How a Finance Degree Can Help You Enter the World of Cryptocurrency
In 2009, Bitcoin, a form of digital currency, emerged. While initially thought to be a passing fad, cryptocurrency has stuck around and even evolved into a major player in the world of finance – or the management of money.
Cryptocurrency is an entirely digital form of currency and is not backed by a physical commodity such as gold, as the U.S. Dollar once was, or by the full faith in and trust of a government, like the current U.S. Dollar. However, this digital form of currency does allow consumers to buy or sell many goods and services or trade.
The use of cryptocurrency, sometimes referred to as simply “crypto,” has increased over the last few years, according to Daniel Serra, CFP®, adjunct instructor of finance programs at Southern New Hampshire University (SNHU). According to CNBC, 13% of Americans traded cryptocurrency in the last 12 months, and, according to the Economic Times, cryptocurrency trading rose by 500% in the first six months of 2021.
What began as simple experimental online transactions have turned into a legitimate career field ready for individuals interested in finance to help take it to the next level.
What is Cryptocurrency?
At its simplest, cryptocurrency “is a digital currency used to buy or sell goods and services, or trade with the goal of earning more by selling it than you initially paid for it,” said Kristin Regis, associate dean of business programs at SNHU. It’s important to note that this is not the same as using a credit card to make a purchase online or banking or investing U.S. Dollars through an app. To be considered fully digital, the currency “must be only available in electronic form and is based on blockchain technology,” as opposed to the U.S. Dollar or a foreign currency, Regis said.
While the creation of cryptocurrency can be challenging to explain, Regis offers a straightforward explanation: “For the U.S. dollar, the Federal Reserve manages the supply of money, and the U.S. Treasury Department prints it. Whereas, for cryptocurrency, coding is used to create it.” The characteristics of cryptocurrency make it highly speculative, which can make it difficult for many investors to have confidence in the currency's value and potential for longevity.
Cryptocurrency “reminds me of baseball card trading, or any other collectible, except the value is publicly published,” said Serra. Imagine exchanging computer files with a value determined by a group of traders, also known as the marketplace.
What is Blockchain?
Since cryptocurrency is based on blockchain technology, it’s important to understand how blockchain technology works. Blockchain technology is essentially a “digital ledger stored in a distributed network,” Regis said. That ledger has encrypted distribution and creates a form of digital ecosystem. Each block of information in that ecosystem needs to be verified as secure before the next block can be verified.
"Picture links in a chain," Regis said. "Now, imagine another link is added, then another and another, with the inability to change earlier links." This makes the ledger essentially impossible to corrupt, which leads to secure data.
Blockchain technology is not solely used in cryptocurrency. In fact, this type of technology is being used – or being researched and tested – by multiple industries.
Dr. Kimberly Blanchette, executive director of SNHU business programs noted the U.S. Department of Education is researching blockchain technology. “Blockchain technology would give students more control over their educational records and make it easier for them to share verified degrees or credentials with employers or transfer records to another education provider," she said.
It also widely supports supply chain efforts from finance to shipping and even tracking for music royalties. “Blockchain technology can increase transparency and efficiency in the supply chain industry as well as reduce risks and costs,” said Monique Jordan, senior associate dean of SNHU business programs.
Why Has Cryptocurrency Risen in Popularity?
The absence of government regulation is integral to how cryptocurrency initially came about. Originally, cryptocurrency grew from Europeans seeking an alternate form of payment with a currency that they felt “was more stable and not regulated by the government,” said Serra.
Then, as various European countries saw the value of cryptocurrency rising, “they started adopting and gathering (the cryptocurrency known as) bitcoins, hoping that could provide an alternative to their country’s existing currency,” Serra said.
The lack of regulation also appeals to many who want to make transactions anonymously or avoid taxation.
Cryptocurrency has also risen in popularity for the same reason it tends to make investors nervous: it’s highly speculative. This means that trading goods and services using a fully digital, unregulated currency offers “high risk, but with that comes the potential for high reward,” Regis said.
And, because individuals without a bank account can use cryptocurrency, it offers ease of use, too, Regis said.
Of course, as with most things, with demand comes an increase in value, interest in creating a competitive option and prevalence. Today, there is more than one type of cryptocurrency available. Bitcoin was the first and remains the most widely known, but people can and do create more types of cryptocurrency. Some other types of cryptocurrency include meme coins, Ethereum and XRP, according to Time.
What Are Some Types of Career Paths in the Cryptocurrency Industry?
While the use of cryptocurrency had a somewhat of a slow start due to skeptics, it has become prevalent in a variety of financial fields. This provides a great opportunity for anyone interested in a finance career or already working in finance who wants to add to their financial skills toolkit.
Earlier this year, Fortune reported that cryptocurrency firms are struggling to find talent to fill hundreds of roles. According to Regis, there are a variety of careers that combine the world of cryptocurrency and finance that are poised to offer new career opportunities.
Here are some financial careers for someone seeking a role in the cryptocurrency industry:
- Accountant: Managing cryptocurrency collections for individuals is becoming increasingly important, according to Serra, so a solid understanding of cryptocurrency from an accounting perspective could be beneficial to your career. This field is projected to grow 7% between 2020 and 2030, according to the U.S. Bureau of Labor Statistics (BLS).
- Compliance analyst focused on crypto: This field could allow you to help companies of all sizes adhere to the new and ever-evolving regulations that affect cryptocurrency. The mean annual wage for compliance officers is currently $75,620.
- Crypto derivatives trader: In this specialty area, you could help set the price of cryptocurrencies in the future. This work may include roles in the areas of securities, commodities and financial services sales.
