Investing in Currencies

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.The writer is a global economist and the author most recently of ‘Edge of Chaos’Scepticism over the viability of cryptocurrencies has its roots in the framework of money as a medium of exchange, unit of account and store of value. Critics of bitcoin point to its instability and lack of nimbleness in transactions, but there are very good reasons for business leaders to invest in it.In terms of exchange, cryptocurrencies are cumbersome...

In 2020, more operating companies began allocating cash to digital assets and cryptocurrencies. This is a new dynamic and a departure from more conventional investing by funds and others in this space. One telling example is MicroStrategy Inc., which announced, last December, that it had made more than $1B in total Bitcoin purchases in 2020, a move that it characterised as an investment that would “provide the opportunity for better returns and preserve the value of our capital over time compared to holding cash.”1 Some companies have followed suit, and...