Twitter CEO Jack Dorsey and rapper Jay Z unveil Bitcoin fund

As more high-profile companies accept digital currencies as a form of payment, speculation is rife that Bitcoin's price could hit $50,000 soon

Jay-Z and Tidal’s other existing artist-shareholders will retain some ownership in the company. AFP

Twitter chief executive Jack Dorsey and rapper Jay Z announced they are establishing a Bitcoin development fund.

Mr Dorsey tweeted on Friday that they are taking applications for a “blind irrevocable trust” initially focused on Africa and India. The fund will have “zero direction” from either Mr Dorsey or Jay Z and the partners are searching for three board members.

The mission of the fund is to “make Bitcoin the internet’s currency”, according to job application for the fund.

Mr Dorsey and Jay Z are investing 500 Bitcoins, the world’s largest cryptocurrency, currently worth about $23 million, in the project.

The move comes as Bitcoin finds more acceptance in the financial services and payments industry.

Payments processor Mastercard said last week that it will give merchants options to accept Bitcoin payments. When a customer wants to buy an item with Bitcoin, Mastercard’s crypto partners will convert the digital currency into traditional currency and transmit the funds over its network.

Mr Dorsey is a proponent of using cryptocurrencies along with a number of billionaires including Tesla founder Elon Musk.

His other company, Square, acquired $50m worth of Bitcoins last year. Twitter is also studying the potential use of Bitcoin to pay its employees and vendors.

Cryptocurrencies like Bitcoin and Ethereum are increasingly finding favour – especially as haven assets amid the pandemic – but some governments continue to shun them.

India, Asia’s third-largest economy, plans to introduce a law to ban cryptocurrencies such as Bitcoin and, instead, develop the framework to create its own official digital currency that will be issued by the country's central bank.

While India steers away from crypto assets, Africa has experienced a surge in cryptocurrency transactions. Nigeria is only second to the US in the volume of Bitcoin traded over the past five years, according to peer-to-peer Bitcoin marketplace Paxful.

Bitcoin received a vote of confidence from ride-hailing company Uber on Friday, whose chief executive said the company would start accepting cryptocurrencies as a form of payment if it benefits the business and if there is a need for it.

“Just like we accept all kinds of local currency, we are going to look at cryptocurrency and/or Bitcoin in terms of currency to transact,” Dara Khosrowshahi told CNBC.

“That is good for business … That we will certainly look at and if there is a benefit there, if there is a need there, we will do it.”

He said Uber will not buy the digital currency with its own cash, something Tesla said it is already doing.

The electric vehicle maker announced last week that it has already invested $1.5 billion in the biggest cryptocurrency.

The most valuable car company on the US stock market said it is also planning to let its customers pay for its cars using Bitcoin.

Tesla's announcement triggered a buying frenzy on Monday, pushing Bitcoin as high as $46,750 before consolidating for the rest of the week near $48,000 level.

The US food and beverage company Pepsi is also discussing options to buy Bitcoin with its cash.

“Bitcoin [is] on course to close sharply higher for the fifth consecutive week and the $50,000 handle is now in sight,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a note to investors on Friday.

“With more and more household names starting to accept Bitcoin and other cryptos as a form of payment, speculation is ripe ... [it] could be heading north of $50,000 soon,” he said.

With governments debasing their currencies, investors worried about the value of fiat currencies are flocking to digital currencies, Mr Razaqzada said.

Even gold has lost its haven status “as it is being manipulated in the paper form with many central banks and other institutions allegedly keeping precious metal prices superficially low”.

“Some investors clearly think that Bitcoin is thus offering a much better store of value, and a good rate of return than gold, even at these high levels,” he said.