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Bitcoin and Institutions Feb. 2021

Bitcoin was made for individuals to be able to own like property or cash. An individual can hold the keys by themselves and decide what to do with it. Spend or hold. A company has to follow procedures for purchasing goods, for paying salaries and so on. In a company no single individual can decide to unilateraly spend money. There needs to be multi-signature schemes for spending and other procedures to split responsibilities between employees, teams and managers.

At the moment individuals can front-run corporations because it’s easier for them to use Bitcoin. But do not wait too long. Companies are flocking in.

It has been difficult for companies to buy and invest in bitcoin in the past. Now at least in the US more custodial services like Fidelity, Coinbase, or Circle support companies to hold bitcoin. Kraken Bank was the first real crypto bank that was awarded a US state banking charter in September 2020. Even Deutsche Bank announced that they want to act as a custodian for digital assets.

Michael Saylor CEO of MicroStrategy started a wave of bitcoin investments by companies in August, when MicroStrategy exchanged 425 million USD of the company’s cash reserves to bitcoin. Followed by a workshop for hundreds of CEOs and companies in early 2021, where Michael Saylor explained Bitcoin and his buying strategies. It seems many of the participants were not able to buy bitcoin for their companies due to regulatory reasons. In February 2021 MicroStrategy started offering 900 million more in convertible debt at 0% interest to be able to buy more bitcoin and offer exposure to bitcoin.

Early 2021 the total market size of bitcoin was 980 billion USD. At the same time MicroStrategy is taking 900 million and starts to exchange it to bitcoin, what do you think will happen? It’s increasing demand for bitcoin, which increases its value and price. Those investors value bitcoin as a hedge against the inflation of fiat currencies. They are attacking the USD at the same time, speculating on its demise.

On February 23rd Square, the company behind CashApp also announced that it has purchased approximately 3,318 bitcoin at an aggregate purchase price of $170 million. Combined with Square’s previous purchase of $50 million in bitcoin, this represents approximately five percent of Square’s total cash, cash equivalents and marketable securities as of December 31, 2020.

Aligned with the company’s purpose, Square believes that cryptocurrency is an instrument of economic empowerment, providing a way for individuals to participate in a global monetary system and secure their own financial future. The investment is part of Square’s ongoing commitment to bitcoin, and the company plans to assess its aggregate investment in bitcoin relative to its other investments on an ongoing basis. Source

Elon Musk’s company Tesla exchanged $1.5B of its cash holdings to bitcoin and announced that they are planning to accept bitcoin as a payment for their cars in February too. Sounds like a bold move, right? But it’s only 0.2 percent of Tesla’s market cap or 7% of their total cash reserves. Elon Musk is dipping his toe into the water. Tesla wants to have exposure to the upside of bitcoin, which is much higher than the risk of losing it. Even a total loss of bitcoin wouldn’t put Tesla in any economic danger.

And that’s how you can approach Bitcoin too. Dip your toes in the water, learn how to exchange your fiat money to bitcoin without risking it all. Learn how to safely store and use bitcoin.

Bitcoin was made for individuals. For people like you and me. For us. This is your chance to exit the sinking boat of fiat currencies. The privileged people like Michael Saylor and Elon Musk are already testing the waters. What are you waiting for? Bitcoin is your life boat. It might look unsafe, it might be new technology that you don’t trust. Educate yourself about it. The alternative is to go down with the Euro, the US-Dollar, or whatever your fiat currency is called.

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