In his recent interview with CNBC, Hugh Johnson, the Vice-Chairman, and chief financial officer of the beverage behemoth PepsiCo, said the company is doubtful to use bitcoin anytime soon. He noted that bitcoin is a digital asset and is very volatile and speculative. A recent study on the same topic shows that CFO’s of some global companies are offering good interest in using bitcoin and other cryptocurrencies.
According to Gartner, in a September 2021 survey, 47% of 251 global CFO’s and other financial heads showed interest in using digital currencies for business in 2022 and 2023.
The September poll is quite a shift from a survey done in February by Gartner. The survey of February 2021 concentrated mainly on bitcoin adoption only. It showed that 84% of financial leaders did not want to use bitcoin as a corporate asset because of the risks involved with the volatile nature of the currency.
CFOs’ Sentiments Improve Further
According to Alexander Bant, Chief of Research with Gartner Finance, financial leaders are now more open to digital currencies than before. With more successful use cases of cryptocurrencies, the economic leaders are keen to know what their competitors think about using digital currency and the chances of using these currencies within their organizations.
The research firm also said that even though the CFO’s sentiments were a little more favorable than before, 50% of these leaders still intend to evaluate the risks and opportunities related to these digital currencies by next year. It further said that the actual adoption of bitcoin may not happen as smoothly with the corporate houses. Still, it is good news that the financial leaders are finally noticing these digital currencies.
Bant also said that the interest remains unclear, and 25% of the leaders say that their association with digital currency is minimal. Only a small percentage of CFOs were keen to take full advantage of digital currency initiatives. The data from the February polls pointed to the volatile nature of digital currencies as the most notorious risk, and this will most likely remain the key concern when the finance heads study the merits next year. This equation can only change if more CFOs show concern about inflation in traditional currencies.
He further added that a few digital currencies could become a feasible hedge due to inflation. This may prompt some companies to consider taking digital payments. It is also in the light of the statement by SEC that it won’t ban such companies as many Chinese companies are now accepting digital payments. Bant favors digital payments as they have many benefits like more ESC responsibility, lesser risk of fraud, transparent reports, and reliable audits.
It is also crucial to note that digital currencies and blockchain are two different things that are often confused with being the same. Many experts believe that blockchain can be beneficial to companies, even if they take digital payments or not. For the less aware, blockchain is a kind of digital ledger that contains each cryptocurrency’s signed records with timestamps and reference links of all new and previous transactions.
These digital ledger records are permanent, and all participants of the network share the same. The companies might be slow to adopt digital currencies based on blockchain soon, but blockchains shared between organizations can be very helpful. The CFOs can use these blockchains to lower manufacturing and operating costs and make the companies cost-efficient.
Phong Le, MicroStrategy President, and CFO advocate the vast opportunities related to bitcoin acquisitions. He considers bitcoin as digital gold and even better than gold. As per Phong, it is easy to move bitcoin at lightning speed across different locations and jurisdictions without the hassles of trading gold or money. He expressed his views in a recent interview with the Wall Street Journal. In his interviews, he said that while looking for various options to diversify their $550 million of excess cash, he considered options like corporate bonds and equities and commodities like gold and silver.
But he said that he sees this as an excellent time to consider bitcoin as a good solution if the companies can handle the short-term volatile nature while looking at the potential long-term gains. He also said that he was correct in this view as more and more corporate treasures were actively thinking of what to do with their excess cash over the last six to eight months. He also urged that more CFOs should consider this trend.
The Gartner study also pointed out many essential benefits that CFOs can get if they use blockchain-based digital currency. These benefits may include reduced legal, payroll, and transactional finance costs.
It is easy to manage the complex, distributed, and fragmented supply chains that spread across huge organizations and geographical locations with digital currencies. These organizations can also easily verify the integrity of the path and origin of the products and various components. Blockchain-based currencies, especially bitcoin, can help these big companies maintain and reconcile complicated databases within the company and track any changes. It will, in turn, help to automate and standardize the process of audit in these companies. With a standard audit process, there will be lesser chances of bias affecting the outcome of any audit.
