financial reporting standards for Bitcoin funds ?

[Accountant]

I am an accountant by training, and am absolutely horrified by the way that bitcoin miners present their financial information to potential creditors and investors. I am really interested in developing a financial reporting standard for these miners to help investors and creditors understand the risk and benefits associated with their decisions.

Does anybody else agree?

[Accountant]

really? no input after 50 views?

[greyhawk]

People here are mostly no fans of standards and rules and stuff. 

Also how are they going to scam their investors victims when they go all IASC.

[Kazimir]

Exactly what would miners want from investors and creditors? 

[Sparxy]

Do you mean you're looking to invest in a miner? What kind of financial report are you interested in then?

[Stephen Gornick]

really? no input after 50 views?

Incidentally, 42 of them were probably bots notified of a new post via RSS and were pulling the content for Twitter and wherever else.

The 7 remaining were merchants or other accountants hoping you had something useful for them.   Few miners will probably even read this thread based on the title.

[Accountant]

Exactly what would miners want from investors and creditors? 

I am specifically referring to miners who offer bonds and equity stakes in their operations. How can investors make rational decisions when these miners offer no proper financial reporting? I see many "investment funds" putting out their "income statements", which is 30% nonsense, 10% substance, and 60% god-knows-what. As an accountant by training (at one of KPMG/PwC/Deloitte), the lack of standards when it comes to financial reporting just makes me cringe.

[Accountant]

Do you mean you're looking to invest in a miner? What kind of financial report are you interested in then?

I am not looking to invest specifically.

financial statements and reporting standards are essential for investors. standards are important for relevance and comparability. how can investors decide to invest in one fund over another if they don't publish financial statements that share the same reporting standards?

The lack of standards, I feel, is a big reason why the bitcoin "securities" scene is not as thriving as it should be.

[DanielleEber]

I am an accountant by training, and am absolutely horrified by the way that bitcoin miners present their financial information to potential creditors and investors. I am really interested in developing a financial reporting standard for these miners to help investors and creditors understand the risk and benefits associated with their decisions.

Does anybody else agree?

First of all, welcome to Bitcoin.  Next, posting in the newbies section of the forum is perhaps not the best way to get the attention of miners.  There is a separate mining section.

Third, standard for where?  Bitcoin is trans-national, so what makes sense to a US investor may be different for one in a different country, as far as how the data is presented and what terms are used.  I'm not an accountant, so correct me if I am wrong on that point and there are accepted international standards.

Fourth, what is the incentive for miners to use a standard?  If they are raising enough funds as is, and there are no regulatory requirements to meet, they may be happy with the current situation.  I think you need a stronger argument to get acceptance of such a standard.

Fifth, my understanding is the Bitcoin network is a distributed account book with means of transferring balances between accounts.  "Mining" is the process of updating and verifying the transaction history.  A "bitcoin" is an arbitrary unit in the account book, which only has the value people give it by exchanging it for other goods and moving balances.  How you define what mining is and what bitcoins are would seem to be a critical part of any standard.  I would be interested in what your understanding is.

Note: "Bitcoin" capitalized usually refers to the software client people download, and the P2P network that delivers transactions.  "bitcoins" uncapitalized usually refers to the units in the transaction history.  People often confuse the two.

[dherik]

I agree with Accountant, the lack of financial reporting standards is scary. But I would interject that most of the people involved aren't aware of the Financial Accounting Standards Board (FASB), or Statements of Financial Accounting Standards (SFAS). While I am not a CPA, I have had several years of training and education in accounting. If more of these people seeking funding through bitcoin securities had a good set of honest books, and the security exchanges enforced some sort of standard reporting it could be taken a lot more seriously. I have tried to read some of the "prospectus" some of the companies listed on the exchanges posted and it was terrible.

While I understand the point of bitcoin is a decentralized monetary solution, financial reporting (even though all bitcoin transactions are publicly traceable) is important for a viable and serious securities market.

