You might remember that back in March, we brought you a round-up of the most incisive insights from the latest piece of “research” on bitcoin by Citigroup. The report included the claim that bitcoin could become “the currency of choice for international trade”, and that more illicit transactions took place using credit cards than using bitcoin (it turned out the banks’ top analysts had mistaken basis points for percentage points).
But we are of course not the types to think that one bad crypto apple means the whole bunch is rotten. So as you can imagine, it was with our usual wide-eyed credulity that we opened the latest report on “Corporates using crypto” from Deloitte.
Unfortunately, though, our characteristic receptiveness was soured the minute we saw the title and subtitle Deloitte was using in its accompanying article: “The rise of using cryptocurrency in business: Considering the benefits of crypto”. By the time we read the introduction, we trusting Alphavillains were feeling downright cynical:
Why consider using crypto?
More than 2,300 US businesses accept bitcoin, according to one estimate from late 2020, and that doesn’t include bitcoin ATMs. An increasing number of companies worldwide are using bitcoin and other crypto and digital assets for a host of investment, operational, and transactional purposes. Many sports teams accept bitcoin for the purchase of both game tickets and merchandise. Many retailers accept bitcoin.
Probably time to pause here already. Deloitte chose to open their entire report, in a section whose opening question is about why you would “consider using crypto”, with the fact that 2,300 US businesses accept bitcoin. Now while if you have not much sense of numbers that might seem like a relatively large one, it should probably be put in the context of the total number of US businesses out there.
According to the US Small Business Administration there were almost 31m businesses in the US in 2019. If 2,300 of those accept bitcoin, that would represent about 0.007 per cent of the total, or about seven in every 100,000. We imagine that many of these 2,300 businesses — perhaps most — are crypto- or blockchain-focused. So to say that “many retailers accept bitcoin” is possibly somewhat misleading. And what are these “operational purposes” crypto is used for that they refer to? They never explain. Still, compelling opener!
After the intro, Deloitte gets down to business: “What can crypto do for your company?” (emphasis ours):
To spark your company’s thinking about crypto, here are some of the rationales behind why some companies are currently using crypto:
• Crypto may provide access to new demographic groups. Users often represent a more cutting-edge clientele that values transparency in their transactions.
• Introducing crypto now may help spur internal awareness in your company about this new technology. It also may help position the company in this important emerging space for a future that could include central bank digital currencies . . .
• Crypto furnishes certain options that are simply not available with fiat currency. For example, programmable money can enable real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation .
Now we don’t want to suggest this report has been written by a bunch of crypto bros, but has this report been written by a bunch of crypto bros? Do they consider themselves “cutting-edge”? Do they think crypto has something to do with central bank digital currencies (it really doesn’t, apart from the word “digital”)? Real-time and accurate revenue-sharing while enhancing transparency to facilitate back-office reconciliation can be furnished, they say? Um, OK.
Then we’re furnished with more rationales:
• Crypto provides a new avenue for enhancing a host of more traditional Treasury activities, such as:
– Enabling simple, real-time, and secure money transfers
– Helping strengthen control over the capital of the enterprise
– Managing the risks and opportunities of engaging in digital investments . . .
• Crypto may serve as an effective alternative or balancing asset to cash, which may depreciate over time due to inflation. Crypto is an investable asset, and some, such as bitcoin, have performed exceedingly well over the past five years. There are, of course, clear volatility risks that need to be thoughtfully considered.
Yes, you see unlike more traditional Treasury activities, crypto enables simple and secure money transfers, and strengthens control over the capital of the enterprise (!??). Naturally of course it is also should replace cash on balance sheets, because it is guaranteed to not depreciate.
The whole thing reads like a sales pitch for Crypto Limited, not a serious report from one of the big four accounting firms. Paragraphs like this are strewn in throughout:
Crypto is viewed by some as a critical part of the evolution of finance. When your company chooses to engage with crypto, that triggers changes across the organisation, as well as changes in mindset.
After more fluff you come to the concluding paragraph:
The adoption and use of crypto and, more broadly, digital assets, is gaining traction across industries. Customers and service providers alike are beginning to see more fully the potential benefits of crypto. So, companies need to lean in and examine the relevance and application of crypto to their business. And executives should be prepared to provide a clear point of view and substantiated recommendations for an appropriate course of action.
It’s a shame that there was no section in this report that focused on what the risks or negative aspects of crypto are. Still, we’re sure that none of the authors of this report have any kind of vested interests here. Just doing their jobs as honest citizens and putting the cold hard truth out there aren’t they. So remember: lean in and see more fully the potential benefits of crypto!