More Than Half of the World’s Companies Already Use Digital Currency
According to a study conducted by PYMNTS.com, 60% of the managers of 250 multinational companies and financial organizations already use at least one cryptocurrency in their international transactions. Bitcoin was the most popular one and is used by about 30% of those surveyed. Stablecoins are in second place (29%), and Ethereum is in third place (24%). Still, the companies don’t offer cryptocurrency transactions to their customers. What are the pros and cons of using cryptocurrencies by businesses?
Giant Companies Using Cryptocurrencies
Among the companies using digital currency as a form of payment are large multinational companies such as Expedia, AirBaltic, PayPal, Overstock, Shopify, KFC, Subway, and Starbucks.
In 2021, there were developments indicating the adoption of Bitcoin as an alternative asset class. Tesla made transactions with the cryptocurrency, buying $1.5 billion of Bitcoins in February and selling 10% of its digital coins in late March. Tesla ended up making $101 million in profit from the sale. Also, MicroStrategy, Square, The Motley Fool, and others have started to invest in this cryptocurrency.
Major US investment banks have begun to use Bitcoin as well. JPMorgan, Goldman Sachs, and the world’s largest hedge fund, Bridgewater Associates, promised to give their clients the opportunity to invest in digital currency.
Benefits of Cryptocurrency Usage for Businesses
The most attractive factors for companies using cryptocurrency are:
- The absence of intermediaries. Unlike traditional methods, cryptocurrency transactions between counterparties need no intervention from any third party. It leads to a decrease in transaction fees and easier transaction procedures.
- Inflation protection. Digital currencies have become a good tool for diversification, as they can show higher yields than shares, bonds, and other assets.
Risks of Cryptocurrency Usage for Businesses
However, there are also risks to be taken into account:
- A lack of developed financial infrastructure and regulatory framework. The issue of digital money recognition still has not been resolved at the state level. Governments may declare cryptocurrency transactions illegal or impose heavy taxes.
- Risks related to cyber security. In August 2021, an unidentified hacker committed a record-breaking robbery, stealing $610 million from Poly Network. Later, the intruder returned all the stolen items and stated that his actions were intended to draw attention to the system’s vulnerabilities.
- The potential use of digital currency to evade taxation, launder money, and finance terrorism.
- High volatility. Within a day, its value can vary up to a thousand dollars, which can cause significant damage to small and medium-sized businesses.
Recently, the international auditing firm Deloitte published a study showing that the flow of funds to digital assets is increasing. New business models are growing around cryptocurrencies, reflecting changes in the financial industry. Multinational companies are working on changing their traditional products to be ready for their customers’ future needs. Investors are increasingly interested in them as a way of saving money.
Digital currency has made great strides towards assimilating into traditional financial spheres. It is possible that digital money will soon become a viable alternative to traditional payment methods or replace them completely.