Artificial Intelligence (AI) continues to drive transformative changes across various sectors and industries worldwide. From healthcare to transportation, finance to customer service, the widespread integration of AI technologies is improving efficiency, accuracy, and user experiences. In the context of crypto accounting, AI represents a wealth of untapped potential.
To fully appreciate how AI could revolutionize crypto accounting, let’s first consider the current landscape of these two intertwining markets: AI and accounting.
The AI Market: An Overview
As of 2021, the global AI market size was valued at approximately USD 62.35 billion and is projected to reach USD 997.77 billion by 2028, according to Fortune Business Insights. The adoption of cloud-based applications and services, the rise of advanced and predictive analytics, and increased data-driven decision-making are a few factors contributing to the market’s expansion.
AI’s proliferation across sectors stems from its ability to automate complex tasks, enhance productivity, and generate insightful predictive analytics. These capabilities are particularly valuable in industries that manage large volumes of data, including finance and accounting.
The Accounting Market: A Snapshot
The global accounting market, valued at USD 582.44 billion in 2018, is projected to reach USD 1601.83 billion by 2026, according to Allied Market Research. This growth can be attributed to increasing business operations, demand for advanced auditing and reporting capabilities, and the need for efficient financial transaction processing.
As the accounting market grows, so does the complexity of financial operations, especially in industries like crypto where transactions often span multiple blockchains, each with its own unique infrastructure. This complexity highlights the need for advanced solutions like AI to streamline processes and improve accuracy.
Potential Applications of AI in Crypto Accounting
Given the current trajectory of these markets, let’s delve into how AI could hypothetically revolutionize crypto accounting in the future.
Intelligent Classification: Making Sense of Complex Transactions
Crypto transactions often involve complex smart contracts with multiple moving parts. For instance, consider a user swapping Ether (ETH) for DAI in a Decentralized Exchange (DEX) like Uniswap. This single transaction includes an ETH transfer, a liquidity pool interaction, and a DAI receipt.
In a future with AI integration, an algorithm could be trained to automatically recognize and classify each component of this transaction. It could identify that ETH was swapped for DAI using Uniswap, breaking down the process into intelligible data points. This level of automatic classification could dramatically reduce the time spent on manual transaction categorization, enhancing productivity and accuracy.
Risk Management: Spotting Red Flags Before They Wreak Havoc
Interacting with smart contracts comes with a certain level of risk, given the burgeoning field’s growing pains. Let’s consider a user transacting with a new DeFi protocol. Unknown to the user, this protocol may have a history of vulnerabilities or even fraudulent activities.
A hypothetical AI integration in the crypto accounting software could monitor a database of risky contracts and flag the user’s interaction with this protocol. The user could be notified via an alert, potentially saving them from a costly mistake. This proactive risk management could significantly improve the security of financial interactions in the crypto space.
Asset Strategy: Tailoring to Specific Business Needs
Different businesses have varying risk tolerance levels, reflected in their crypto asset mix. Some may hold primarily stablecoins to mitigate volatility, while others may venture into more volatile assets like BTC and ETH for higher potential returns.
Imagine an AI that, after analyzing a business’s transaction history and asset performance, suggests an optimal asset mix. For example, it might recommend a certain business to maintain a 60:40 ratio of stablecoins to volatile assets based on its risk tolerance and market trends. Then, it could automatically alert the finance team if the asset mix becomes unbalanced.
This level of personalized, data-driven advice could be invaluable in helping businesses navigate the unpredictable crypto market.
Navigating Regulatory Compliance: Staying Updated with Minimal Effort
Crypto regulations are a constantly moving target, with new guidelines and enforcement actions frequently rolled out by bodies like the IRS, SEC, and FASB. Not to mention news about particular tokens, protocols, or service providers a business may be using. For a busy finance team, staying on top of these updates can be time-consuming.
In a future where AI is integrated into crypto accounting software, it could automatically monitor relevant regulatory bodies and flag critical updates. For instance, if the IRS introduced a new reporting requirement for crypto transactions, the AI could notify users of this update and potentially even adapt the software’s reporting features to comply with the new requirement.
The Future is Bright for AI in Crypto Accounting
At Gilded we’re always looking ahead, striving to harness the power of cutting-edge technologies that could revolutionize crypto accounting. We are deeply committed to our mission: to onboard the next million businesses to web3 with streamlined, efficient, and powerful crypto accounting solutions. The crypto industry is never static, and neither are we. Stay tuned for the future of crypto accounting with Gilded!