Once there were eight. Since 2002, only the ‘Big 4’ remain. These multibillion international professional service firms comprise the majority of the world’s accounting business: PricewaterhouseCoopers (PwC), Deloitte Touche Tohmatsu, KPMG and Ernst & Young (EY). PwC has been acknowledged as the reigning champion of their annual competition in terms of revenue, but EY may have grabbed the title in terms of public visibility and innovation when they announced in November 2016 that they would begin accepting bitcoin as payment.

Effective January 2017, EY initiated the use of bitcoin in their Switzerland Office. In addition to accepting bitcoin as payment for services from clients, EY is expanding use of bitcoin among the public at large. They installed an ATM that exchanges bitcoins in their Zurich office. Next to a train station, both employees and the general community members can access it. In addition, each EY employee is encouraged to use a secure digital wallet which allows them to send and receive secure bitcoin transactions.

WHAT IS BITCOIN?

Bitcoin is a digital currency created and exchanged independent of banks or governments and was the highest performing currency in 2016. In operation, bitcoin users must each create a unique a digital address of 27-34 characters for use as a virtual mail box. Transactions are then processed anonymously.

Underlying the bitcoin is a blockchain technology. At its essence, a blockchain is a digital distributed or decentralized ledger / database. Each record includes a timestamp and is called a block. Blocks are linked together, encrypted and cannot be modified.

In 2013 EY emphasized that bitcoin should be considered an e-commerce payment for micro transactions rather than a currency replacement for government-issued dollars, pounds and euros. However, many large banks and governments still view bitcoin as a threat to the stability of their legal tender. China, which has seen the largest ownership of bitcoin, has even begun an investigation into bitcoin for potential market manipulation and related matters.

WHY IS EY USING BITCOIN IN SWITZERLAND?

Perceived by much of the world as the international banking center, any new methodology implemented by Switzerland gives the practice a particular gravitas. Since Switzerland has begun incorporating bitcoin into their society, forward-looking businesses must pay attention. The first steps by the Swiss are were accepting bitcoin as payment at their train kiosks and for at least one of its cities to accept bitcoin as payment for public services.

In order to ‘walk their talk’, EY is embracing the innovation of its host country. Giving their employees hands-on experience with bitcoin ensures they will understand the mechanics of the digital innovation and take the lead for its potential impact on the rest of the financial landscape.

WHY AREN’T THE OTHER ‘BIG 4’ FIRMS IMPLEMENTING BITCOIN?

The summary by PwC on their preference for permissioned blockchains over bitcoin is representative of all three firms. The fundamental issue is trust. Bitcoin is a public blockchain. A permissioned blockchain is one where members can restrict access and limit participants. By implementing an authorization level, one arguably controls spammers and reduces costs. In addition, the governmental concerns that illegal transactions are facilitated through a public blockchain are minimized, if not eliminated.

As the world ushers in the new year, EY stands at the threshold and opens the door for the transformation of the entire financial realm. Only time will tell if EY has struck gold with bitcoin or if the other ‘Big 4’ firms will reap the reward with permissioned blockchains in the future.