“Bitcoin is an innovative payment network and a new kind of money,” says bitcoin’s website on the main page.
Bitcoin is a cryptocurrency. Cryptocurrencies are digital assets or non-fiat currencies meant to be used for transactions online. The key feature of cryptocurrency is its decentralization, which means that no regulatory body is involved in bitcoin transactions.
Bitcoin and other cryptocurrencies are based on blockchain networks. These networks allow cryptocurrency transactions to be decentralized, discretionary, and transparent. Apart from a few of the platform-based features, different cryptocurrencies have different features setting them apart and providing them with some value.
Bitcoin is the oldest and the most famous cryptocurrency. For people not familiar with the different types of cryptocurrencies, bitcoin is cryptocurrency.
Since its invention in 2008 by ‘Satoshi Nakamoto’ and the beginning of its usage in 2009, bitcoin has gained significant public interest. Particularly in the past year (2020), bitcoin has gained unparalleled interest and this interest is appropriately quantified in the cryptocurrency markets as well.
2020 was a great year for bitcoin, the price of bitcoin skyrocketed in 2020. But the journey of bitcoin was not as rapid all along. For most of its life, bitcoin was worth less than $1,000. Bitcoin started rising from 2017 onwards. In Jan 2017, 1 bitcoin was worth about $1,000, by the end of 2017, the same bitcoin was worth about $15,000 as per reports, provided by the coindesk. Today, it is worth about $50,000.
The price movement of bitcoin has been exponential in nature. The historical price movement of bitcoin or any other asset for that matter does not necessarily imply a similar price movement in the future and this should be well noted while thinking about bitcoin.
Historical Price Movement of Bitcoin Upto 13 May, 2021,
Image source: Coindesk
Looking at the graph above, the journey of bitcoin may seem smooth, due to the larger time frame being looked at. On the smaller time frames, including hourly, daily and even weekly, one can understand the amount of madding volatility of bitcoin especially compared to other assets available in the financial markets all over the world and this is concerning for bitcoin-enthusiasts. The bitcoin volatility index is used to measure the volatility of bitcoin.
Volatility is an important metric for currencies or anything with transactional qualities. One of the most important roles of central banks all over the world is to keep the volatility of their currency under check. Bitcoin faces tremendous criticism on account of its volatility.
Since the comparison between the volatility of fiat currency including the dollar, rupee, etc. and cryptocurrency including bitcoin, ethereum, etc. is futile, crypto-critiques highly doubt seeing cryptocurrency including bitcoins to be accepted by the central banks and other regulatory institutions in the near future. If bitcoins are to replace fiat currencies someday, volatility will have to be reduced.
If not, people will not be confident enough to hold bitcoin for transactional purposes and regulatory authorities won’t allow the same. For now, bitcoins are used primarily for investment purposes in anticipation of a future where they might be used more for transactional purposes.
There however are companies that have started to accept and adopt bitcoins for various purposes. We’ll look at a few of these companies in this blog:
Tesla made a humongous, $1.5 billion investment in bitcoin in February this year and started accepting bitcoins in exchange for its products. Elon Musk, the CEO of Tesla and the second-richest man on Earth is a public supporter and believer of a promising future of cryptocurrency. In contrast to his decision of accepting bitcoin, in May Elon Musk explicitly stated that it won’t be accepting bitcoin anymore due to environmental concerns.
He tweeted “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/ transaction”. This points at the biggest concern of bitcoin- the environmental concern.
According to the Cambridge, Bitcoin Electricity Consumption Index, the energy used to create bitcoin has soared along with the price of bitcoin, it is now equivalent to the annual carbon footprint of Argentina, the eighth-largest country in the world.
The energy requirements are expected to increase at an alarmingly rapid rate in the future as well. This has brought about criticism of bitcoin, even from its endorsers, the chief of whom is Elon Musk.
Massive research is being done to reduce carbon emissions. The recent decision taken by Elon Musk is aimed towards getting rid of the hypocrisy behind Tesla’s aim of becoming an emission-free company and bitcoin’s drastic increase in carbon emissions. Bitcoin currently uses approximately 125 TWh of energy per annum.
To get an estimate of this amount, India with a population of 1.3 billion people uses about 1400 TWh of energy as electricity per annum. Energy being used for the purpose of mining can have alternative uses and since most of the mining is done in China where the power source of most of this energy is coal, the environment can be considered protected provided bitcoins are not mined at the current alarming rate.
Microsoft started accepting bitcoin as a mode of payment in 2014. It was one of the first companies to do so. Microsoft accepts bitcoins for applications, games, and other windows content, basically all it’s digital content on Windows Phone, Xbox Games, Xbox Music, Xbox Shops, etc.
AT&T is the world’s largest telecommunication company. It became the world’s first telecommunication provider accepting payment in cryptocurrency as well when it started accepting bitcoin for its services in 2019.
Paypal is one of the world’s biggest and fastest-growing fintech companies, providing online payment systems worldwide. PayPal announced in October 2020 that users can buy, sell, and hold selective cryptocurrencies through their Cash or Cash Plus accounts starting in 2021.
Yum Brands operates KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill and is one of the world’s largest food conglomerates. Pizza Hut Venezuela started accepting bitcoins and other cryptocurrencies last year and KFC Canada did so for a short period of time.
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Restaurant Brands International is the parent company of Burger King, Tim Hortons, and Popeyes, it is the fifth-largest operator of fast-food restaurants in the world. Restaurant Brands International started accepting bitcoins beginning from Burger King Venezuela last year.
Coca-Cola Amatil, a Coca-Cola distributor, has announced a partnership with digital assets platform Centrepay to embrace Bitcoin as a payment option in the Asia-Pacific region.
BMW dealerships in the United Kingdom are also taking Bitcoin as payment for brand-new BMWs. Stephen James Enfield BMW, a car dealership in London and Kent, has joined forces with BitPay, a global network, to embrace Bitcoin payments.
The biggest home repair store in the United States is Home Depot. Home Depot supports Bitcoin payments through a collaboration with the mobile wallet service Flexa, which is built into their store checkout processes.
Expedia is one of the world’s most used travel agencies and also one of the early adopters of bitcoin. It partnered with Coinbase and started accepting bitcoin in 2014.
Above are mentioned a few of the famous companies that accept bitcoin, either wholly or on partial basis for its services. Bitcoin is being accepted by companies working in all the sectors from the financial and IT sectors to the Fast Moving Consumer Goods (FMCG) and tourism sectors. Other famous companies that accept bitcoin include Starbucks, Twitch, Etsy, Rakuten, Whole Foods Market, Overstock.com and Sotheby.
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Then there are other companies including the world’s largest banks particularly JP Morgan and Goldman Sachs who are planning to introduce funds particularly for bitcoins and other digital currencies in the near future.
Ever since its inception, the acceptance of bitcoins has increased significantly as is evident from the myriad of companies accepting and adopting bitcoins today. The future of bitcoin, however, is completely dependent on innovations particularly focused on the shortcomings presented by bitcoins.
Like Tesla, other companies may also limit the use of bitcoins over environmental concerns if not handled in a swift manner. On the other hand, till bitcoin is associated with the insane levels of volatility, as it is now, it would be almost impossible for bitcoin to replace fiat-currencies, providing a much more stable medium for exchange.
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