Why is a Chinese tech firm spending $40 million in Bitcoin and Ethereum?

Why is a Chinese tech firm spending $40 million in Bitcoin and Ethereum?

Chinese software giant Meitu says it just bought $40 million worth of Bitcoin (BTC) and Ethereum (ETH).

In a statement, the selfie app company reveals its reasons for buying 15,000 ETH worth $22.1 million and 379 BTC worth $17.9 million.

“The Board takes the view that blockchain technology has the potential to disrupt both existing financial and technology industries, similar to the manner in which mobile internet has disrupted the PC internet and many other offline industries. The Board believes that the blockchain industry is still in its early stage, analogous to the mobile internet industry in circa 2005.

Against this backdrop, the Board believes cryptocurrencies have ample room for appreciation in value and by allocating part of its treasury in cryptocurrencies can also serve as a diversification to holding cash (which is subject to depreciation pressure due to aggressive increases in money supply by central banks globally) in treasury management.”

Meitu adds that it bought ETH in preparation for its plans to enter the blockchain industry. The selfie app maker notes that it is looking at how to incorporate blockchain technology into its overseas businesses while finding blockchain-based projects for potential investments.

“Purchasing Ether is therefore a logical preparation for both initiatives, as the Ether purchased would become the gas reserve for the Group’s potential dAPP(s) to consume in the future, as well as being used as consideration for investing in blockchain-based projects that take Ether as consideration.”

The Hong Kong Stock Exchange-listed firm also notes that its BTC investment is part of an asset allocation strategy. The company believes that Bitcoin has features that make it superior to gold as a store of value.

“[Bitcoin] has several features that enable it to be a good alternative store of value, such as being limited in supply, its exchangeability into fiat money or goods and services, portability, and its potential to act as an effective hedge against depreciation of fiat currencies due to aggressive increase in money supply by central banks globally. Some of these features potentially even render Bitcoin as a superior form to other alternative stores of value such as gold, precious stone and real estate. Being an alternative store of value, its price is primarily a function of future demand that is driven by consensus of investors and the general public.”

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