Industry News Ethereum is making Headways into the Institutional Adoption Arena

Ethereum is making Headways into the Institutional Adoption Arena

March 10, 2021

In the context of cryptocurrencies, mentioning names like Square, MicroStrategy, and Tesla Motors makes perfect sense. Among them, these companies that have a global presence have already made investments of billions of USD into digital currencies. More precisely, all of them are holding vast numbers of BTC tokens they bought recently. Some of them, like MicroStrategy, doubled down on their investment in the recent correction of the crypto markets. They clearly, for better or worse, believe in the digital currencies and the potential they have, not just in regards to elements of investment and return they might expect, but also the technological implications they carry.

Like esports, digital social media and many more IT breakthroughs of the 21st century, cryptocurrencies are also an incredibly powerful tool that is only becoming somewhat defined in the minds of the industry leaders not just in finance, but any other domain as well. However, the issue of crypto institutional investment is so far very one-dimensional. Instead of having a diversified portfolio, institutions are focusing on bitcoin BTC tokens and practically nothing more. Yet, there are signs that this might be changing, and surprisingly, ETH is leading the field. If the ETH token becomes a part of corporate balance sheets, the opening for a further expansion of diverse digital tokens could quickly become immeasurable.

Filling the Digital Corporate Treasuries

The movement like those from MicroStrategy was and continues to be all about adding a new element to the corporate treasury. Naturally, such movements did not go unnoticed. Mass media quickly latched onto it. With that, began the news media cycle that quickly broadcasted the same information across the world and thus in the minds of many company bosses. Many among them probably previously dismissed any possibility of getting bitcoin in their portfolio, but now, a new version of the fear of missing out began pressing on the same figures.

The pressure likely continues to exert itself, especially there where a board of directors might be pushing for a riskier strategy in the fact of mounting pandemic problems. So, the news about big companies buying crypto is now a part of the overall business landscape. Instead of this news staying in the shadows, crypto companies and consultancies are now bending over backward to help businesses navigate the same space. That is happening because more and more corporations desire to enter the investment domain with their fiat funds.

Ether Question

While there is no doubt that the broader corporate domain is more and more aware of the crypto potential, one mysterious question remains. That is related to the use of ethereum tokens for this purpose. More precisely, why are they not a part of the growing corporate coffers of digital tokens? Some believe that this is related to the problem of volatility in the ETH ecosystem. Yet, the same problem can be translated to any other crypto space, including the bitcoin network as a whole. Numerous critics took the time to point out that bitcoin is too volatile to present a stable store of value. However, others clearly understand that this is a very short-term view of the same space and how it fits into the wider corporate domain. In the near future, bitcoin value compared to fiat currencies might plummet, as it did in March of 2020 during the market crash.

However, long-term, the same space is drawing in money faster than many other similar undertakings, especially those in the tech domain. At the same time, the supply of BTC tokens, like ETH tokens, remains relatively low and the demand for them is in any case increasing a lot faster than the same supply does. Here, all cryptocurrencies have the same advantage compared to cash. It, even with a fixed 2 percent inflation target, remains a wasting asset that slowly dissolves over time. However, even with all of that, there is no denying that many businesses are still not moving to purchase ethereum ETH tokens.

Specific Value

It should also be noted that the ethereum network does not simply mirror the appeal and potential of the much langer bitcoin network. It is first and foremost much smaller and will remain so in the foreseeable future. While back in 2016 there was much talk about the narrative of the flippening – a scenario where ETH would slowly take more market capitalization and price value as BTC fell in both – is long gone even for the most ardent supporters of ether.

So, in this constellation, BTC will remain the big gun for companies looking to pour their money into a particular asset. However, that was never the pitch that this cryptocurrency offered to its users and potential investors. Instead, it always pivoted towards the much stronger side of the same network – its technical aspects and the potential that they provide to anyone who employs it.

Corporate DeFi

The angle that many companies are bound to take will be a more technical one. That means that businesses will begin procuring ETH tokens inside of the decentralized finance domain and using them in the same manner. Instead of buying and holding their tokens, like in the case of the BTC option, they will be actively employing the ether tokens to provide some kind of decentralized finance services. The implications of that decision could be monumental because they could herald a further stepping away from the traditional institutions of finance, like banks for example, and moving onto self-sufficient systems that take on the same or broadly similar workload.

That could allow businesses to slim down their cost of operations, providing a substantial long-term benefit. In short, ETH could start powering digital payment processes and many similar things, while at the same time, it would also offer further diversification of liquid assets, which is an added benefit. That is why some believe that ETH could play the role of digital oil to the alternative of BTC being digital gold. At least that is the present paradigm and it is most definitely putting ethereum on the corporate radar.

Source: Coindesk