Ten years ago, cryptocurrency – most notably of all, Bitcoin – was in its infancy, and for the most part, still being discredited as a strange fad that wouldn’t go anywhere. But just five years later, it was a bull market, with self-made millionaires racking up huge amounts of coins they couldn’t wait to spend, thanks in no small part to the latest online trading platforms such as Bitcoin Up.
It wasn’t long before some of the most business savvy entrepreneurs saw an opportunity to cash in on a slice of the action, too, and started tapping into the high-end crypto market to provide services in exchange for the online currency.
One such example is US-based The White Company – a luxury concierge service providing everything from Aston Martins to rare artwork at a moment’s notice, and just the click of a few buttons online.
Bringing in over $250 million – that’s nearly £200 million in British pounds – in the past year alone, it’s left in little doubt that its creation was a smart business decision, and one that has paved the way for numerous other entrepreneurs to follow suit, creating businesses that offer products and services in exchange for cryptocurrencies. Put simply, they want to join the blockchain party and get a slice of the cryptocurrency pie due to the impressive returns on investment on offer – and who can blame them?
So, why luxury? Because the small percentage of those who are privileged to have Bitcoins to exchange are affluent, high net, and enjoy the finer things in life. In general, luxury is in high demand, and offers status to those who seek it – so it’s little wonder that things like VIP travel packages, First Class flights, high-end sportscars and expensive art are some of the most coveted products and services amongst investors.
From the consumer side of things, the ability to purchase expensive cars, jewellery and watches with cryptocurrency remains a novelty – yet today, it is relatively widespread. World-famous Bonhams car auctions began accepting Bitcoin back in 2018, making transactions swifter and more efficient than ever – and many other have since followed suit.
Even travel and holidays can now be arranged and paid for with Bitcoin – and you don’t need a concierge service to get your fix. Travel giant Webjet now allows such transactions to be made – no doubt earning it a hefty upswing in luxury bookings made by big spenders across the globe.
It’s not just luxury companies that have benefitted from the birth of cryptocurrencies, though; in 2017, CNBC reported that in the US, charities received over $22 million in Bitcoin donations alone – so is the promise of a smoother, hassle-free transaction the cause of this surge in generosity?
The lack of transactional fees is certainly attractive. Users can send money to anywhere in the world without paying for the privilege – something which quite simply doesn’t exist outside of cryptocurrency. And, when you consider that some of the world’s most luxurious companies are spread across the globe – from the LVMH Group to Formula One, it makes perfect business sense to use this new-age method to trade.
There’s no denying that over the past few years, bitcoin has enjoyed a meteoric surge in popularity and in 2017, cryptocurrency experienced a huge bull market, making many small investors overnight millionaires. The result? A new generation of younger, tech savvy millionaires who were more likely to spend and enjoy their fortune than reinvest, as their older, more sensible counterparts – coming from a generation of lesser freedom and excess – likely would have done.
The result? Cryptocurrency transactions are no longer seen solely in the luxury market, but are making their way into the mainstream, too. Today, you can even pay for fast food using bitcoin – something that at LLM, we never imagined we’d see.
So, what next for cryptocurrencies? The speculative bubble has certainly passed – but nonetheless, Bitcoin and other cryptocurrencies remain one of the most popular investments today. The overnight riches they once delivered are unlikely to recur, but those willing to play the longer game are still likely to enjoy modest returns in the long-run.
And in the meantime, we can expect to see bitcoin becoming more and more of a household name, with everything from home décor to pet supplies likely to be swept up in its wave.
Investing in cryptocurrencies carries risk, do so at your own risk and we advise people to never invest more money than they can afford to lose and to seek professional advice before doing so.