Why does every company suddenly want to do something with bitcoin?,
Tesla, Microsoft, PayPal, Starbucks. The list of companies that let customers pay with bitcoin is getting longer and longer. And according to rumors, the online store Amazon would now join them. What drives all these companies to suddenly jump on the bitcoin bandwagon? “Whoever owns the money has the power in his hands,” says bitcoin analyst and Youtuber Madelon Vos.
The bitcoin price went sharply higher on Monday after it turned out that Amazon is looking for someone with ‘experience to develop our strategy around digital coins and blockchain technology’. Many investors thought that Amazon also had plans to accept bitcoin as a means of payment, but the internet giant denied that a day later. But it is clear that Amazon wants to do something with bitcoin.
This raises the question of what so many companies suddenly see in bitcoin, a currency that for the time being is mainly used as an investment and is not widely distributed as a means of payment.
Experts see it mainly as an investment in the future. “Bitcoin is now in the spotlight and companies don’t want to feel afterwards that they jumped on the bandwagon too late,” explains ING economist Teunis Brosens, who specializes in the crypto market.
Stefan Zeisberger, professor of Financial Economics at Radboud University in Nijmegen, also confirms this. “Every company wants to have knowledge of the market that is dominant at that time and is therefore now experimenting with bitcoin.”
‘It helps that your name gets in the media’
Although according to many, there is also a marketing strategy behind it. “It helps, of course, that your company’s name comes out in the media because of these kinds of announcements,” Zeisberger says. “Just look at Tesla CEO Elon Musk who is getting a lot of media attention thanks to bitcoin.”
And companies would like to give themselves a young and hip image, according to crypto economist at Rabobank Wim Boonstra. “In the Netherlands there are about two hundred companies that offer it, but in practice nobody pays with the cryptocurrency,” he says.
‘Companies have realized that there is a lot of money going around in the crypto market’
Dutch bitcoin analyst Madelon Vos disagrees that this is a marketing stunt. “Companies do indeed want to show that they are moving with the times, but also realize that this is a market where a lot of money goes around.
Money is becoming more and more digitized and bitcoin is the biggest exponent of that. And whoever owns the money has the power in his hands. Look at Facebook, which has made efforts to develop and offer its own cryptocurrency to its three billion users.”
But will we ever really pay with bitcoin? No one is really convinced of that. “Certainly in Europe, the added value of this is not that great at the moment,” brosens thinks. “In other countries where fewer people have their own bank accounts or where there is less trust in the government, that’s a different story.”
Last month, El Salvador voted for a law that declared bitcoin legal tender in the country. With this, the president wants to “involve” the 70 percent of the population that does not have their own bank account in the financial system.
Slow transaction speed is bitcoin’s problem
One of the problems that bitcoin has is that its transaction speed is very slow. On the blockchain, the technology behind bitcoin, only 5 transactions per second can be carried out, while with ordinary coins that can be up to 220,000 transactions per second. “So if we are going to pay with it in the super soon, we will be in line for three weeks,” says Boonstra. Attempts are currently being made to develop a faster network that is separate from the blockchain, but that is still in its infancy for the time being.
And then there are the central banks that can intervene. “The European Central Bank (ECB) is letting it happen at the moment, but will never allow many people to pay with bitcoin,” brosens says. “Then the bank loses its grip on the economy and will want to do something about it.”
The Chinese central bank has warned several times that it will never accept bitcoin as a means of payment and the Cpb Netherlands Bureau for Economic Policy Analysis (CPB) has already called for cryptocurrencies to be banned.
The ECB and other central banks have been developing their own digital currencies for some time. “And if they come and are registered as an official means of payment, it may well be done with bitcoin,” Zeisberger thinks.
Why does every company suddenly want to do something with bitcoin?
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