Supercar Maker Ferrari Joins Growing List of Global Brands that Accept Cryptocurrency Payments

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Full-text transcript of David Berlind's Interview with Mark Venables, Founder The Crypto Merchant

David Berlind: Today is November 1st, 2023. This is the Blockchain Journal podcast. I'm your host and the editor-in-chief of Blockchain Journal, David Berlind. Blockchain Journal's mission is to help global brands and other enterprises to understand how it is that blockchain can make them more competitive in their industries and improve business outcomes. We provide a lot of technical and business information as well as research to organizations around the world. And in so doing, we often look at what other enterprises and global brands are doing in the way of adopting blockchain so that different organizations can learn from those implementations.

One of those companies that just recently announced that it will be accepting cryptocurrency as a form of payment is a very well-known global sports car brand, Ferrari. Now, Ferrari is no stranger to cryptocurrency. Back in December of 2021, it also announced that it would be putting out NFTs with the help of some partners. So it's been around the blockchain world a little bit, but it wasn't until recently that they announced they would be accepting cryptocurrency as a form of payment.

And joining me to discuss this announcement is Mark Venables. He is the founder of The Crypto Merchant. Mark, thanks very much for joining me on the Blockchain Journal podcast.

Mark Venables: Pleasure. Absolutely.

Berlind: Yeah, so let's talk a little bit about what The Crypto Merchant is, so to understand what perspective it is you bring to this announcement. What does The Crypto Merchant do?

Venables: So The Crypto Merchant – we specialize in cold wallets or hard wallets. So, self-custody devices to secure your digital assets. You know, they're relatively simple – or at least they can be. And we've been doing that for about three years, but it is really to... it's all about security. Common sense and security.

Berlind: Okay, you mentioned two terms that maybe not all of our audience members are familiar with, so let's talk a little bit about that first. What is a cold wallet? And then we'll talk, after that, we'll talk about what is self-custody.

Venables: Okay, sure. So a cold wallet, or sometimes referred to as a hard wallet, is a physical device. It's hardware and it enables you to take your crypto or digital asset off of the exchanges like Coinbase or FTX – that got in trouble as we know. And that basically leads on to you then have custody of it. So you're the bank.

To be fair, technically you're not transferring cryptocurrency, it's keys to allow you to essentially locate your assets on the blockchain.

Berlind: Right.

Venables: So it is. It's still in the blockchain, but it's, I mean, it's virtually impossible to search without these keys or the seed phrase. So you can take this device and you can put it in your safe – under your bed if you like – but you are now the bank. And that's not to say that you lose this cold wallet. You lose your assets. That may have been true years ago, but nowadays there's a lot of things you can do to safeguard against that as well.

Berlind: And I'm sure that a lot of members of our audience who are interested in that or may be doing that, if you're an expert in this area of hard or cold wallets, they might wanna know; What's the wallet or the hard wallet that you have in your pocket right now?

Venables: I actually have several different ones. So, sometimes people sometimes do this for different exchanges or they do it for different currencies. I actually do have a SecuX that I use quite frequently. Also, there's one called an IM card (imKey) because it's very small and it's just easy to carry around. It's easy to use. And there's a number of other ones. You have the top sellers, which is Ledger and Trezor. I do have... I do use Trezor quite frequently as well. But then there's a lot of emerging products from all over the world and they're all very good. At least the ones we stock are all very good. We make sure that they go to our tech support and they're checked out and the quality of them are good and safe, of course, the security.

Berlind: Okay, so you're a practitioner, you're somebody who self-custodies, so to say, your cryptocurrency...

Venables: Yep.

Berlind: ...and you're familiar with the idea of using cryptocurrency to pay for services and goods, no doubt.

What we have today is Ferrari making this announcement that they are going to accept cryptocurrency as a form of payment. Now in our research at Blockchain Journal, we find that the number one use case for blockchain right now among enterprises and global brands like Ferrari happens to be NFTs to improve customer loyalty, customer engagement, fan engagement, and that accepting payments, cryptocurrency payments that is, a sort of a distant second. So let's talk a little bit about why it is. What their motivations would be for accepting cryptocurrency versus just taking fiat.

Venables: I think now, they've chosen this time to go ahead with that – because in my opinion – Bitcoin is going up. And as we come into next year and the halving, and of course the presidential election here in the US, it's most people's opinion that crypto – or at least Bitcoin – will continue to bull run. So, I think if it was...

Berlind: Well, right now we're in a bit of a crypto winter, right?

Venables: It has been.

