Bitcoin as Company Cash Reserve | Bitcointalksearch.org

shield132

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Quote from: mk4 on September 30, 2020, 10:36:33 PM

Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

The question here is what could be the difference of a company holding an Bitcoin for reseve asset than an ordinary man buying holding a Bitcoin?

Completely depends. Depending on how much bitcoin a certain company holds, they may be forced to liquidate the bitcoin if it comes to the point that they need more cash to keep the company running. This is why I find it really risky for MicroStrategy to be holding a huge amount of bitcoin(in contrast to their company's assets and marketcap). But then again, I'm pretty sure their CEO is a hundred times smarter than me so who am I to judge his choice.

It's the riskiest move but the smartest one at the same time, it's like a Va-Bank. I think they have a huge hope after a lot of predictions that company will profit without problem in near future and probably on long term and it won't have a need of using reserves, it's like: We are sure we will grow and don't need any reserves but why to just leave our reserves put on the table? Let's convert it into bitcoin and if bitcoin rises, we will have a decent profit and it will help us with upcoming profit to expand and develop even further. Yesterday's 10K USD tomorrow will turn into 100K.
That's what I think about it, otherwise to convert your asset reserves into bitcoin is a very, very risky move (especially without smart plan) and playing of Russian roulette for a company.

pokeronlinestatus

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This is quite a risk that this CEO has taken here. Imagine that the price of Bitcoin happens to crash to a very low price, it’s going to put the company in jeopardy.

On the other hand if there happens to be another bull run that is similar to the one that happened back in 2017, the company is going to be doubling its net worth and will become very rich which is a nice thing. I just hope that they mess everything up for themselves. Maybe putting half would have been a better choice? Than going all in with the company’s reserve?

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Quote from: taufik123 on October 01, 2020, 05:31:18 PM

Large companies that start to adopt bitcoin and make Bitcoin as their Main Reserve asset, is certainly a big step. We know Bitcoin is a digital asset with high votality and risk, but the company makes it their main reserve.

Chances are they have already thought of a strategy how they can benefit more from bitcoin. They may have bought bitcoin at the lowest price and then held it until the price went up and made a profit. What is certain is that they already have an expert in the field of digital asset trading who has thought about what strategies are good and profitable, they also realize that Bitcoin will be very risky. They are professionals and they know what to do.

Whenever the company holding a Bitcoin for reserve assets it highly affects bitcoin price.
The company positively takes the market with highly invest. While an ordinary man can not help much for the market.
Bitcoin will be the future of money and a lot of companies gonna make benefit from it.
I've assumed that bitcoin didn't drop so bad its stable. For me its the right time for companies to use bitcoin as an asset.

rollingdice

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Such a courageous decision if we take into consideration Bitcoin high volatility.

maxreish

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The only difference from that of a single guy purchasing btc with that of the company was ofcourse, those private companies can purchase huge amount of bitcoin. And if they'll gonna use it as a reserve asset, they'll taking the risk but gaining for real. Of course, it may ffect the market if they'll sell off their holdings.

And it is not surprising that more companies are jumping into cryptocurrency as their reserve asset, it will gonna help the company grow financially. I believe, they've seek advice from other companies that already been doing this since before. They'll not gonna take this risk if they haven't seen such success from the other companies as well.

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Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

Since for me, it is a purely risky since it is company and a lot of people are relying on the company itself. But somehow, there's also a lot of possibility that their reserve will generate a huge returns for them if ever Bitcoin will continue to increase it's price.

reserved funds means that its not thier primary funds thats why its okay for them to trust this funds in bitcoin and there is not only risk on here but theres mostly rewards that they can get .

i think if im the company leader ill also suggest this and will do the same instead of seeing the funds in the corner and not growing . why worry when you are not part of the company anyway ? but you should be happy instead for this news and for them .

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Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

The question here is what could be the difference of a company holding an Bitcoin for reseve asset than an ordinary man buying holding a Bitcoin?

Since for me, it is a purely risky since it is company and a lot of people are relying on the company itself. But somehow, there's also a lot of possibility that their reserve will generate a huge returns for them if ever Bitcoin will continue to increase it's price.

You said the difference already.

Putting the money that is being reserved by a company to an asset which is considered high risk as of this moment is considered a risky move by them. It may also affect the price movement of Bitcoin depending on the number of BTC they will buy and they will sell. One thing more to this is that, this is risky because anytime the price of Bitcoin can goes down and their reserved money can go lower because of this. Instead of just holding cash since it is just a reserve, they risked it and put it in Bitcoin.

An ordinary man holding Bitcoin is different since he is just thinking of himself when he is investing into it unlike the company where he is thinking the whole company and the employees. Chances of the company doing this is low since they see some risk in doing this.

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Quote from: Lorence.xD on October 01, 2020, 10:01:45 PM

With the current price climate of bitcoin, chances are they can't pull out the their reserve immediately. The emergency and the prices might not match which might cause shortage in funds or worse bankruptcy. If I were the CEO of a company, I would hedge my bet on putting my reserve in a 50:50 split of cryptocurrency and fiat because cryptocurrency is not yet widely adopted.

