This article was first published in the May 2018 UK edition of Accounting and Business magazine.

There are times when you look at current social trends and think that the accounting world – checking, describing, painstakingly telling you where the money is going – is doomed to disappear. 

This is a recurring theme. Back in my early audit days I was told by one of the sparky women in what used to be known as ‘bought ledger’ that audit was over and next year we would be redundant. What she meant was that the systems were going electronic. It would all be foolproof and self-checking. It stands to reason, as people used to say. 

Needless to say it was not. But there is always a suspicion at every point of change that the basics will no longer be needed. Money, in the world of cryptocurrencies, is going the same way. Cash is vanishing. A touch of a card in a café or bar is swifter and enough. 

A friend, recently back from Beijing, reports that there even the homeless have gone cashless. The equivalent of the old call for ‘Got the price of a cup of tea, guv?’ is satisfied by a touch of your cash card on their electronic gizmo.

Simplicity of electronic systems takes you to places that even a few months ago would have seemed bizarre. But the fundamentals remain. The 18th century philosopher Adam Smith understood. And as a result his portrait is on the back of the current English £20 note.

Mark Carney, governor of the Bank of England, pointed out Smith’s value when he spoke about ‘The Future of Money’ to a recent economic conference in Edinburgh convened by students from six Scottish universities. On the last figures, banknotes showed a 5% year-on-year fall in usage. But the need for money remains. Carney pointed out that it was the only means of satisfying a diverse range of needs and wants. Quoting Smith, he said: ‘It is not from the benevolence of the butcher, the brewer or the baker that we expect our dinner, but from their regard to their own interest.’ 

Smith would be startled by cryptocurrencies. But he would get the point. And this was what Carney was talking about. Cryptocurrencies are poor stores of value. Yet they probably are, despite Carney’s doubts, something close to the answer. At present it is the complexities that get in the way of a sensible functioning currency that we would all recognise. 

Carney was sceptical of ‘the entire cryptocurrency ecosystem’, which is astonishingly cumbersome. Little of it seems sensible. Carney looked at the whole process of the ‘miners’ who recreate the electronic transaction ledgers to produce a unit of cryptocurrency for you to use. ‘The costs of bitcoin mining are enormous,’ he said. ‘Its current annual electricity consumption is estimated by some to be up to 52 terawatt hours, double the electricity consumption of Scotland.’ 

Carney’s overall conclusion was that cryptocurrencies at the moment were failing. And the fact that everything is conducted anonymously means that the law and the tax authorities are out of the loop. Sooner or later scandals will engulf that side of the process. But it cuts out intermediaries like central banks and financial institutions. It works directly between payer and payee.

Reaching that simplicity would create a quasi-banking utopia. Earlier in the year I was at an event in the City where two of the cryptocurrency experts of our time gave an overview of what was happening. The audience was a cross-section of City experts in many fields. During a break, I asked people if they had a clue about what had been said. I found not one, including me, who had. But it did strike me that cryptocurrencies were likely to be the future. It was just that the fog has yet to clear. When it does it will just seem natural. 

Robert Bruce is an accountancy commentator and journalist