More CFOs See Gain in Bitcoin and Other Digital Currencies

Even though the Chief Financial Officer of Pepsico Hugh Johnson, who is also the Vice-Chairman of beverage behemoth PepsiCo said in a recent interview with CNBC that the beverage behemoth is unlikely to use bitcoin anytime soon because the digital asset is “too volatile and too speculative,” a recent study shows that CFOs globally are already showing much keenness on bitcoin and other digital currencies.

A September 2021 survey of 251 CFOs and other finance leaders revealed that 47% intend to assess digital currencies for business in 2022, according to Gartner. This again is a shift from a February poll by the analyst firm that centered on bitcoin adoption showed 84% of finance leaders said they would never hold bitcoin as a corporate asset and pointed to a range of risks associated with holding the currency.

“Sentiment towards digital currencies appears to be improving among finance leaders,” said Alexander Bant, Chief of Research in the Gartner Finance practice.

“As digital currencies mature and successful use cases materialize, finance leaders are looking at what their competitors are doing and whether it can be applied to their own organizations.”

Among CFOs sentiment was slightly more favorable, with 50% saying they intended to assess the risks and opportunities of digital currencies for their organization next year, says the research firm.“While the actual adoption in most corporate settings may not happen right away, it’s clear that digital currencies are beginning to make finance leaders sit up and notice,” said Bant.

“But interest remains tentative at this stage with around a quarter of respondents expecting their personal involvement to be quite limited and only a few percent expecting to take full leadership of digital currency initiatives.”

From the February polling data, the most noted risk was the volatility of digital currencies, and this is likely to remain a key concern as finance executives assess their merits next year.“That equation could be altered by increased CFO concerns around inflation in more traditional currencies,” said Bant.

“Some digital currencies may be seen as a viable hedge in an inflationary environment, and that in turn might lead many to consider taking payment in digital form especially considering the SEC said recently it won’t ban them as China has done.”

Bant also pointed to other potential long-term future benefits such as reduced fraud risk, improved ESG accountability, real-time transparent reporting and fast more accurate audits.

Digital currencies and blockchain are often incorrectly conflated as the same thing. Experts advise that blockchain may be useful for organizations even when digital currencies are not. Blockchain is a digital ledger in which each cryptographically signed record contains a timestamp and reference links to previous transactions. The records on a blockchain ledger are irrevocable and are shared by all participants in a network.

“While adoption of digital currencies based on blockchain might not happen in the near future for many organizations, it’s perhaps easier to see how business blockchains shared between organizations can provide CFOs opportunities to lower operational costs and drive efficiencies,” said Bant.

MicroStrategy President and CFO Phong Le sees tremendous opportunities in bitcoin acquisitions. “Bitcoin is digital gold, which makes it even better than gold. You can move bitcoin at the speed of light across different locales and different jurisdictions without the friction that moving money or gold entails,” he said in a recent interview with The Wall Street Journal.

He explained in the interview, “As we looked at the options for diversifying our $550 million in excess cash—from corporate bonds to equities and commodities like silver and gold—time and again we saw bitcoin as the best solution, as long as we could stomach short-term volatility in return for potential long-term asymmetric gains. We’ve been shown to have been reasonably right in the short term over the last six to eight months, and as we see more corporate treasurers taking a proactive view about what to do with excess cash, I think this is something everyone should consider.”

The Gartner study also noticed a number of key benefits CFO will notice on using digital currencies based on blockchain, number one being reducing costs – legal, payroll and transactional finance costs. These digital currencies can manage complex, fragmented, distributed supply chains across organizational and geographic boundaries, especially for fraud prevention. They can further verify the veracity of the origin and path of product components.

Bitcoins and blockchain-based currencies can help large complex organizations reconcile multiple databases intra company and track cross-charges, providing a single source of truth. It is also used as an automated and standardized way of audit, which can minimize and mitigate the chances of any biases affecting the audit’s outcome.