Agreed. Only few companies are risking there reserve in BTC because its too risky currency to use for reserve just like what happened on other venture capital that invest on BTC last crypto hype and lost tons of money after the huge dump. I believe hedging there reserves in crypto is the best way to protect there reserve value if they really to invest in crypto. Even a 50:50 ratio is very dangerous considering the amount of money they are holding, just like what you said, liquidity might not be enough in case they decided to liquidate there BTC position.

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Quote from: GreatArkansas on October 01, 2020, 06:45:37 PM

Additional to this topic.
MicroStrategy company which is major in mobile application and cloud services providers.

"MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M." - Source

This company can be our example for using Bitcoin as company cash reserve. I really admire the CEO of MicroStragey, it's really a risk taker and also one of the big supporter of Bitcoin.

You can check on his tweet here.

this is what we all wanted to happen,that companies worldwide will consider cryptocurrencies are their reserve like what these companies now are doing.
Microstrategy find it reliable thats why the break the silence and start using bitcoin to be in their reserve,better than Gold Bitcoins volatility and decentralization is why people like CEO of Microstrategy trust and now using Bitcoin.
to follow are other company
from every part of the world will Buy bitcoin and that will be the true spike of adoption and the 6 digits that we all waits will soon to come.
i have some gold also as investment but majority
is Bitcoin and some altcoin that i really trust and support.

Lorence.xD

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With the current price climate of bitcoin, chances are they can't pull out the their reserve immediately. The emergency and the prices might not match which might cause shortage in funds or worse bankruptcy. If I were the CEO of a company, I would hedge my bet on putting my reserve in a 50:50 split of cryptocurrency and fiat because cryptocurrency is not yet widely adopted.

GreatArkansas

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Additional to this topic.
MicroStrategy company which is major in mobile application and cloud services providers.

"MicroStrategy Buys $175M More in Bitcoin, Upping BTC Holdings to $425M." - Source

This company can be our example for using Bitcoin as company cash reserve. I really admire the CEO of MicroStragey, it's really a risk taker and also one of the big supporter of Bitcoin.

You can check on his tweet here.

taufik123

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Large companies that start to adopt bitcoin and make Bitcoin as their Main Reserve asset, is certainly a big step. We know Bitcoin is a digital asset with high votality and risk, but the company makes it their main reserve.

Chances are they have already thought of a strategy how they can benefit more from bitcoin. They may have bought bitcoin at the lowest price and then held it until the price went up and made a profit. What is certain is that they already have an expert in the field of digital asset trading who has thought about what strategies are good and profitable, they also realize that Bitcoin will be very risky. They are professionals and they know what to do.

stomachgrowls

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Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

I found this on twitter which this guy told that they already moved to a bitcoin standard which they are using Bitcoin as their primary reserve asset.

At first, I am glad reading this, I hope this is true.
I know there are lot of advantages and disadvantages for this, especially they are buying Bitcoins with the company's money and it will become a reserve asset.

The question here is what could be the difference of a company holding an Bitcoin for reseve asset than an ordinary man buying holding a Bitcoin?

Since for me, it is a purely risky since it is company and a lot of people are relying on the company itself. But somehow, there's also a lot of possibility that their reserve will generate a huge returns for them if ever Bitcoin will continue to increase it's price.

We know the risk but there are people/company/businesses that do embrace it out in spite of the chance or possibility on getting negative instead.

I dont know if they do make out some analysis first before making such step or just purely rushed into making such decision on putting up their primary reserve into bitcoin.

havent reached out into their consideration about the risk that could happen?If they do then i can say that they have somewhat that gambling kind of mind.To be frank, we cant really deny the risk of losing money
no matter how bullish you are with BTC but you cant just risk out that big amount.

Good thing for them if the market rose but if it would dumped? Panick will surely be felt.

pixie85

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Not sure if the tweet is real. Holding reserves in Bitcoin seems risky.

Bitcoin is still an investment not a safe store of value for a company and it's because although I believe in Bitcoin and know it's going to gain value over time it has periods of short term bearishness where it can take months or even years before the price normalizes.

As a company you may need the money here and now because of expansion or a worse year that makes you reach for reserves. You can't wait 2 yearsfor the bear market to be over.

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Quote from: Shasha80 on October 01, 2020, 01:44:53 PM

I am sure that many companies have decided to buy Bitcoin as company cash reserve. Because the price of Bitcoin continues to rise,
which takes into account why many companies decide to use Bitcoin as company cash reserve. Even I, who own a small business,
have made Bitcoin a company asset. Because I believe that if the Bitcoin price goes up, make my business finances healthier. Indeed,
the decision to make Bitcoin as company cash reserve is a bit risky, because the price of Bitcoin could fall and make the company's
finances unhealthy. Therefore, the company must have a financial advisor who can analyze the Bitcoin market well. That way it will be safer,
because the company can make risk management.

