How large enterprises are driving digital currency adoption

By Kate Birch
One-fifth of large firms expected to use digital currencies by 2024, as regulatory guidance and CBDCs offers CFOs more avenues to pressure-test use cases

Digital currencies have had a bit of a rollercoaster ride over the last year, with values rising and dropping, no doubt influenced in part by influential Tesla CEO Elon Musk’s own up/down relationship with Bitcoin. Following Musk’s announcement early in 2021 that Tesla would accept bitcoin payments for vehicle purchases in the US, a follow-up to the company’s US$1.5bn investment in Bitcoin in February.

Despite this, a growing number of large organisations are getting onboard with the digital payment, and even countries have got in on the action with El Salvador recently making Bitcoin legal tender. 

Because while volatility of cryptocurrencies remains a concern, anticipation of clearer regulatory guidance, and the advent of central bank digital currencies now offers CFOs more avenues to “pressure-test use cases for digital currencies”, says Alexander Bant, chief of research in the Gartner Finance practice

And it’s this that has given many enterprises the confidence to embrace cryptocurrencies in 2021, with Gartner picking up on an “uptick in interest in digital currency and blockchain applications among CFOs” since the start of 2021.

Mastercard and Visa among large organisations embracing crypto

Among some of the big global players who have already made the decision to use and accept cryptos this year is Mastercard, which in November announced it would allow partners on its network to enable their consumers to buy, sell and hold cryptocurrency using a digital wallet, as well as reward them with Digital currencies under their loyalty programmes. 

Credit card company Visa is also on board, piloting a scheme with platform Crypto.com to accept cryptocurrency to settle transactions on its payment network, and it will now accept USD Coin, a stable crypto coin that is pegged to the value of the US dollar.

AXA Insurance, Microsoft, Starbucks, Tesla, PayPal, Sotheby’s, Expedia and Coca-Cola are among some of the biggest business names to adapt to the use of cryptocurrencies. 

At Microsoft, Bitcoin can be used to pay for a variety of services, including Xbox Live and Skype; while at Starbucks, customers can use the new Bakkt app to pay for drinks and goods at the coffee chain with converted Bitcoin. 

Even wider adoption expected in 2022

An even wider adoption of crypto by large enterprises will gain momentum in 2022 and beyond, according to a new Gartner report, which predicts that one-fifth of large organisations will use digital currencies by 2024. 

So, what’s driving this wider adoption?

Increasing mainstream acceptance of cryptocurrencies on traditional payment platforms and the rise of central bank digital currencies (CBDCs) will push many large enterprises “to incorporate digital currencies into their applications in the coming years,” says Avivah Litan, VP analyst in the Gartner IT practice. 

Gartner says that increased acceptance and adoption of crypto is in part driven by the already healthy environment of service providers and off-the-shelf solutions that are available to enterprises who have identified a specific use case for digital currencies.

According to Litan, among the primary use cases for digital currencies identified, there will be no need for most organisations to develop a customised blockchain application stack. “Many large banks, payment platforms, institutional digital asset custodians and wallet providers have already done the heavy lifting in this area, which should provide large enterprises with a minimum of friction in deploying their own digital currency applications.”

Additional factors that could make digital currency applications more palatable to CFOs in the next 12-24 months, include hedging against the highest inflation in more than 39 years, increased regulatory clarity, improvements in energy usage, and adoption by employees, consumers and suppliers.  

“There has always been theoretical appeal in the use of blockchain and digital currencies for CFOs as a means to lower costs, increase transaction processing speed, reach new global customers, move toward continuous accounting and auditing, and create an error-free and fraud-free environment,” says Bant. “Now, with Congressional oversight starting to develop and the potential for more central banks to join China in launching a CBDC, we can see a path where the use of digital currencies will be potentially more predictable and stable in the future.”

Bant also noted that macroeconomic pressures related to ongoing high inflation, and its impact on fiat currencies, could push more CFOs to explore some digital currencies as a potential store of value for a portion of their reserves.

“2022 is the year that we expect CFOs to rapidly up their knowledge on digital assets, currencies, and other blockchain applications. When the CEO and Board start asking for the opinion of the CFO, they must have a point of view on the risks and points of differentiation for their organisation,” he explains. “We are starting to see some Fortune 500 companies map out scenarios for how they will respond if a country or supplier moved to doing business with only digital currency and what steps they would take as a result.”

Big business use cares for crypto

Gartner predicts that digital currencies will be primarily used by these organisations for payment, a store of value and the ability to leverage high-yield investments available in decentralised finance (DeFi) applications.

We highlight five recent use cases by large organisations in utilising crypto.

1. Burger King

While Burger King Moscow and Venezuela began accepting bitcoin as payment for a meal purchase in 2020, Burger King North America got in on the crypto action until recently when it partnered with investment app Robinhood Crypto on a limited-time promotion, the ‘Burger King with a Side of Crypto’ giveaway, allowing Royal Perks members to claim a free cyptocoin every day. 

 

2. PayPal

Last year, the payments app introduced a way for US users to buy, sell and hold select cryptocurrencies via their cash or cash plus accounts, and also learn and track crypto within their PayPal app. 

 

3. Coca-Cola Amatil

One of the world’s biggest bottlers and distributors of non-alcoholic and ready-to-drink beverages in the APAC region, Coca-Cola Amatil partnered with online assets platform, Centrapay, in 2020, allowing them to accept bitcoin as an official payment methods. There are now more than 2,000 vending machines in Australia and New Zealand that now accept cryptocurrency. 

 

4. Sotheby’s

The first major auction house to accept cryptocurrencies for physical artwork, Sotheby’s introduced bitcoin or ether as a payment option when it presented Banksy’s artwork ‘Love Is In The Air’ at its art sale in New York in May 2021. 

 

5. AT&T

An early adopter, AT&T became the first mobile carrier in 2019 to accept cryptocurrency payments, which it carries out via BitPay. 

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