PayPal, Microstrategy, and Square were probably the first big financial institutions to invest in bitcoin; laying the ground for other companies like Tesla.
Countries have also joined the fray and after El Salvador made bitcoin a legal tender, there is a high possibility that more countries will follow suit. For instance, a senator in the US state of Arizona recently introduced a bill seeking to make bitcoin a legal tender in the state; something that will make the state the first in the USA if the bill passes.
In Texas, the governor hopeful Huffiness has also promised to make bitcoin a legal tender in Texas if elected.
With the growing list of companies that have invested in bitcoin, it could very soon become modern-day gold.
The list of companies already invested in bitcoin
- Visa (V)
List of institutions that have expressed interest in bitcoin
- JPMorgan Chase & Co. Bank
- BNY Mellon Bank
- MasterCard Inc.
Reasons why corporations are investing in cryptocurrencies
The first main reason is of course the fact that the founders and CEOs of these corporations believe in Bitcoin and other cryptocurrencies. No CEO would lead his company to invest in something they do not have full confidence in.
Cryptocurrencies like Bitcoin have elicited excitement among investors and companies do not want to be left behind. And that is why companies like Microstrategy and Tesla have dived in even though Bitcoin isn’t the core of their businesses.
A company like Microstrategy had a market cap of below $1 billion at the beginning of 2020. However, after investing in Bitcoin last year, its market cap is now about $10 billion. The reason most of these corporations are investing in Bitcoin is to hedge against monetary inflation and debasement.
Jack Dorsey, Square CEO, had also expressed his fascination with Bitcoin well before his company decided it is now time to get all in.
Tesla’s move to accept Bitcoin as payment for its cars will however be a game-changer in its marketing. The company sells about half a million vehicles in a year. And if it sold a small percentage of those cars in Bitcoin that would be huge marketing for the digital currency.
Other companies, especially financial institutions, are opting to invest in Bitcoin and other cryptocurrencies because of the demand from their clients. Examples of such institutions include BNY Mellon Bank and JPMorgan Chase, which have all said that they would introduce Bitcoin trading if their clients demand it.
The infrastructure around Bitcoin has really grown and more and more people are showing interest in the digital currency not leaving behind the big corporations also. These financial institutions act as the intermediaries for the most financial transaction of custodians of all these clients. Therefore, if they were to ignore Bitcoin, they would easily be edged out of the market since one of the main advantages of blockchain technology is eliminating intermediaries.
MasterCard and Visa (V), the main credit card processors, perfectly fill in the role of middlemen and they are the last places where Bitcoin would make the mark. Bitcoin already has BTC Visa cards that are used in BTC ATMs around the world. MasterCard also said that it would accept the use of cryptocurrencies later this year.