Want to hear my complete discussion with Noah? Check out Episode 83 of the Earmark Podcast.