Capitalizing on the Crypto Craze: High-End Brands Are Profiting from Cryptocurrency
By Shubhangi Shah
High-end Italian luxury brand Gucci has announced that it will start accepting cryptocurrency payments. A few days later, another luxury brand Balenciaga also announced the same. The two brands will launch the operation in select stores in the United States, with Gucci indicating that it plans to roll out the same arrangement in all of its stores in North America soon. Despite
volatility and the risks involved, it seems that brands are increasingly embracing new era technologies to keep pace with current technological developments.
Although all the rage now, cryptocurrencies have been around for quite some time. And Gucci is not the first to explore the crypto payment option.
Walk with caution
In 2014, before cryptocurrencies became such a fad, American tech giant Microsoft started accepting cryptocurrency payments. You can use bitcoin to recharge your Microsoft account and pay for its various services.
Although his company was the first to jump into the cryptocurrency rage, Microsoft co-founder Bill Gates doesn’t seem like a fan. In one of his “Ask Me Anything” sessions on Reddit, the billionaire technocrat said, “I don’t own any (cryptocurrency). I like to invest in things that have a valuable return,” adding: “The value of crypto is exactly what another person decides someone else will pay for it, so does not add to society like other investments. Also, he warned anyone who have less money than Elon Musk, i.e. everyone, to “be careful” when investing in these digital assets.
Legendary investor Warren Buffett expressed similar views. At Berkshire Hathaway’s annual shareholder meeting last month, he said he wouldn’t buy all the bitcoins, even if they were sold for $25. It’s “because what would I do with it? I’ll have to sell it to you one way or another. It won’t do anything,” Buffett added. Explaining its appeal, Buffett said, “There’s a magic to it, and people have attached magic to a lot of things.”
The environment-capital conundrum
Billionaire entrepreneur Elon Musk’s relationship with the environment seems complex. In March last year, he announced that electric car maker Tesla would accept cryptocurrency payments, only to backtrack two months later amid outcry from environmental activists. Citing environmental concerns, Musk said, “We are concerned about the increasing use of fossil fuels for Bitcoin mining and transactions, particularly coal, which has the worst emissions of all fuels.” Adding, he said, “cryptocurrency is a good idea…but it can’t cost the environment.”
And rightly so, crypto mining consumes a large amount of computing power and therefore energy, much of which comes from cheap fossil fuels like coal. Additionally, on its website, Tesla states that its “mission is to accelerate the global transition to sustainable energy. In pursuit of that goal, we make products that replace some of the biggest polluters on the planet, while trying to do the right thing along the way. »
However, earlier this year, Musk announced that Tesla would accept Dogecoin, a cryptocurrency that started out as a joke on social media, for its derivative products.
Multinational coffee chain Starbucks also accepts crypto payment to top up its Starbucks Cards through its “Stars for Everyone” loyalty program. To do this, customers scan a QR code at the counter and make payments directly through their cryptocurrency wallets.
Visa, the multinational financial services company, also announced last year that it would accept cryptocurrency to settle transactions on its payment network. The company has authorized USD Coin (USDC), a stablecoin whose value is pegged to USD, for transactions. Stablecoins are considered alternatives to highly volatile cryptocurrencies like Bitcoin.
A green shift
Long before the cryptocurrency ecosystem exploded, Wikimedia, the non-profit organization that runs Wikipedia, began accepting them for donations in 2014. However, following an intensive discussion between Wikipedia editors, after which a request was sent to the organization, the company stopped crypto donations for environmental reasons.
Meanwhile, Mozilla, the company behind the Firefox web browser, also announced this year that it won’t accept “proof-of-work” cryptocurrencies like Bitcoin and Ethereum, which are extremely energy-intensive. For example, Ethereum’s energy requirement per year is equal to that of the Netherlands and higher than that of the Philippines. Mozilla will instead accept “proof-of-stake” cryptos like Solana and Polkadot, which only allow a few miners and therefore require less power.
Apart from their ecological impact, cryptocurrencies are notorious for their associated volatility, as evidenced by the collapse of terraUSD (UST), a stablecoin, which plunged the crypto market as a whole. Despite this, it seems brands are not shy about taking risks and capitalizing on the crypto craze.