Bitcoin is hot news right now. The virtual currency has always been a topic of debate but since the start of 2021, it has been gaining popularity among analysts and companies, many of whom now consider it less of a fad and more of a game-changer. Up until last week, bitcoin traded at a price above $50,000, going on to hit a market value of $1 trillion for the first time.
However on Monday, according to a report by CNBC, US Treasury Secretary Janet Yellen voiced concerns on the legitimacy and stability of bitcoin which led to a fall in the price of the cryptocurrency. Ms. Yellen termed it an “inefficient way of conducting transactions” and pointed out issues such as association with illegal activities and the possibility of losses due to volatility.
Following these comments, bitcoin saw a drop in its price. On Tuesday, the virtual currency fell as much as $45,041, according to CNBC. Its value is now less than $900 billion. Still, bitcoin is up over 60% since the start of this year and market experts believe this sharp volatility is nothing new to cryptocurrencies.
Major companies that have accepted bitcoin
Several leading companies are now accepting bitcoin which is one of the main reasons behind its current rally. Five of them are listed below:
PayPal – Last October, PayPal Holdings (NASDAQ: PYPL) announced the launch of a new service allowing its customers to buy, hold and sell cryptocurrency directly from their PayPal account. The company plans to expand the features to Venmo in the first half of 2021. PayPal has partnered with cryptocurrency services provider, Paxos Trust Company, for this purpose.
Yum Brands – Yum Brands Inc. (NYSE: YUM), which owns Pizza Hut, KFC and Taco Bell, has accepted bitcoin as payment at KFC Canada earlier and is currently doing so at Pizza Hut Venezuela.
Starbucks – Last March, CoinDesk reported that Starbucks (NASDAQ: SBUX) was testing Bakkt Cash as a payment option on its mobile app for bitcoin payments.
Home Depot – The Home Depot Inc. (NYSE: HD) has partnered with payments start-up, Flexa, to provide the option of bitcoin payments in its stores.
Microsoft – Microsoft Corp. (NASDAQ: MSFT) began accepting bitcoin at its online Xbox Store in 2014. After halting temporarily due to the volatility, the service has resumed and can be used to buy apps, games and other digital content.
Risky business
Despite this popularity and acceptance, bitcoin is considered a very risky business. Due to the lack of proper regulation, it is subject to sharp market volatility giving rise to the risk of heavy losses. There are also security concerns due to the public nature of its transactions and its vulnerability to hacking. Although storage options like paper wallets are considered safe, the risks that arise from the loss of or damage to the paper wallet are far worse than the security benefits. In addition, any losses from bitcoin-related issues are irrecoverable. So is the risk worth it? Maybe not.