- Cryptocurrency analyst: While a financial or investment analyst researches and recommends investments, “a cryptocurrency analyst would focus on cryptocurrencies,” Regis said.
- Data scientist: This role can be part of the greater computer and information research science field, which is set to grow as much as 22% between 2020 and 2030, according to BLS.
- Digital payment manager: As more and more companies adopt cryptocurrencies as an accepted form of payment, “someone is needed to know how to manage the bitcoin (or another cryptocurrency) account,” Serra said.
- Financial advisor or planner: Someone interesting in starting their own business could benefit from focusing on cryptocurrency and could then “focus on wealthy, high-risk clients who want to diversify their portfolios with cryptocurrencies,” Regis said. Financial advising is projected to grow 5% between 2020 and 2030, and opportunities for financial managers are projected to grow a healthy 17% over the same period, according to BLS.
- Financial analyst: Working as a financial analyst specializing in cryptocurrency could "lead to many cryptocurrency-focused positions or advancement to financial manager and then chief financial officer,” Regis said. A career studying economic and business trends lends itself well to roles that include cryptocurrency. Jobs in this field are also expected to stay fairly stable, with an average growth of 6% between now and 2030, according to BLS.
- Investment analyst: In this role, an analyst focused on cryptocurrency could have an advantage in becoming an investment portfolio manager, Regis said. Especially since cryptocurrency is so speculative, the risk is high, “so investors need guidance on how to manage a portfolio that includes crypto,” Serra said.
- Investment operations analyst: In this role, you could focus on processing and settling all aspects of crypto assets trading.
- IRS Agent: Finance and cryptocurrency education could help you get a position as an IRS agent focused on cryptocurrency reporting and tax evasion.
Ultimately, a solid knowledge base in a preferred area of finance, augmented by experience with cryptocurrency, can position a finance professional to grow their career in new directions.
How Will Things Evolve in the Cryptocurrency Industry?
Increased regulation is coming, said Serra. Because cryptocurrency is unregulated, American companies have been slow to adopt it as an official currency, and “some have stopped using it altogether,” he said. However, Serra does believe that cryptocurrency is here to stay, and with it comes the likelihood of the IRS starting to regulate it. That provides a lot of potentials for accountants to add working with cryptocurrency to their resumes.
Regis believes that cryptocurrency will soon become commonly accepted by mainstream businesses. In fact, several well-known companies are already accepting cryptocurrencies, such as “Microsoft, PayPal, Starbucks, Home Depot, Whole Foods and more,” Regis said.
Investors may also use cryptocurrency to fund part of their retirement portfolios and other future goals, according to Serra. Because of this, financial analysts and investment advisors who deepen their knowledge of cryptocurrency now “will be well-prepared” as the use of the currency continues to grow.
Bitcoin recently became El Salvador’s national currency. Could cryptocurrency become the U.S.’s someday?
Is Having a Finance Background Necessary to Break into a Career in Crypto?
Seeing as cryptocurrency is a form of money, and finance is the management of money, then a finance background seems like a natural springboard for a crypto career. In fact, with cryptocurrency being so new and evolving so quickly, “those in finance careers have the opportunity to be leaders in managing crypto” as it evolves and continues to grow, Serra said.
A finance degree is a great first step for someone who knows they want to work with cryptocurrency, “especially with a concentration in investment management and portfolio analysis,” Serra said.
Having the background to be able to explain the risk and reward of cryptocurrency is necessary for managing a portfolio because “financial advisors are fielding a ton of inquiries from investors wondering if they should add crypto to their portfolios,” he said.
Of course, finance backgrounds are helpful when it comes to any form of money management. Anyone with professional expertise in the finance field can help clients understand cryptocurrency. Sound knowledge of tax law and computer science can also be of great use in the ever-changing field of cryptocurrency.
What Type of Businesses Would Hire Someone with a Background in Crypto?
Given the increase in the use of cryptocurrency, virtually any business has the potential to one day use or accept cryptocurrency. This means that the business world, in general, is a wide-open opportunity for someone with expertise in this area.
"All businesses rely on individuals with financial knowledge,” Regis said. “As more and more businesses accept or invest in cryptocurrencies, individuals with a background in finance and cryptocurrency will be valuable.”
What Could Someone Do to Build a Career in Crypto?
As in most career fields, networking is key. Get to know others in the field. Read articles and stay on top of industry news. Ask people in your professional network who have expertise in cryptocurrency if they’re open to informational interviews. While learning about crypto is a good start, don’t stop there. Work on gaining practical experience wherever you can to build your skills.
“Listen to cryptocurrency podcasts, read cryptocurrency magazines and follow and engage in cryptocurrency social media sites,” Regis said. “Conduct regular research to learn more about the field and see where the industry is heading.”
Earning a degree in finance or a related area that interests you can also help prepare you for a solid career in cryptocurrency. There are many options to further your education, up through and including graduate degrees and certificates in finance, accounting and similar areas.
The Bottom Line
Cryptocurrency is a concept that straddles the worlds of finance and technology. Because of this, “careers in either field will need the understanding of the currency to manage its use if it continues to evolve,” Serra said.
So, while a finance degree can point the way to a satisfying career in cryptocurrency, knowledge of and experience with coding, computer science and even the criminal justice world will help build a solid career in this industry.
While cryptocurrency appears here to stay, “the primary concern is the volatility of the price and whether it will continue to be an alternative payment source,” Serra said. This is why a finance degree is an excellent choice to prepare you to enter the world of cryptocurrency because no matter what happens with cryptocurrency, you will be poised to lead the way.
Marie Morganelli, PhD, is a freelance content writer and editor.
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