- Author: Nina Hendy
- Posted: March 31, 2021
Elon Musk’s ‘Master of Coin’ Openly Displays Deep Loyalty to Digital Currency
By Nina Hendy
Sit up and take notice. The CFO to the world’s richest man has changed his title to ‘master of coin’. By Nina Hendy.
When the CFO working for the world’s richest person changes their titleto ‘master of coin’, financial folks tend to sit up and take notice.
Zach Kirkhorn works for Tesla, reporting to billionaire chief executive Elon Musk. The new job title is a nod to Tesla’s investment in bitcoin the company made last month, which in turn sent shares in the digital cryptocurrency soaring.
Musk, who has previously changed his Twitter biography to #bitcoin, recently announced to the Securities and Exchange Commission that it purchased $1.5 billion worth of bitcoin, which it says has already made the company more money than 13 years of car sales.
The car marque will also start accepting payments in bitcoin in exchange for its products, making it first of its kind to step into the crypto world.
But wait, there’s more.
The finance world collectively choked on their Weet-Bix when news broke that a mysterious buyer paid $69.3 million for a digital collage this month.
The auction heralded an historic moment for the art world, marking one of the highest prices ever paid for work by a living artist.
The buyer emerged as a cryptocurrency entrepreneur who uses the pseudonym MetaKovan, who had bought other works by the artist and divided ownership of them into blockchain tokens, selling these to the public.
The stunning sale price made headlines around the world, shining a spotlight on the rise of Non-Fungible Tokens (NFTs) as they transform the world of collections. NFTs are touted as the digital answer to collectables, while bitcoin has been hailed as the digital answer to currency.
Others in the artistic space are following suit, too. Rock band Kings of Lean also announced they are getting into the crypto game as they released their eighth album, When You See Yourself, selling the album via NFTs.
It’s also spreading into the premium fashion world. Gucci is leading the foray into digital-only fashion, unveiling a pair of augmented reality sneakers, which can be purchased for around $AU16 worn in virtual worlds. Sounds like a bargain given Gucci can retail for as much as $1,000 a pair.
Even the Reserve Bank announced it is partnering with Commonwealth Bank, National Australia Bank, Perpetual and a blockchain technology company to explore the potential use and implications of a wholesale form of digital currency.
What is an NTF?
If you are unfamiliar with NFTs, they’re essentially a type of cryptocurrency that, instead of holding money, holds a unique digital asset that allows art and other media to be tokenised.
It means that buyers get a truly unique piece, with the assumption that the token’s value will increase over time as the crypto sector gathers pace.
It raises questions over whether CFOs should be taking notice of what Tesla are doing, and buying up big.
Caroline Preuss is the CFO of The Perth Mint says that CFOs need to open their minds to this intriguing world of digital currency, which requires an investment of time.
Building appropriate business relationships with fin tech companies can require different skillsets to other more traditional organisations. “The often thought of ‘softer skills’ of communication will become much more important in these kind of relationships,” she says.
“There will be a further evolution of the CFO role as we understand risk and take more responsibility in managing risk for our organisations,” she says.
“This will involve having a clear understanding of an organisation’s risk profile to ensure businesses remain within their approved risk appetite’s and understanding all business is around taking and managing risks appropriately.”
If you are still sitting on the fence though, you’re by no means alone.
A recent Gartner survey suggests CFOs are not yet ready to dabble in the world of digital currency.
In fact, just 5 per cent of finance executives polled in February this year said they planned to hold bitcoin as a corporate asset this year.
The poll of 77 finance executives (including 50 CFOs) revealed that volatility was the top concern by a large margin, while the other big issues were board risk aversion, slow adaption as an accepted form of payment, regulatory concerns and a lack of expertise in cryptocurrencies.
Alexander Bant is Gartner’s chief of research in the finance practice. He says there are a lot of unresolved issues when it comes to the use of bitcoin, and that it’s unlikely that adoption will increase rapidly until there’s greater clarity on these challenges. “Finance leaders who are tasked with ensuring financial stability are not prone to making speculative leaps into unknown territory,” he says.
Seventy-one per cent of respondents said one of the top things they’d like to know is what others are actually doing with bitcoin. Sixty-eight per cent want to hear more from regulators about bitcoin and better understand the risks involved with holding it, he says.
Even the 16 per cent of respondents willing to adopt cryptocurrency as part of their organisation’s financial strategy appeared in no rush. Five per cent of respondents indicated that they would begin to hold bitcoin in 2021, 1 per cent said they would hold bitcoin at some point in 2022/23, while the remaining 9 per cent who indicated that they would begin holding bitcoin in 2024 or later.
The volatility does not sit comfortably with finance folks, with reports that Wall Street CFOs are more wary of putting company funds into bit coin after a recent 30 per cent price plunge.
If the volatility can be arrested, it could be a different story altogether, though.
Watch this space.