Software Firm Snappa Swaps 40 percent Cash Reserves for Bitcoin
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The Snappa announcement came on August 24, 2020; the company converted 40 per cent of its cash reserves to Bitcoin(BTC). The Snappa move to Bitcoin followed similar announcements by Microstrategy and Tahini’s restaurant chain. The trend among Canadian firms is based on observations of the national economy, and it also reflects a view of global economic conditions. The reasoning and strategy underlying these moves may apply to businesses and investors around the world.
Reasons for the Snappa Move:
Snappa acted to protect its cash assets against a perception that fiat currency or cash would not yield more excellent value than Bitcoin. According to Snappa’s analysis, cash holdings were subject to national monetary policy. Quantitative easing in Canada supports national economic goals, and it involves managing debt and creating additional supplies of cash. Quantitative easing has reduced the levels of interest paid by banks and thrift institutions. Snappa reported that its latest investment interest rate was 0.45 per cent.
Bitcoin is not subject to the impacts of economic policy. Unlike a national currency, no central bank can continuously increase the supply and possibly reduce its value. The below-listed items describe the financial foundation for the conversion of cash reserves to Bitcoin.
- Bitcoin has a limited volume
- Government monetary policies will not dilute Bitcoin
- Bitcoin has a transparent supply to flow
- Bitcoin May be More Predictable
According to Snappa’s analysis, Bitcoin has advantages in today’s economy over cash for holding reserves. The money supply can expand to carry-out national economic policies. When the money supply grows, the value of money can fall. Moving to Bitcoin is a hedge against volatility in the amount of cash in economies that apply monetary policies like quantitative easing.
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