This year, investing in cryptocurrency has become much more mainstream. Polling data from a recent NBOA webinar, The Essentials of Cryptocurrency and Digital Transformation, suggests that nearly half (42%) of schools have received inquiries from families about cryptocurrency (crypto) payments. To meet that demand, over a third of schools (35%) plan to accept crypto in the next year.
Kathy Ferguson, senior audit manager at Armanino LLP, has high hopes for digital currency at independent schools. “We are in the frontier of what's coming out. To move our schools forward in this digital environment, we can’t have the [conversations around cryptocurrency] stay in the classroom. Being able to say on your website that you accept crypto puts you ahead of the game in this education space.”
“We are in the frontier of what's coming out. To move our schools forward in this digital environment, we can’t have the [conversations around cryptocurrency] stay in the classroom, Being able to say on your website that you accept crypto puts you ahead of the game in this education space.”
To discuss how crypto can be used appropriately, Ferguson joined Dean Quiambao, chief relationship builder, and Noah Buxton, managing director, blockchain and digital assets practice, in conversation with NBOA’s director of tax and accounting, Liz Maher. The panel provided a high-level overview of crypto and answered a few key questions. The following is an excerpt of “Cryptocurrency FAQs” from Armanino and NBOA, which covers six additional questions. NBOA members can download the full FAQ here.
Are all cryptocurrencies the same?
All cryptocurrencies are based on similar principles: decentralized, digital, and open ledgers secured by cryptography. However, different cryptocurrencies offer a wide variety of approaches to offer users security, privacy, speed of transactions, finality and immutability of transactions, etc.
How is cryptocurrency stored?
Cryptocurrencies can be stored by using a cryptocurrency wallet. Cryptocurrency wallets are used to store your private keys. These hexadecimal keys must be matched with your public keys in order to move crypto from one wallet to another. Some wallets can be used to store multiple types of cryptocurrencies, while others can only store one type. There are a few different types of wallets. Some wallets are convenient to use to quickly buy and sell cryptos, but other types may be more secure.
Which wallet you use depends on the type of cryptocurrency you use; how much you plan to put into cryptocurrency and how you plan to use the cryptocurrency. Examples of crypto wallets include Ledger or Trezor. Cryptocurrency can also be stored with a third-party exchange, wallet or custodian. These businesses hold the private keys and users hold an IOU from the platform provider.
Is accepting crypto in conflict with a school’s sustainability initiatives?
It depends on the school’s sustainability initiatives and its own views on the environmental impact of crypto mining. Cryptocurrency has come under scrutiny because of the large amounts of energy required to power the super- charged computer systems used in crypto mining (confirming transactions on the global network). However, there are many things that we as individuals, communities and organizations use or consume that have high energy usage. Context is important. Whether or not there is conflict between accepting crypto and sustainability initiatives should be a conversation between the leadership team and governing board.
Our school has made the decision to start accepting cryptocurrency. Now what?
Partner with a trusted provider to help you in the mechanics of accepting and properly processing donations or crypto payments. Even if you have internal teams that are knowledgeable, outside expertise is important to ensure risk areas are addressed in an objective manner.