Berlind: It's not bull-running at the moment, but it's...

Venables: No, not quite yet. But, you know, a lot of people think 2024 or even `25, but, you know, we've seen a good increase recently. And I think if their analysts told them that Bitcoin was going to go the other way, that they probably wouldn't be so keen to accept crypto as a payment. But I think ultimately, the dealers, and ultimately Ferrari, will receive payment in traditional fiat because they're not going to have anything to do with managing cryptocurrencies.

Berlind: Okay, so this is – I think what you're getting at maybe is that Ferrari itself isn't going to hold any cryptocurrency on its own books. And, in many ways, this is something that other enterprises and global brands should think about is just because you accept cryptocurrency as a form of payment for whatever it is you're selling doesn't necessarily mean you have to hold that cryptocurrency and perhaps suffer the consequences of market volatility. Is that right?

Venables: Absolutely, because we all know how volatile the market is with crypto. So they've basically having CoinDesk manage that. And so...

Berlind: They're having CoinDesk manage that. So how does CoinDesk play a role in allowing them to manage that? My understanding, by the way, is that they are doing what a lot of other companies that decide to accept cryptocurrency payment do, which is they're using BitPay as sort of the...

Venables: Yep, processor.

Berlind: ...the processor so that essentially what happens if I'm not mistaken is you pay with cryptocurrency but actually BitPay is processing that payment and Ferrari just takes the payment in the form of fiat from BitPay. Is that not the case?

Venables: I think so, yeah. I mean, I'm not absolutely certain, much like everything. But so and I'm not sure how they're going to work. I don't know if anyone's actually paid to be a Bitcoin, but I can imagine that they will be paid and it will be the exchange rate at that time as to how much Bitcoin you pay.

Berlind: Right.

Venables: And, yeah, and I think it goes through BitPay to be processed. And I think CoinDesk, if that's who they'll end up using will just sell straight away. You know, because to avoid the exchange rate volatility.

Berlind: So CoinDesk is an exchange, just the way so everybody understands, that's the exchange...

Venables: So yeah, so –

Berlind: ...where sort of like the payment would pass through, and if it was to be exchanged for fiat, it might happen there.

Venables: Yeah, I think it gets a bit complex with the people that process it and where it goes after that. So, that's my understanding. They're going to get fiat. They're not going to take the chance, I don't think.

Berlind: Right, so the bottom line is Ferrari itself probably doesn't wanna be subject again to the consequences of market volatility when it comes to the changing value of something like Bitcoin relative to the US dollar or to any other fiat currency. I mean, they're an Italian car manufacturer.

Venables: Well, that's right.

Berlind: So, you know, they might, so maybe in Italy, you pay with Bitcoin, but it gets turned into –

Venables: Euro.

Berlind: Euros, or something like that. So, what are the motivations? Let's just go back to that. Why would Ferrari want to do this? And if you look across other companies, global brands, that have decided to make this move, particularly if they're using Bitpay and they're still at the end of the day, they're just putting fiat currency into their bank account, what's the motivation here? Is it [to] expand the market? Is there... are consumers clamoring for this capability? Why would Ferrari do this?

Venables: Well, I think the first thing that springs to mind, is the convenience. So, if I order the Ferrari from the factory in Italy, straight away, if I'm paying Bitcoin, I can get the rate and I can pay them and within 30 minutes, they have the payment. In addition to that, if the exchange rate is €105 to $1 that you would perhaps see on Yahoo Finance or Google. That's the exchange rate that you're going to be paying. You're not, you know, a bank, for instance, if you went through a bank, they have their margin. So they're, so, you know, they're going to buy and sell higher or lower because they got to make money from it. Well, with it being decentralized, you're going to get the absolute exchange rate – if you like. So you're going to get the [ €]105.

Berlind: I see, so let me just kinda back through that – unpack that a little bit. What you're saying is, if I'm an American consumer buying a Ferrari, I might be subject – the transaction might be subject – first to the exchange rate, and Ferrari wants to take collection and put it in its own bank account. Ferrari is gonna look at this and say, “Okay, we're gonna have to deal with the exchange rate from USD to euro...

Venables: Yep.

Berlind: ...and if they're allowing for payment cryptocurrency, then you don't have to worry about that exchange rate. And, number one, it just goes straight from Bitcoin to euro. And, number two, you also get the performance of a cryptocurrency payment, which is typically in minutes versus taking some number of days for an international cross-border payment to complete.

Venables: And a number of questions. If you bought something particularly expensive, a million-dollar Ferrari, which it certainly isn't unheard of, your payment difference could be $50,000. So if you went through a regular high street type bank.

