By Bentley Kapoor (India)
Co-founder and CEO of Snappa, Christopher Gimmer announced on Monday, 24th August that the company had decided to use Bitcoin as their reserve asset. The Canadian startup boasts a cloud-based graphics design tool and has only recently decided to opt for crypto as their reserve asset rather than fiat. The CEO explained that after checking the low-interest rate available for a Canadian dollar or U.S. dollar savings account, they had come to the conclusion that the purchasing power of their fiat savings was actually going down after being adjusted for inflation. Therefore, it didn’t take them long to realize that Bitcoin was the answer to their problems.
Hence, the company had begun accumulating Bitcoin from March of this year, and currently, the cryptocurrency makes up for a significant percentage of their ‘overall cash reserves’. Gimmer said that they had thought about using gold as a reserve asset, but they had decided against it after going over the paper published by Vijay Boyapati titled ‘The Bullish Case for Bitcoin’. It had made them realize that Bitcoin was a far superior choice where the store of value is concerned because the pioneer cryptocurrency will continue to outperform gold in the coming years and decades.
Gimmer disclosed that he was quite concerned about maintaining his company’s purchasing power for their savings due to the macro environment these days. He said that even though there was a lot of debate about whether or not QE causes CPI inflation, which he considered a flawed metric, it was quite obvious that QE had contributed to asset price inflation. Furthermore, he said that these policies were continuously widening the wealth inequality because of which people were now looking for more permanent types of UBI i.e. universal basic income and this would definitely lead to CPI inflation.
According to Gimmer, putting your money in a savings account or buying short-term government debt is now resulting in a negative return when adjustments are made for inflation. The Snappa CEO said that some people do consider Bitcoin quite a risky asset, but holding fiat currencies, particularly over longer durations, is just as riskier. In May, the announcement made by Paul Tudor Jones II, a prominent American hedge fund manager, about using Bitcoin as an inflation hedge also left a powerful impression on Snappa. However, it wasn’t the same as the announcement earlier this month by MicroStrategy Inc., the business intelligence company listed on NASDAQ, about purchasing Bitcoins as a reserve asset.
This left an even more powerful impression on Snappa. Gimmer said that he is aware of the primary risks involved when using Bitcoin as a reserve asset. These include short-term price volatility, which can be mitigated by keeping an ample amount of fiat dollars, regulatory risk, which he believes is quite unlikely at this point and protocol risk. The last involves a major bug being highlighted in Bitcoin Core software, but Gimmer said that it has been running smoothly for the last 11 years, which means the flaws are quite unlikely.
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