(cover photo – photo by Adobe Stock)
Digital forms of currency, based on innovative blockchain technology, have earned their rightful place on the global financial stage in recent years, significantly changing our thinking about value, transactions, and financial sovereignty. Large corporations, aware of the potential of Web3, have incorporated cryptocurrencies into their development strategies.
In the first part of our series of articles dedicated to cryptocurrencies in the business environment, we presented the state of development of the cryptocurrency ecosystem. We analyzed global trends and the degree of adoption of technology.
READ: https://quark.house/en/2023/07/15/cryptocurrencies-the-new-era-of-business-part-1-3-rising-adoption/
In the second of three articles, we will look at how corporate giants – such as Tesla, PayPal, and MicroStrategy – have adopted cryptocurrencies and how these decisions have affected their operations and business strategy. An analysis of benefits such as transaction speed and cost reduction, as well as challenges such as price volatility and regulatory issues, will help us understand how cryptocurrencies are changing the rules of the game in business.
Cryptocurrencies as potential for businesses
Undoubtedly, cryptocurrencies are gaining a wider circle of supporters in the business market. Among the prominent people supporting these technologies, Michael Saylor, CEO of MicroStrategy, publicly declared his support for Bitcoin, describing it as “superior to traditional cash.” PayPal, a pioneer in the field of digital transactions, also opened its platform to cryptocurrencies, allowing customers to purchase and conduct transactions in them.
Global payment giants like Visa and Mastercard have also started to engage in cryptocurrencies. Both institutions officially supported the use of Bitcoin, and Visa went a step further, enabling transactions using stablecoins based on the Ethereum blockchain. The public support of these entities has stimulated the discussion on cryptocurrencies and confirmed their growing role in the global financial ecosystem.
According to Mike Swigunski, a Forbes collaborator, cryptocurrencies have the potential to radically change the future of business. Among the mentioned benefits are: lower transaction costs, faster payment processing, greater transparency and accountability, as well as improved security and privacy. This paves the way for increased customer loyalty and global expansion. A similar opinion is expressed by Jeff Bezos, founder and CEO of Amazon, who stated that “cryptocurrencies are not just a trend, but a true financial revolution affecting all sectors of the economy.”
Even the Nobel Peace Prize laureate, Malala Yousafzai, sees the potential of cryptocurrencies as a “force for good” that can help solve some of the most pressing problems facing humanity today.
Nevertheless, cryptocurrencies are not without risk. But they have the potential to become a powerful tool capable of reshaping the way businesses operate and interact with customers, partners, and stakeholders. As current trends suggest, education about the possibilities and challenges of cryptocurrencies is becoming key for both individuals and organizations. Cryptocurrencies have become an integral part of the digital economy, and their role in the future of finance and technology may prove crucial.
Corporate Interest
Several leading global corporations, such as Tesla, MicroStrategy, and Square, have made the strategic decision to invest in Bitcoin and other cryptocurrencies as an integral part of their capital reserve. Data collected on the Bitcoin Treasuries platform indicate that over 30 public companies collectively own more than 1.5 million bitcoins, valued at over 70 billion dollars. Additionally, corporations like PayPal and Visa have begun adapting their payment systems to handle cryptocurrency transactions, which is another step towards full integration of these digital assets with the global financial system.
There is also a noticeable trend of increasing engagement of the fashion and luxury industry in blockchain technology and cryptocurrencies. Numerous renowned brands such as Rolex, Nike, or Adidas, are filing trademark registration applications related to cryptocurrencies and creating platforms using non-fungible tokens (NFTs) and metaverse. NFT tokens, being unique digital assets created using blockchain technology, can represent a wide range of products – from works of art, through music, to collectible items. The metaverse, on the other hand, is a virtual world where users can create, experience, and interact with a variety of content through their avatars. For the fashion and luxury goods sector, the use of these modern technologies opens the possibility of reaching new customer segments, building engaged communities, and creating unique experiences.
Below are three detailed case studies of corporate cryptocurrency adoption: Tesla, PayPal, and MicroStrategy.
Case study: Tesla
One of the most significant and frequently cited examples of cryptocurrency use in the corporate world is Tesla – a leading company producing electric vehicles, founded by the innovative entrepreneur, Elon Musk. In February 2021, Tesla made a pioneering move in the market by acquiring bitcoins worth 1.5 billion dollars, which was the largest and most significant cryptocurrency investment among companies. Additionally, Tesla declared its readiness to accept Bitcoin as one of the payment options for its products. This decision was widely acclaimed and confirmed the growing acceptance of Bitcoin in the mainstream market.