It's going to be higher, but even if you had a currency manager, they're still going to even a few cents that they make on each dollar could amount to an awful lot of money. So the fact that you could do it in 30 minutes or less, and it costs you $4 or $8 or something along those lines instead of the $50,000, then I imagine that's the – that's the first benefit that springs to mind. And anyone anywhere in the world can order direct from the factory from the dealer of their choice.

Berlind: Is that a benefit? I just want to be clear – is that a benefit to Ferrari or is that a financial benefit that is to Ferrari or is it a financial benefit to the buyer of the car?

Venables: I think – it gets a little complicated – but I think it's a financial benefit to the buyer because if Ferrari, for instance, say, here we have this F30 and we want a million dollars or a million euros, then all you have to do then is basically use the euro to Bitcoin exchange rate. You're not having to use the euro-to-dollar exchange rate because you've got Bitcoin on an exchange or hopefully on a hard wallet. So I think it's a pretty big incentive for the buyer.

Berlind: So the consumer, in order to meet the obligation to Ferrari, has to pay Ferrari, at the end of the day, in a certain number of euros. And, if they're not paying in US dollars, then the net price to them – nets out to be about $50,000 less or something. That's what you're pointing out, is you're actually paying —

Venables: Yeah, it could be more, it could be less, but it's a significant amount.

Berlind: Yeah.

Venables: When you're – you know – if I was to change a million dollars today, I think it's 105. The bank certainly isn't going to give it to me at 105. They might give me, say, one-to-one.

Berlind: Right.

Venables: So instead of 900,000, it's going to cost me a million to go through the bankers.

Berlind: This is one of those reasons that I always say that in order to understand blockchain, you not only need a degree in computer science, but also in international finance, because there's a lot going on here. Exchange rates, cross-border payments, taxes.

Venables: Yeah, yeah. And that's the tax is that's always been a gray area because people don't know how to regulate it. If I bought Bitcoin at 14,000 and it's now worth 35 and I pay for a Ferrari, should it – am I going to be expected to pay tax on the money, the difference in what I've made — because you have made money. I couldn't afford a Ferrari when it was 14,000...

Berlind: Right.

Venables: ...but now it's 35,000 I can. And I think that's one of the things that only global regulation and with everyone basically getting together and agreeing on everything, which sounds impossible. if we can't get one country to agree, how you're gonna get hundreds of countries to agree? That it's...

Berlind: Yeah, and that's an interesting issue for many enterprises to consider, which is that – what are the regulations in the jurisdictions that you operate? There's no global international regulation here, and the regulations differ from one geography to the next.

Venables: Absolutely.

Berlind: In some cases, there's a little more regulatory certainty. For example, there's more regulatory certainty in Europe than there is in the US, and there's within Europe, there's more regulatory certainty in certain countries like Germany and Switzerland than there is in the rest of Europe. So, these are things that every enterprise and global brand have to consider in order – before they just go dive into the world of blockchain and cryptocurrency.

Venables: Well, yeah, I mean, you need safe-havens. So, big enterprises, multinationals, they know that if they do this and this, that they're safe. That they follow the rules. Because right now there isn't that sort of safe-haven type situation where it's very clear that if you follow these rules here, then you're safe, because they just don't exist. So everyone has to spend an awful lot of time and money on trying to... you know, try to comply with regulations in the US or are we complying with regulations in the UK because where is the Bitcoin? It's everywhere.

Berlind: Right.

Venables: So you know, is it who you're paying or is it where it's coming from? It's certainly not something I plan to, I mean, I do my best, but it's just not one of my fortes. I will just follow the crowd to a degree when it comes to that and try and just try and stay safe.

Berlind: Well, in general, I think that in the world of blockchain, a lot of areas or corners and niches of the whole industry end up not being somebody's forte even though they have a forte in another niche. It's just that complicated...

Venables: Absolutely.

Berlind: ...when you think about the labyrinth of things to consider. Among people who are holding cryptocurrency, you're familiar with them because they are your customers. How many of them really wanna buy something like a Ferrari with cryptocurrency? And I don't mean how many of them wanna buy a Ferrari – although I do know that several people who've made it big on cryptocurrency went out and bought a Ferrari – but how many of these people actually want tpay their merchants – their ultimate merchants – whether it's Ferrari or Ralph Lauren or whoever it is they're buying their goods and services from with cryptocurrency versus fiat currency. Is there a big demand for that?

