Why Large Companies Are Investing in Cryptocurrency

By Guest Author
Published April 30, 2021 Updated April 30, 2021
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Why Large Companies Are Investing in Cryptocurrency

By Guest Author
Published April 30, 2021 Updated April 30, 2021

In 2021, amidst the growth of bitcoin, large companies began to show interest in the innovative payment network. Tesla, MicroStrategy, Square, The Motley Fool, and other kingpin companies have already invested in the main cryptocurrency. BitXmi experts explained how corporations and small organizations benefit from working with digital assets.

However, it’s not just US companies that are interested in digital assets. In early April, the Hong Kong tech giant, Meitu, brought its investment in bitcoin to $100 million. The world’s largest hedge fund, Bridgewater Associates, also expressed its readiness to invest in bitcoin, albeit only once the volatility of the main cryptocurrency decreases and liquidity increases.

Advertising and Routine

News about the purchase and use of cryptocurrencies by large companies usually comes with the growth of the crypto market. This kind of news generates a plethora of comments and discussions on social networks, which proves beneficial for any company – both large and small.

On the other side of the coin, cryptocurrencies are turning into a completely ordinary asset in the portfolio of a modern investor. Some companies hold stocks or bonds on their balances; others may invest in bitcoin and other cryptocurrencies, simply because they can potentially generate substantial returns.

Tesla CEO, Elon Musk, remarked on the company’s $1.5 billion acquisition of bitcoins as being a gamble. The entrepreneur explained that Tesla’s actions do not directly reflect his views, but that bitcoin is “simply a less stupid form of liquidity than cash savings.”

Operations and Development

Corporations can also use cryptocurrencies to pay for their goods and services. For example, in March 2021, Tesla added a payment function allowing the purchase of electric cars with bitcoin. Elon Musk then announced that the company would not convert cryptocurrency into fiat funds.

Another reason companies may be interested in digital assets, is adopting new technologies in their manufacturing processes. The use of cryptocurrencies in the activities of corporations is rather an initiative of their leaders and owners who believe in new technologies and a future fair financial system.

Inflation protection

Cryptocurrencies are becoming a good business tool for risk diversification. This is especially important when the world’s largest nations turn on printing presses to support global trade and economies. Sooner or later, incentives will have to be abandoned, traditional markets will be under attack, and perhaps the best solution for business will be the crypto market. Many large companies today are looking only at digital assets – predominantly the main cryptocurrency.

However, in order for investments in bitcoin to bring in profit, large amounts of money will need to be frozen for an indefinite period of time (2-3 years minimum). Fortunately, many companies have the financial bandwidth for this assets-freeze and will not be at risk of bankruptcy in the event of a fall in the bitcoin exchange rate, which has already dropped by more than $10,000 over the past week.

Experts recommend taking a closer look at the BXMI token, the own token of the BitXmi crypto exchange. Since the listing on the exchange, the token rate, with an initial price of $0.1, has shown 700% profitability in less than 9 months. At the moment, it is traded at an attractive investment price of $0.72 and shows only positive growth dynamics.

Continuation of the trend

The likelihood remains that large companies will continue to show interest in and invest in digital assets. In this case, everything depends on the bitcoin social distribution index – how popular it will be among the richest people in the world and the owners of the most famous companies worldwide.

In addition to continuing purchases of bitcoin by large corporations, experts are certain that another trend will develop – the creation of their own corporate cryptocurrencies. Unlike 99% of all cryptocurrencies, such tools will rely on the support of real businesses.

Can Governments “Turn Off” Bitcoin?

Curtis Spencer, co-founder and CEO of blockchain company Electric Capital, spoke about how the bitcoin network can be shut down “pretty quickly” and why this is not happening.

During a speech at the Collision Web Summit, Spencer outlined a way in which governments can “turn off” bitcoin. In his opinion, it is enough to stop the mining farms.

As an example, Spencer recalled the situation in the Chinese province of Xinjiang, where most of the mining farms were shut down due to power outages. This led to the hashrate of the main cryptocurrency network dropping to its lowest value since October last year – 98.53 EH/s, according to the analytical service Bitinfocharts. As of April 21, the bitcoin network hashrate is 118.4 EH/s.

Governmental Support of Bitcoin

According to Curtis Spencer, the absence of strict restrictions on bitcoin mining by governments, suggests that the authorities support the first digital coin and are backing its growth.

“The fact that bitcoin is still here means that governments support it. See what happened in Xinjiang. In fact, shutting down the Bitcoin mining network can be quite quick, especially if the United States and Kazakhstan stop all their miners – this will already turn off 80% to 90% of the network hashrate,” – added the Electric Capital co-founder.

Earlier in the Chinese province of Inner Mongolia, an initiative was discussed to ban the mining of cryptocurrencies in order to conserve energy resources in accordance with China’s five-year economic plan.

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Disclaimer
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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