Tesla’s motivation to invest in bitcoin stemmed from several reasons, as Elon Musk explained. According to the company’s founder, bitcoin represents a “less dumb form of liquidity than cash,” and its potential risk is acceptable for an innovative company like Tesla. Musk also emphasized that bitcoin “is on the verge of gaining widespread acceptance among conventional financial investors.” He also noted that “Cryptocurrencies are a more efficient way to transfer value than traditional notes, which is evident.”
“Acceptance of cryptocurrencies is a natural continuation of the innovation that Tesla introduces. We want our products to be available to the widest possible audience worldwide,” Musk said, announcing in February 2021 that the company would accept bitcoin as a form of payment for its vehicles.
In a tweet from August 2023, Elon Musk wrote: “Crypto is a revolution that will contribute to transforming the world for the better,” announcing that Tesla is resuming acceptance of bitcoin as a form of payment after it was suspended in May 2022 due to environmental concerns.
Case study: PayPal
PayPal, a global online payment platform, successfully uses cryptocurrencies, establishing a new standard in digital financial transactions. In October 2020, the company announced its intention to enable customers to buy, sell, and store cryptocurrencies, including bitcoin, ethereum, litecoin, and Bitcoin Cash, directly on its platform. In the longer term, PayPal announced that this service would be expanded to allow transactions using cryptocurrencies on a network of over 26 million merchants worldwide.
The decision to integrate cryptocurrencies with PayPal’s services was primarily motivated by the desire to “popularize understanding and acceptance of cryptocurrencies among consumers,” as well as “prepare our network for future digital currencies that could be introduced by central banks and corporations.” As Dan Schulman, CEO of PayPal, emphasized: “The transformation towards digital forms of currency is inevitable,” and “cryptocurrencies have the potential to improve the efficiency, speed, and resilience of our payment system.”
Dan Schulman, in a statement from October 2020, emphasized: “Cryptocurrencies represent a new form of digital money, characterized by several advantages, such as transaction speed, low operational costs, and global reach. As a leader in the payment industry, we want to enable our users and partners to use this innovative technology in a safe and intuitive way.” It was then that PayPal officially announced the introduction of a service that allows the purchase, sale, and storage of cryptocurrencies on its platform.
Case study: MicroStrategy
MicroStrategy, a leading provider of business analytics solutions and cloud services, is another important example of engagement in the cryptocurrency area on the corporate stage. In August 2020, MicroStrategy surprised the market by announcing that it had decided to adopt bitcoin as its primary treasury reserve. The company then invested $250 million in bitcoins. By the end of December 2020, MicroStrategy had increased its commitment to bitcoin to over $1 billion, demonstrating its strong confidence in this cryptocurrency.
MicroStrategy’s decision to invest in bitcoin was motivated by the belief that bitcoin is a “reliable store of value and an attractive investment asset with greater appreciation potential in the long term than holding cash.” Michael Saylor, CEO of MicroStrategy, describes bitcoin as “digital gold,” emphasizing that “it is smarter than any money that preceded it.”
MicroStrategy’s strategy in relation to bitcoin has set new standards for corporate adoption of cryptocurrencies, showing that they can serve as an effective instrument for preserving asset value and protection against inflation. In the face of economic uncertainty and growing inflation fears, many other companies may start considering a similar strategy, seeing it as a way to protect their balance sheets.
It is also worth noting that MicroStrategy’s actions may have contributed to the increase in widespread acceptance of bitcoin, both as a store of value and as a payment method. This change of perspective may in turn contribute to the increase in bitcoin’s value and its wider adoption in the corporate world.
Summary
Cryptocurrencies are becoming increasingly popular in business, as evidenced by the actions of giants like PayPal, Visa, and Mastercard. These technological innovations can revolutionize the future of business, lowering transaction costs, speeding up payments, and increasing transparency.
Cryptocurrencies are also becoming an integral part of corporate strategies, with companies like Tesla, MicroStrategy, and Square investing in bitcoin as part of their capital reserve. At the same time, the fashion industry and luxury brands are increasingly using blockchain technology and NFT tokens.
Tesla is one of the most important players investing in cryptocurrencies. Elon Musk describes bitcoin as a “less dumb form of liquidity than cash” and sees cryptocurrencies as key to global acceptance. Meanwhile, PayPal has integrated cryptocurrencies with payment services, allowing customers to buy, sell, and store cryptocurrencies on their platform.
MicroStrategy’s engagement in the area of cryptocurrencies sets new standards for corporate adoption of these technologies. Perceiving bitcoin as “digital gold,” the company invests in it as the main treasury reserve, which may have contributed to its widespread acceptance in the corporate world.
In the final article in the series, we will examine the benefits and challenges arising from corporate adoption of cryptocurrencies and shed light on the practices of companies leading this digital transformation.
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