Venables: I think there is and I think it's just going to continue to grow. I know it's very – for me, it's simple for me to pay my suppliers in crypto and to have the goods delivered. We've had occasion where I've wired a fiat to someone in Singapore or Hong Kong and they build steel plates but they have crypto in the name and the intermediary bankers refused to send the wire on because their policy is to have nothing to do with cryptocurrency. And soon as my company is called The Crypto Merchant and the manufacturer was called crypto-something, they refused to send the money. So it took...

Berlind: Oh, they see the names of the organizations and they're like, “No, we don't want any part of this.”

Venables: That's right. It's their policy and we have it in the UK as well. Even me paying a private individual for certain things because it was crypto-related. They said, “No.” I mean, the overreach is astounding in some cases. You can't wire money from many UK banks or US banks to a coin base to invest because it's under the guise of there's a lot of fraud with crypto, which again, simply isn't the case. But it's really because, you know, in my opinion, it's because they haven't managed to monetize that. But that caused a huge issue because it took like 9 or 11 weeks to get my money back. And in the meantime, I'm having to find another way to pay these guys and [with] crypto it just would have just would have been done. And then they can choose whether they want to hold that crypto actually make money out of it or if they just want to change it to whatever their currency is and pay their suppliers.

Berlind: Yeah

Venables: So you know, for that reason.

Berlind: One of the problems with enterprises and global brands holding crypto is that the back office technologies – to keep track of that in a way they keep track of fiat currencies – is just not there yet. There are some solutions on the market that have come out –

Venables: There are, yeah.

Berlind: – but in general, the systems, the back office systems are just not nearly as mature on the cryptocurrency front as they are on the fiat currency front, dealing with everything from changing values relative to some other fiat currency like the US dollar or also the tax implications, particularly with shifting regulations and tax structures. So that's a tough one for enterprises to do as chief financial officers in general are going – you know going to bristle at the idea of holding cryptocurrency especially given the volatility they've seen in the market.

Venables: Yeah, it's, I mean, even on a very small scale, such as myself, my CPA is scratching his head and, you know, looking for advice and that sort of thing when it comes to the end of the year. Because again, I've been paid for products in crypto, and I've paid for inventory in crypto.

Berlind: Right.

Venables: And that's one thing, that's just one facet of the, “Well, how long did you hold it for?” Because if you only held it for... If you held it for a couple of months, we got to tax you at 38%, but if you held it over a year, then we tax you at 18% as an investment vehicle. I don't have it as an investment vehicle, but that's how it is perceived.

Berlind: Of course.

Venables: Again, I'm not good with that.

Berlind: We talk about relative value. It's not necessarily relative value to another fiat currency, although you could use the fiat currency value as part of the calculation. But if you are buying steel plates from Hong Kong and you are able to buy more steel plates with your cryptocurrency, which... which essentially grew in value from the time that you acquired that cryptocurrency, then you're essentially getting more value or a better exchange rate on that cryptocurrency.

Venables: Yes.

Berlind: And a tax accountant will obviously want to reflect that gain in value in your books so that you don't end up with the IRS or some other tax organization knocking on your door.

Venables: Absolutely.

Berlind: Yeah, that's an interesting point.

Venables: Yeah, so it does get complex. And, I think people don't think – you have to think of Ethereum or Bitcoin as another currency. When I was relatively new to the crypto space, I had someone do a project for me for 2 Ethereum. And it went up quite a lot within this month. And so I said, you know, “Can I pay you one and a half? It's worth a lot more now.” But the deal was for 2 Ethereum. If it was for €2,000 and the exchange rate changed, would I think to say that? And you probably wouldn't. But you may do if it was on a million-dollar scale. But in that case, you're not gonna – that was the deal. So, you have to sometimes think about it as just another currency. Because I mean, after all...

Berlind: Yeah, it's just another good reason that Ferrari or any other enterprise is gonna wanna basically convert whatever the cryptocurrency payment is into fiat as soon as possible to essentially avoid all of the tax complications that come with withholding it. I mean, even if the value of the cryptocurrency goes down, that's another tax calculation because you get to take, you get to write that off or something like that, right?

Venables: Yeah, it's a loss. Yeah, and it depends on how the country treats the crypto because some treat it as an asset – an investment vehicle – and others don't. I know there are certain conditions within the UK, for instance, if you're day trading crypto, they consider that as gambling and therefore it's not taxed.

Berlind: Right.

Venables: But there is a certain, you know, just to, again, I'm not a tax accountant, so I'm giving no advice, but you have to be set up in a certain way to take advantage of that.

