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Taking a brief look at the surge of cryptocurrency globally, one can only expect more multi-million dollar companies to get into it. Singapore’s Monetary Authority is seen as crypto-friendly with multiple applications for token service providers. Additionally, Alibaba’s launch of an NFT market makes it seem like there is acceptance of cryptocurrency in both Europe and Asia. Unlike in America, these places have experience using various currencies, making adaptation easier.
An increasing number of companies worldwide are using digital assets for a host of transactional, investment, and operational purposes. There are dangers (both known and unknown) and powerful incentives, as with every frontier. No one wants to miss out on the benefits of cryptocurrency.
Many commerce companies are building a crypto portfolio because of the tax benefits. There is a lot of traffic in the crypto scene, and companies like Google would want to receive ad revenue in crypto because of the flexibility it provides them. The companies enjoy certain tax benefits, but governments may suffer; as a result, there is resistance. The fear that the economy may be affected by money leaving to non-taxable companies has made the United States government slow down the acceptance of crypto until there are enough resources to audit it.
No IRS (International Revenue Service) department is explicitly designed for cryptocurrency. Collin Plume, CEO of Noble Gold Investments and My Digital Money, suggests investing in Bitcoin IRAs (Individual Retirement Accounts). Cryptocurrency contributions to IRAs are tax-deductible. You get immediate tax benefits and do not pay taxes until you access the funds at retirement.
The Starbucks Model
Actions taken by Starbucks provided additional reasons for other companies’ desire to apply for licenses to create digital currencies of their own. One of the most brilliant business strategies ever conceived, Starbucks set a precedent for other businesses. How did this happen?
- Starbucks’ former president, Howard Schultz, introduced the Starbucks reward program for starters. The program allows you to earn stars with each purchase you make. The stars are redeemed for free drinks and food. You have to have a Starbucks gift card or an e-gift card to access the stars.
- Because of how gradually these stars accumulate, people rarely use all of the money (or stars) on their cards. Millions of people forget the small amounts of money left on their cards, and many people pre-load their cards every month. Starbucks has access to this money.
- Starbucks is free to use the money in any way they deem fit, including using it to make more money.
- Essentially Starbucks has become a bank. (Not legally since customers cannot use their balances for anything other than products and services offered by the company, but in the sense that Starbucks can invest its customers’ money for profit.)
Google and Facebook desire to create similar systems by getting people to put their money in their companies and leave it there. They realize that they can create a cryptocurrency and give it away for free, keeping customers in their business and helping them retain the cryptocurrency under their control. Eventually, they can monetize it and make a sizable amount of money, increasing their reach and allowing them the opportunity to venture into new businesses and expand into other things.
Customers can reload their cards with cryptocurrency, rewarding customers with loyalty points that they exchange for stars, making money for the company. With the new Bitcoin Law in El Salvador, the customers can now make direct purchases with Bitcoin at any Starbucks in the region. The users can easily scan the QR codes available at the counter or make direct payments through their Bitcoin wallets. However, the relative newness of cryptocurrency raises concerns about volatility. It is important to remember that every new concept takes time to settle and gain acceptance. Cryptocurrency will eventually seem commonplace.
The Starbucks model brought the possibility of increased earnings through cryptocurrency into the limelight. Many countries have been slowly incorporating cryptocurrency into their economies. More companies, like Facebook and Google, are also implementing the use of cryptocurrencies.
