Analysts at Canada’s largest bank noted that after PayPal and Square’s crypto offerings, the market for tech firms creating crypto wallets has already been confirmed.
Apple, the manufacturer of best-selling works from iPhones to tablets, is the world’s largest publicly traded company with a market value of $2.3 trillion.
So, after electric vehicle maker Tesla announced Monday that it had bought a $1.5 billion bitcoin purchase, it seems almost natural that at least one Wall Street analyst speculated on whether Apple would benefit from jumping into the cryptocurrency business.
What Does the New Report Say?
A new report from brokerage firm RBC Capital Markets has simply raised $40 billion from Apple’s cryptocurrency business, which has provided payment wallets to millions of consumers in an economy that has become increasingly cashless since the coronavirus outbreak in early 2020. He claims he can make more money. This breakthrough of the company could also help the US become a technological head in cryptocurrencies in the years to come.
RBC analyst Mitch Steves says payments firm Square generates about $1.6 billion per quarter in Bitcoin-related revenue based on an effective sum of alleged nearly 30 million.
The report states, “Apple’s install base is 1.5 billion, and even assuming only 200 million users will process, that means it’s 6.66 times larger than Square. Therefore, the potential revenue opportunity exceeds $40 billion per year.” term is included.
The report further states that “the research and development cost involved in this effort will be minimal in our view as Square’s entire R&D budget is less than $1 billion.”
Competition in the Crypto Space
Analysts wrote that competition in the crypto exchange space is “light”. Regulations make it harder for US consumers to buy crypto, and many of the exchanges crash at high volume times.
Analysts noted that cryptocurrencies could solve their regulatory and know-your-customer (KYC) challenges if Apple creates a closed system where it simply transfers crypto ownership amid customers.
They also added that they could develop a Bitcoin wallet and banking service Strike or an open system that uses Bitcoin’s Lightning Network to reduce the cost of converting fiat currency to crypto.
Analysts said that Apple’s keeping a crypto exchange afloat could also reduce the likelihood of the US banning Bitcoin in the future.
Analysts said, “If Apple goes down this path, the US will probably get the most crypto assets from a global perspective. If the US owns the most crypto assets (bitcoins or other assets), in our view banning it wouldn’t make sense. Also, with Apple’s faithful and top-notch software, the US will be able to rely on user information and stability should the need arise in the future.” they say.
Bitcoin on Apple’s Balance Sheet
There’s even a trick Apple can pull to fund the development of the project: Invest in Bitcoin.
Analysts suggest that Apple could pay for the cost of developing an Apple crypto wallet or exchange, which, according to their assumptions, is about $500 million by adding Bitcoin to the tech giant’s balance sheet.
For example, if the firm bought bitcoin for $5 billion, the price of the backing asset would have to increase by 10% before the firm could fully finance the entire project in the first place.
Analysts at this point “This is a solid compensation offer in our view as the business will comfortably finance this issue without affecting other projects in the firm.” they are emphasizing.