Capitalizing on the Crypto Craze: High-End Brands Profit from Cryptocurrency

By Shubhangi Shah

Upscale 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 it plans to roll out the same scheme in all of its stores in North America soon. Despite

volatility and the associated risks, it seems that brands are increasingly embracing new technologies to keep up with current technological developments.

To advertise

Although all the rage right now, cryptocurrencies have been around for quite some time. And Gucci isn’t the first to explore the crypto payment option.

Walk carefully

In 2014, before cryptocurrencies became such a craze, US tech giant Microsoft started accepting cryptocurrency payments. You can use bitcoin to top up your Microsoft account and pay for the various services.

Although his company jumped into the cryptocurrency rage first, 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 give valuable returns,” adding: “The value of crypto is exactly what another decides that someone else will pay for it, so it doesn’t contribute to the business like other investments, and he warned anyone with less money than Elon Musk, that is, anyone, to “be careful” when invest 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 sold for $25. It’s “because what would I do with it? I’ll have to sell it to you somehow. It won’t do anything,” Buffett added. Explaining the appeal, Buffett said, “There’s magic in it, and people have attached magic to many things.”

The riddle of environmental capital

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 come back two months later amid outrage from environmentalists. Citing environmental concerns, Musk said, “We are concerned about the increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of all fuels.” He added, “cryptocurrency is a good idea…but it shouldn’t cost the environment.”

And rightly so, crypto mining consumes a lot of computing power and therefore energy, much of which comes from cheap fossil fuels such as coal. Additionally, Tesla states on its website that its “mission is to accelerate the global transition to sustainable energy. To pursue this goal, we create products that replace some of the world’s biggest polluters, while trying to do the right thing. †

Earlier this year, however, Musk announced that Tesla would accept Dogecoin, a cryptocurrency that started as a social media joke, for its derivatives.

Other brands

Multinational coffee chain Starbucks also accepts crypto payments 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 pay directly through their cryptocurrency wallets.

Visa, the multinational financial services company, also announced last year that it would accept cryptocurrency to transact 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 such as Bitcoin.

A green shift

Long before the cryptocurrency ecosystem exploded, Wikimedia, the non-profit organization that runs Wikipedia, started accepting them for donations in 2014. After an intensive discussion between Wikipedia editors, after which a request was sent to the organization, the company stopped using cryptography. donations for environmental reasons.

Meanwhile, Mozilla, the company behind the Firefox web browser, also announced this year that it will not accept “proof-of-work” cryptocurrencies such as Bitcoin and Ethereum, which are hugely energy-intensive. For example, the annual energy requirement of Ethereum is equal to that of the Netherlands and higher than that of the Philippines. Mozilla instead accepts proof-of-stake cryptos like Solana and Polkadot, which allow only a few miners and therefore require less power.

Aside from their environmental 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 that brands are not shy about taking risks and capitalizing on the crypto craze.

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