Why Are Big Companies Investing in Bitcoin?
A breakdown of the big players in the game, and 4 reasons why they are adopting crypto
Towards the end of 2020 and into 2021, there has been consistent news about mainstream businesses investing and getting involved with cryptocurrencies. Most recently we saw that Tesla disclosed a purchase of $1.5 billion dollars worth of Bitcoin to hold on its balance sheet. Alongside this news, we have seen Bitcoin finally soar over $55k within a few short weeks.
Tesla was not the first, and surely won’t be the last. On February 11th, BNY Mellon, the oldest bank in the U.S., announced that it will hold and transfer cryptocurrencies for customers. Roman Regelman, the CEO of asset servicing and head of digital commented on this announcement “Growing client demand for digital assets, the maturity of advanced solutions, and improving regulatory clarity present a tremendous opportunity for us to extend our current service offerings to this emerging field,” said Roman Regelman, the bank’s CEO of asset servicing and head of digital.
Additionally, both Mastercard and Visa are exploring using cryptocurrencies as a payment system. In December of last year, Visa announced its partnership with Blockfi to roll out a credit card that lets users earn Bitcoin on purchases. Square has also put Bitcoin on its balance sheet and has granted users of Cash App access to buy the cryptocurrency. Alongside of all of this news, Twitter has followed suit and is also considering adding Bitcoin to its balance sheet.
We can identify 4 main reasons that these corporations are choosing to dive into Bitcoin and other cryptocurrencies.
1. Fundamental Belief in Bitcoin & Digital Assets
Many company founders have expressed their approval and actual excitement about Bitcoin and other cryptocurrencies. This has lead them to get the companies involved, or have cryptocurrency investments, even if Bitcoin isn’t the center of their operations We have seen this happen in multiple cases, such as Elon Musk, the CEO of Tesla, and Michael Saylor, the CEO of MicroStrategy.
Square CEO Jack Dorsey has also had a long-standing fascination with Bitcoin, which was likely a factor in the speed of Square’s adoption of it.
2. Demand from clients and customers
Another reason certain companies are getting into Bitcoin is the customer demand. For banks and other financial institutions, being able to offer cryptocurrency has become increasingly more important. As we covered earlier, companies such as BNY Melon, Visa, and Mastercard are all embracing this new technology and industry to best serve their client bases.
3. Increased Government Acceptance
As crypto is becoming more mainstream, we are also seeing increased government acceptance. Although there are many bad actors in the space, the overall adoption of crypto is opening the eyes of many governing bodies. It would not be a smart investment, or even a possible investment, for these large companies without the approval of regulators.
4. Diverse Use Cases for Cryptocurrencies
The last reason cryptocurrencies are gaining traction in these corporations is that these cryptos can serve multiple purposes. There is potential for cryptocurrencies to go beyond the fundamentals of Bitcoin as a way to send and receive money without intermediaries. Stablecoins, which are pegged to a fiat currency, can allow for faster transactions across the globe.
“We’ve seen growing demand from clients across the world that want to be able to plug in and use these networks, but they want a global, neutral, trusted brand, to help them be able to do that,” Sheffield the CEO of Visa said in an interview. Visa has also previously announced that said that it created software that enables bank customers to buy and hold cryptocurrencies through lenders’ websites.
Overall, it is highly likely that we will continue to see corporations get involved with Bitcoin and other cryptocurrencies.
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