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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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This article originally appeared on
aikon.com