Big tech companies have
increasingly started investing in cryptocurrency and building up their treasury
assets by primarily focusing on Bitcoin.
“2020 is fast becoming the year of crypto acceptance and we see 2021 as the year of mainstream adoption,” – Constantin Kogan, managing director at digital asset manager Wave Financial.
When it comes to big companies buying crypto over the course of the summer and fall of 2020, several big companies have made headlines by purchasing large quantities of cryptocurrency.
MicroStrategy had announced that it had accumulated $425 million in Bitcoin, thus making it its main reserve asset. Galaxy Digital Holdings also invested $134M in June 2020.
Moreover, a mobile payments service Square declared a $50 million investment in Bitcoin, while asset management company Stone Ridge Holdings has disclosed its purchase of over 10,000 BTC as part of its long-term treasury reserve strategy.
Even Microsoft and
PayPal joined this crowd of big companies using cryptocurrency by expanding
their offerings to customers who want to buy crypto by using
their services.
This turn of events cannot be a coincidence and aligns with previous predictions of experts like Raoul Pal, the founder, and chief executive of Global Macro Investor, who recently stated that big companies were starting to recognize the potential cryptocurrencies offer and accumulating this digital asset would be perfectly natural.
“I’d be surprised if within five years’ time Apple, Microsoft, and others don’t have cash in bitcoin,” Raoul Pal said in a YouTube video.
The reason for big companies buying Bitcoin, he stated, is to protect their capital from USD devaluation.
As the price of Bitcoin steadily rises throughout the better part of 2020 (so far we have seen an increase of 40%) corporations are identifying cryptocurrencies as a solid defense mechanism against the wave of inflation some see on the horizon.
It can be argued that they are guided by the logic that when fiat currencies go down in value, crypto goes upwards. Therefore, in order to keep the balance between the two, companies investing in Bitcoin are doing so to diversify their financial portfolios and thus prepare for future developments in the global economy.
“The genie is out of the bottle,” Mr. Pal told his YouTube viewers. “Nothing is a reserve asset like bitcoin.”
And it makes sense if you take into account that apart from USD decreasing in value, bond-yields are practically non-existent, and gold is underperforming.
With a diminished number of places for liquid companies to place their money, cryptocurrency has emerged as the obvious solution. With the growing credibility Bitcoin has been enjoying lately, large companies investing in Bitcoin have taken that as a hint that its extra-accommodative monetary stance will stay in place for years to come.
Mr. Pal went on to compare Bitcoin to the cockroach that is indestructible by traditional financial systems as they are about to collapse under the pressure of the global pandemic. He also called Bitcoin the “life raft” that will take the population and corporate giants through the end of global fiscal policy as we know it.
And it is already happening.
In Stone Ridge’s announcement about the Bitcoin purchase, many financially strong entities – banks, philanthropists, companies using Bitcoin – were also called upon to turn to crypto as part of their treasury reserves.
“Digital assets, tokenization – it’s all coming, and it’s all going to slot into these new digital currencies brought by the central banks.” Mr. Pal concluded.
“So payment systems and rails and everything are going to change massively. Everything we understand – it’s going to be as big a revolution of money that the internet was from everything to email to video to shopping to commerce. It just changed the world we live in. That’s the size of what this is.”
In that sense, companies investing in Bitcoin are those that will make the transition easy for everyone interested in entering the cryptocurrency market. Fighting alongside them are companies that provide services crucial for safe and easy use of the platform, like secure authentication and identity and safe payment services.
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