By Shubhangi Shah
High-end Italian luxury brand Gucci has announced that it will start accepting payments in cryptocurrencies. A few days later, another luxury brand Balenciaga, too, announced the same. Both brands will start this operation at some select stores in the United States, with Gucci saying that it soon plans to roll out the same arrangement in all its stores in North America. Despite
the volatility and risks involved, it seems that brands are increasingly embracing new-age technologies to move at pace with the current technological developments.
Although a rage now, cryptocurrencies have been here for quite some time. And Gucci isn’t the first one to explore the crypto payment option.
Tread with caution
Back in 2014, before cryptocurrencies became such a fad, US tech giant Microsoft started accepting payments in cryptocurrency. You can use bitcoin to top up your Microsoft account and pay for its various services.
Despite his company being the earliest to jump into the cryptocurrency rage, Microsoft co-founder Bill Gates doesn’t seem to be a fan. In one of his ‘Ask Me Anything’ sessions on Reddit, the billionaire technocrat said, “I don’t own any (cryptocurrency). I like investing in things that have valuable output,” adding, “The value of crypto is just what some other person decides someone else will pay for it, so not adding to society like other investments.” Additionally, he warned everyone with less money than Elon Musk, i.e. everyone, to “watch out” when investing in these digital assets.
Legendary investor Warren Buffett has voiced similar views. At the annual Berkshire Hathaway shareholders meeting last month, he said he wouldn’t buy all the bitcoins even if sold for $25. It is “because what would I do with it? I’ll have to sell it back to you one way or another. It isn’t going to do anything,” Buffett added. Explaining its attraction, Buffett said, “It’s got a magic to it, and people have attached magic to lots of things.”
Billionaire entrepreneur Elon Musk’s relationship with the environment appears to be a complex one. In March last year, he announced that Tesla, the electric carmaker, would accept payments in cryptocurrencies, only to backtrack two months later amid the outcry by environmental activists. Citing environmental concerns, Musk said, “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.” Adding, he said, “cryptocurrency is a good idea… but this cannot come at great cost to the environment.”
And rightly so, crypto mining consumes a vast amount of computing power and hence energy, much of it sourced through cheap fossil fuels like coal. Also, on its website, Tesla says its “mission is to accelerate the world’s transition to sustainable energy. In pursuit of this goal, we build products that replace some of the planet’s biggest polluters-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 as a social media joke, for its merchandise products.
Multinational coffee chain Starbucks also accepts crypto payment for reloading its Starbucks cards through its ‘Stars for Everyone’ loyalty programme. For doing so, customers scan a QR code at the counter and make payments directly through their cryptocurrency wallets.
Visa, the multinational financial services company, had also announced last year that it would accept cryptocurrency to settle transactions on its payment network. The company has allowed USD Coin (USDC), a stablecoin whose value is pegged against USD, for transactions. Stablecoins are considered alternatives to highly volatile cryptocurrencies like Bitcoin.
A green turn
Much before the cryptocurrency ecosystem blew up, Wikimedia, the non-profit organisation that runs Wikipedia, started accepting them for donations back in 2014. However, following an intensive discussion among Wikipedia editors, after which a request was sent to the organisation, the company stopped crypto donations over environmental concerns.
Meanwhile, Mozilla, the company behind the web browser Firefox, also announced this year that it wouldn’t accept ‘proof-of-work’ cryptocurrencies like Bitcoin and Ethereum, which are extremely energy-intensive. For example, the energy requirement of Ethereum per year is equal to that of the Netherland and more than the Philippines. Mozilla will instead accept ‘proof-of-stake’ cryptos like Solana and Polkadot, which allow only a few miners and thus require less energy.
Apart from their ecological impact, cryptocurrencies are notorious for their associated volatility, as seen by the terraUSD’s (UST), a stablecoin, collapse, which sent the crypto market, at large, into a tizzy. Despite that, it appears that the brands aren’t shying away from the risk and capitalising on the crypto craze.