[Accountant]

I agree with Accountant, the lack of financial reporting standards is scary. But I would interject that most of the people involved aren't aware of the Financial Accounting Standards Board (FASB), or Statements of Financial Accounting Standards (SFAS). While I am not a CPA, I have had several years of training and education in accounting. If more of these people seeking funding through bitcoin securities had a good set of honest books, and the security exchanges enforced some sort of standard reporting it could be taken a lot more seriously. I have tried to read some of the "prospectus" some of the companies listed on the exchanges posted and it was terrible.

While I understand the point of bitcoin is a decentralized monetary solution, financial reporting (even though all bitcoin transactions are publicly traceable) is important for a viable and serious securities market.

My eventual aim is have a securities rating service. Much like services offered by Moody's and S&P. I am also very interested in equity research done by investment banks. I feel that it is something that will benefit both the investors and miners.

[mjc]

I agree totally.

[greyhawk]

My eventual aim is have a securities rating service. Much like services offered by Moody's and S&P. I am also very interested in equity research done by investment banks. I feel that it is something that will benefit both the investors and miners.

Oh good, our last securities rating service turned out to be a scamming bumblefuck. Of course no one would believe us when we called him out as being a scamming bumblefuck for months before finally everyone was forced to admit it, but hey... Bitcoin.

Anyway, good to have someone here to run some ratings on these unregistered securities by anonymous persons traded on unregistered exchanges. Wouldn't want people to run blindly to their doom, now would we?

BTW, what personally is your opinion on starfishes?

[Accountant]

My eventual aim is have a securities rating service. Much like services offered by Moody's and S&P. I am also very interested in equity research done by investment banks. I feel that it is something that will benefit both the investors and miners.

Oh good, our last securities rating service turned out to be a scamming bumblefuck. Of course no one would believe us when we called him out as being a scamming bumblefuck for months before finally everyone was forced to admit it, but hey... Bitcoin.

Anyway, good to have someone here to run some ratings on these unregistered securities by anonymous persons traded on unregistered exchanges. Wouldn't want people to run blindly to their doom, now would we?

BTW, what personally is your opinion on starfishes?

you're missing the point. bitcoin transactions can all be traced, which means it would be very easy to audit transactions and give a reliability rating. The reports put out by S&P on equities have a number of ratings. And furthermore, the research analysts should NOT be anonymous.

In any case, if reliability can't be achieved, at least comparability will be. That's better than nothing, and is something I think is worth striving for.

[imfed]

My eventual aim is have a securities rating service. Much like services offered by Moody's and S&P. I am also very interested in equity research done by investment banks. I feel that it is something that will benefit both the investors and miners.

We are trying to build a rating agency for Bitcoin institutions. (only exchanges so far) It would be great if you could share some feedback for our score system: http://imfed.org/ratings/our-score-system/

I share your concerns but also believe that self-regulation and transparency are competitive advantages for Bitcoin institutions.

[bitcoinbear]

People here are mostly no fans of standards and rules and stuff. 

Yeah, that is why they use the bitcoin standard to enforce the strict rules of this monetary system?

Accountant: I agree that there is a serious lack of standardization for bitcoin businesses, and some of us have been saying that for quite a while. There is no reason that a business using bitcoins should not use the same accounting methods as everybody else.

[JoelKatz]

We are trying to build a rating agency for Bitcoin institutions. (only exchanges so far) It would be great if you could share some feedback for our score system: http://imfed.org/ratings/our-score-system/

There is no information on where the numbers come from. They may be well researched for all I can tell, but they seem almost entirely arbitrary.

[imfed]

We are trying to build a rating agency for Bitcoin institutions. (only exchanges so far) It would be great if you could share some feedback for our score system: http://imfed.org/ratings/our-score-system/

There is no information on where the numbers come from. They may be well researched for all I can tell, but they seem almost entirely arbitrary.

You are right that there is still a lot of work to be done. We are constantly adding new information.

You can find first data about Mt.Gox's company and network risk here:
http://imfed.org/ratings/mt-gox-tibanne-co-ltd/ (see how often they had to change their bank, where you could sue them...)

The exact numbers are based on facts but are still just an opinion. It is our goal to encourage people to discuss and share information about the specific risks. A lot has already be done in this forum. Our project will only make sense if the ratings are based on well discussed arguments. We are trying to collect and concentrate these arguments.