I wonder what would happen if they need some quick capital and has to liquidate their bitcoin by converting it to fiat. You know right, the price of bitcoin does not continue to rise each and every day? I mean What if the price has tanked to the bottom and it is that exact moment they are needing the cash most? Wouldn't they be making a huge loss by converting their reserves at the moment? This will also make it harder for them to repay debts. They will have to take every financial decisions very carefully.
Since you also use bitcoin as a reserve for your "small" company, would be great if you let us know how would you be managing the risks.

Shasha80

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I am sure that many companies have decided to buy Bitcoin as company cash reserve. Because the price of Bitcoin continues to rise,
which takes into account why many companies decide to use Bitcoin as company cash reserve. Even I, who own a small business,
have made Bitcoin a company asset. Because I believe that if the Bitcoin price goes up, make my business finances healthier. Indeed,
the decision to make Bitcoin as company cash reserve is a bit risky, because the price of Bitcoin could fall and make the company's
finances unhealthy. Therefore, the company must have a financial advisor who can analyze the Bitcoin market well. That way it will be safer,
because the company can make risk management.

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Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

At first, I am glad reading this, I hope this is true.
I know there are lot of advantages and disadvantages for this, especially they are buying Bitcoins with the company's money and it will become a reserve asset.

The chance for it to be truth 90% because alot of private companies are somehow investing in Bitcoin ever since Bitcoin prove itself to be potential currency during the total lockdown and some company in Brazil have also join th race.

Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

The question here is what could be the difference of a company holding an Bitcoin for reseve asset than an ordinary man buying holding a Bitcoin?

Reserve asset are fund kept as a backup for country or company and it also use as fund for balance international transactions and payments. So, they definitely see Bitcoin as the currency to expand their company asset and also to go globally.

Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

Since for me, it is a purely risky since it is company and a lot of people are relying on the company itself. But somehow, there's also a lot of possibility that their reserve will generate a huge returns for them if ever Bitcoin will continue to increase it's price.

The decision is risky but if they learn from crypto exchange site system and how they manage their reserve asset to make a profit through it, the risk can be avoided.

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Quote from: erikoy on October 01, 2020, 05:40:24 AM

We can't get their actual reason why they make bitcoin as their reserve cash or asset but they are free to decide on that matter and it is none of our business. If we will going to speculate why this private company had been eyeing this kind of decision then I am more positive that he sees bitcoin will going to grow as time passes by. Yes, it has been good to make bitcoin as a company cash reserve but this there are lots of advantage and disadvantage as what OP mention. Probably, they decide to risk it all and will hold it only if they can't get return to it and will eventually use the funds if they can get a good return from a good bitcoin market.

For me, the reason is quite simple, they see bitcoin as a good place to store their company's asset. That is because of the current performance and service that bitcoin has provided to us, we didn't also see bitcoin drop so bad that it took away millions of dollars. But right now, bitcoin is performing quite better and with stability. Relating it to the characteristic of bitcoin, in the future, it will be more difficult to acquire one, so they are also taking advantage of the time to convert their funds to BTC as they see it's price going up in the future.

teosanru

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Working of companies(of a reputable scale) isn't that simple. They contain complex structure and rules even for the use of money. I mean generally companies set out a risk management policy for their Financial Advisors and they take their risks accordingly. No prudent company would go with it's full cash in Bitcoin.

Moreover in most of the countries companies are administered by central laws and these laws generally also administer how companies use their money. Because in companies the money generally doesn't solely belongs to the directors the money is of the shareholders and Law creates lot of responsibilities upon Director to take care of this money

Difference of company having reserve is merely one and that too is applicable for larger companies. That is if the companies are holding risky assets such as bitcoin. Generally they won't directly buy bitcoin they would rather buy synthetic derivatives of such coins so that they just have to pay the margin money thereby increasing their ROI. This would lead to increase of an OTC market which would mean that new investment banks could join this field.

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Quote from: GreatArkansas on September 30, 2020, 08:19:13 PM

I found this on twitter which this guy told that they already moved to a bitcoin standard which they are using Bitcoin as their primary reserve asset.

At first, I am glad reading this, I hope this is true.
I know there are lot of advantages and disadvantages for this, especially they are buying Bitcoins with the company's money and it will become a reserve asset.

The question here is what could be the difference of a company holding an Bitcoin for reseve asset than an ordinary man buying holding a Bitcoin?

Since for me, it is a purely risky since it is company and a lot of people are relying on the company itself. But somehow, there's also a lot of possibility that their reserve will generate a huge returns for them if ever Bitcoin will continue to increase it's price.

I consider this strategy as a gamble or might look good for some reasons because who knows when they need that reserved money. If they bought BTC with the reserved money from its lowest price, their company reserved money had been increased significantly today. This is some good strategy they got here as long as they've bought BTC at its low price. Because no matter how bad the situation of the market is, the price will recover after some few months of decline.

Topic: Bitcoin as Company Cash Reserve (Read 402 times)