Why businesses are using crypto: Gartner

Enterprises are beginning to see the value in digital currencies with their main business use cases being stored value and leverage.

Digital Nation Australia spoke to Avivah Litan, distinguished analyst at Gartner Research and specialist in AI and the blockchain. She revealed that the most common enterprise use case of crypto currencies are using the coins as a hedge against the dollar.

“Governments around the world are printing all kinds of money now, and inflation is starting to pick up as you've seen in the United States. So there is this belief that those currencies such as the US dollar will be worth much less in the future and traditionally treasurers have bought gold as a hedge,” said Litan.

“Now you see treasuries also buying Bitcoin as a hedge against the US dollar and other currencies.”

Whether these cryptocurrencies will turn out to be a strong hedge is open to debate she said, but many treasuries are seeing value.

Bitcoin has a fixed supply of only 21 million Bitcoins to ever be issued, which has led to many comparisons to gold due to its scarcity.

“KPMG Canada just bought Bitcoin for their books. You've probably heard Mass Mutual has done that. Tesla's done it.”

The second enterprise use case is leverage, said Litan, which is where cryptocurrencies are used as collateral for a loan.

“You can get much higher rates than you can get from your bank, or you can engage in other kinds of derivatives and financial instruments,” she said.

“We do see traditional companies getting compliant access into this DeFi world so they can put their money to work and make much higher yields.”

According to Litan, the fastest adopters of crypto in enterprise are the financial and retail sectors.

While financial services are interested in the hedging and collateral opportunities, the retail sector is involved through not only accepting cryptocurrency for payments but also through the buying and selling of non-fungible tokens (NFTs).

“Let’s say they are a maker of luxury purses or sneakers like Nike, and Nike and Gucci have figured out how to make money on issuing an NFT of their luxury goods or their sneakers and selling them in these virtual worlds.”

According to Litan, in the next three to four years, at least 20 percent of large enterprises will be using digital currencies.