Last year at this time, Bitcoin was under $5,000. Now it’s over $50,000, though that is temporary. It can go back to $30,000 in a week as fast as it can go to another all-time-high. Sorry. I hope it didn’t jinx it.
The reason Bitcoin is rising is because institutional investors are getting into Bitcoin as a store of value. Tesla
Macrolens’ Brian McCarthy wrote this to his clients on Wednesday: “Here is the only logical use-case for Bitcoin I can come up with: there is some significant societal value in having a decentralized, digital store of value. That store of value can be anything so long as everyone agrees that it is that decentralized, digital store of value that the world so badly craves. First-mover advantage dictates that Bitcoin has been thusly anointed.”
That sounds about right. No one is pricing their real estate or pepperoni pizza in Dogecoin.
In 2020, the cryptocurrency market cap surpassed $1 trillion. This year, you owe it to yourself to learn how you can get involved in digital assets.
“Despite the seemingly overwhelming nature of the digital asset industry, it really isn’t so complicated once you learn the basics,” says Jahon Jamali, CMO of Sarson Funds. “Once you understand the basics, you’ll see that adding digital assets to your portfolio is one of the most critical investment decisions you’ll ever make. That’s why we left Wall Street – to bridge the gap between crypto and traditional finance. You don’t want to be on the sidelines for this emergent industry.”
Tesla is buying Bitcoin, but we are still waiting for them to accept Bitcoin as payment for one of their cars. That’s coming, apparently.
“We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the company said in its 2020 filings, according to Reuters.
Small businesses are using it. Let’s go to Tampa for example, shall we? Best known as “Champa Bay.”
“It’s a great time to be in Tampa Bay,” says Richard Munassi, a director at Tampa Bay Wave, a nonprofit organization working with local startups. “I’ve been a big time Tom Brady fan since he was in high school. We are both from California,” he says of the Tampa Bay Buccaneers Super Bowl winning quarterback two weeks ago. “Watching his rise very much mirrors Bitcoin, with some ups and downs but only getting better over time. The investment by the Bucs into Tom has been worth its weight in Bitcoin,” he says.
I asked him, a retail crypto investor like me, if he is seeing shops in his city accepting Bitcoin, because I am not seeing that yet here in Massachusetts.
“The city business owners have shown some strong early adoption of taking Bitcoin as payment and I think you will see some ramping up over the next 18-24 months as cryptocurrency continues to go mainstream,” Munassi says. “Florida is right behind California with the total number of vendors that take Bitcoin as payment. There are several in Tampa,” he says, naming jewelry stores, restaurants, attorneys, and co-working spaces for rent that are payable in BTC.
One emerging market country that has been a very early crypto player is Estonia. CoinsPaid is from there. They created a crypto-financial solution for businesses. Think of it is one of those electronic payments systems ubiquitous at any retail store were you swipe your credit card. CoinsPaid does that, only it allows for companies to take Bitcoin. For now, their main market is online, mostly gaming and gambling.
“We are geared towards helping companies ascend into the crypto world,” says CEO Max Krupyshev.
Last year they hit their stride. “We scaled from 100 clients to over 300, and this number is still growing,” he claims. “In 2019, we processed around 1% of global Bitcoin transactions and now handle more than 3%.”
Small businesses like having this payment option, too. It’s a way for them to start collecting BTC, quite frankly.
Adoption is happening, but it’s a learning curve.
“A lot of companies miss the know-how that it takes to develop and build this themselves, as there’s a lot to consider. Factors like the right blockchain technology, security measures, and payment flows come from years of experience and a deep knowledge on how the tech works,” Krupyshev says.
Online gaming, casinos, forex trading, e-commerce, where payments need to be made quick and effortlessly, are using CoinsPaid now.
“Among Asian countries, Japan has done exceptionally well with supporting Bitcoin payments in day-to-day life,” says Yulong Liu, managing director of global partnerships at Babel Finance. “I remember buying a cup of coffee with a few Ethereum at the 2019 Bitcoin Conference in San Francisco,” he says.
Atlanta-based BitPay teams up with companies that allow you to buy gift cards using your Bitcoin. While that’s not the same as walking into a Tesla show room and buying a model Y, you can also exchange BTC for fiat on their Mastercard
The day after Tesla revealed in an SEC filing it had invested $1.5 billion in Bitcoins, the cryptocurrency’s price continued to reach new highs.
The company made clear part of its updated investment strategy was to seek out alternative reserve assets, including gold and crypto.
“The market is searching for an acceptable, investable hedge against the vicissitudes of a floating dollar,” says Vladimir Signorelli, head of Bretton Woods Research. Even an old supply side themed investing firm is talking Bitcoin with clients now. “If we had a stable dollar, anchored to gold, crypto currencies likely wouldn’t command more than $1 trillion in total market cap,” he says.
Easy money and liquidity is finding its way into Bitcoin and real estate, also on the rise around the world despite the pandemic.
On CNBC’s Squawk Box, Jim Cramer was asked recently what he thought about all the Bitcoin hype and rumors of it being adopted by companies as a cash alternative. He said, “Every treasurer should be going to boards of directors and saying, ‘should we put a small portion of our cash in bitcoin?’ It seems to be an interesting way to hedge against the rest of the environment. Nice hedge against fiat currency. I used to always say, ‘own some gold, own some cash.’ Now I say, own some cash, own some gold, own some Bitcoin’,” Cramer said.
That’s the hedge angle. But where can we spend this stuff? Will it forever be something that must be exchanged into dollars, likely adding an extra cost to the transaction?
Munassi says he’s paid for pizza at Pomodoro’s in Tampa Bay using his Bitcoin. “The continued adoption has been awesome to watch,” he says.
As Bitcoin adoption becomes more widespread and drives investor demand, the risk of it being displaced by a better-designed decentralized, digital store of value decreases, says McCarthy from Macrolens. “That only adds to Bitcoin’s attractiveness in a self-reinforcing fashion. Either that, or it’s the world’s biggest-ever pump & dump.”