Berlind: Do you know among your customers what they're buying? Like, what do you see them paying for? I mean, I know you can't really see that quite, but maybe you know from just talking to your customers what they're buying with their cryptocurrency.

Venables: That's a fair question. I don't think they are really buying much at all other than – on the smaller scale. Of course, they can buy my products with cryptocurrency and there's certain others if they're – if it says it on the website That they're buying from them. Perhaps they will use cryptocurrency. Again comes...

Berlind: Right. Have you ever... what's the most expensive thing that you've purchased with cryptocurrency for personal use?

Venables: A watch. Frank Muller did a Bitcoin watch, which...

Berlind: Ah, ok.

Venables: So, it acts as a cold wallet and a watch and – it's...

Berlind: Oh, that's cool, a watch in a cold wallet. You don't wanna lose that watch.

Venables: It is. You don't know because you put 1 Bitcoin on it and it's now three times the value and – but it's more the reason I bought it is more as in the future I can see it as a collectible...

Berlind: Yes.

Venables: It's essentially a single-use cold wallet if you like. So it's more the conversational piece, the potential for it to be quite unique in years to come. And they do look nice.

Berlind: For sure, I totally get it because we're in this industry. Sometimes I'll buy into some NFT or something like that with my own money just to get the full end-to-end customer experience that the global brand is offering around those NFTs.

Venables: That's right. I mean...

Berlind: For example, what adidas has done or Starbucks or somebody like that, yeah.

Venables: And Ferrari isn't the first automaker.

Berlind: No, yeah.

Venables: I know it's a little, it's a little, of course you have Tesla, but there's a new company that's remaking the DeLorean and they issue an NFT, you pay with crypto to get your production spot. It's little known and whether it actually comes to fruition – we'll see. But it's...

Berlind: Right. Well, I often say that because people are surprised. We do a lot of research. We gather a lot of data at Blockchain Journal. And, I tell people that it's harder to find a car manufacturer that isn't doing something with blockchain than it is to find one that's doing something with blockchain.

Turns out most of the major car manufacturers out there are doing something The Japanese car manufacturers the American car manufacturers and other ones like Ferrari – all doing something. And so, they're all dabbling in this in one way or another some more experimental than others. You mentioned Tesla. Tesla's kind of flipped back and forth, right?

Venables: Yeah, yeah.

Berlind: They started off ... they accepted cryptocurrency – then they stopped accepting it. It's hard to tell exactly where Elon Musk lies in – you know – when it comes to blockchain and cryptocurrency.

Venables: Yes.

Berlind: Is he a fan or is he just sort of a rainmaker for his own personal gain?

Venables: Yeah, yes, that's the fact.

Berlind: It's hard to tell, but we clearly we're in this area of uncertainty where it's not an experimentation, where it's not very clear exactly where all these different car manufacturers are going to end up when it comes to blockchain and cryptocurrency.

Venables: And I think, yeah, I think you're absolutely right. I think they're dipping their toe in because they see that it has a future. They're just not sure how they're going to make [the] best use of it. But they should dip their toe in now so that they keep up with the development of the currencies and the blockchain and Web3 and this sort of thing. So I think they need to have a presence.But they're just not sure what to do with it yet. It's one of them sort of things. But I'm sure it's become clearer.

Berlind: Well, Mark Venables, you're the founder of The Crypto Merchant. Thank you very much for your insights. For those people who are watching this and wanna check you out, where can they find The Crypto Merchant and the hard and cold wallets that you make available to them?

Venables: They can find it, they can find us at TheCryptoMerchant.com here in the US or TheCryptoMerchantSA.com for South America. And soon, others.

Berlind: Terrific. And where on Twitter and LinkedIn or maybe Twitter X I should call it?

Venables: So X, we're The Crypto Merchant on Instagram and X. And there's the usual Facebook page, [The] Crypto Merchant, which we kept the same handle.

Berlind: Okay, well, Mr. Venables, thank you very much for your insights today, and thank you for joining us on the Blockchain Journal podcast.

Venables: Thanks David, it's been a pleasure.

Berlind: You've been watching the Blockchain Journal podcast. I'm David Berlind. I'm the host of the podcast and the editor-in-chief of Blockchain Journal. We certainly hope you liked this video. If you did, give us a like or subscribe. The more you do that, the more you support us. We don't collect money from anybody. We just look for more audience members to come and view our great content. And if you have suggestions for us, we're easy to find. You can write to me directly at [email protected]. Thanks very much for joining us.