In the early evening hours of May 12,
Elon Musk sent out a tweet that, like many others from the ever-controversial
CEO, proved market-moving: Tesla would no longer be accepting Bitcoin as
payment for its sleek electric vehicles.
On cue, Bitcoin plunged over 10%
following the tweet. The move to stop accepting the stalwart cryptocurrency
came perhaps as more of a surprise than Tesla’s decision to accept it: Musk has
long voiced his belief in crypto (proclaiming himself the
"Dogefather," a riff on joke cryptocurrency Dogecoin), and even
companies as disparate as AT&T and WeWork are accepting the digital coin as
payment.
In Musk's case, the decision to suspend
purchases with Bitcoin was due primarily to concerns about Bitcoin's massive
carbon footprint. He said that Tesla would consider accepting the coin again
once the technology improved (which, Musk recently hinted, will likely be
sooner rather than later).
Qualms over energy efficiency
notwithstanding, the jury is still out among corporates and investors alike
over what, exactly, cryptocurrency should be used for.
Which companies are using crypto, and
how?
If you ask BTIG’s Palmer, the reason some
companies are allowing crypto payments is simple: "I think you have forward-looking
merchants who appreciate the fact that cryptocurrencies are here and they're
here to stay, and they don't want to be left behind relative to their
competitors."
One company facilitating much of that
acceptance is BitPay. Founded in 2011, BitPay is a payments processor that
enables companies to spend and accept Bitcoin and other cryptocurrencies. The
firm boasts a long and wide-ranging list of companies that accept crypto
through BitPay, either through a debit card or gift cards—including mega mobile
service provider AT&T, Amazon, DoorDash, electronics retailer Newegg,
Twitch, Shopify, Microsoft, WeWork, the Dallas Mavericks, and even the first
airline to accept Bitcoin, Latvia's airBaltic. Many of these companies don't
directly accept the crypto, but rather BitPay allows customers to convert their
crypto into fiat gift or debit cards.
Chief marketing officer Bill Zielke says
that BitPay typically processes between 100,000 and 150,000 transactions a
month, with the total value of those transactions often surpassing $1 billion
on an annualized basis. "Many of the purchases that we're seeing [are]
larger-ticket purchases that are making up those types of numbers,"
including luxury cars and jewelry, he tells Fortune.
Notwithstanding the ticket size, the
process is fairly simple: Users can convert their crypto (like Bitcoin) into
fiat spending power on sites like Amazon or Home Depot through a gift card or
BitPay's prepaid Mastercard debit card. Customers can go to the checkout of a
company like Newegg and select which coin they'd like to use, and gain access
to a QR code that they can scan with their crypto wallet to make the purchase.
What's happening "behind the scenes," explains Zielke, is that the
merchants "never have to touch that crypto." BitPay takes
"control" of the coin and settles with the merchant for the amount in
their local fiat currency (or crypto, if they choose). "Now we have the
crypto, and we own the risk associated with that crypto, whether the crypto
goes up or down," he says.
On the corporate side, BitPay's
"Send" feature, launched last year, allows companies to also use
crypto for their own payroll or to pay contractors.
fortune.com