Bitcoins for Frappuccino: Will Starbucks' Crypto Endeavours Pave the Way for Mainstream Adoption?

The United States coffeehouse chain Starbucks is one of the most mainstream companies to look into crypto, and its intentions have finally been confirmed this week: The company has teamed up with Microsoft to track its beans with a blockchain.

As many mainstream companies, Starbucks leans toward the "Blockchain before bitcoin" approachStarbucks' relationship with crypto could be traced back to January 2018, when its executive chairman and former CEO Howard Schultz discussed the subject during the company's Q1 2018 earnings call.

Notably, according to the original press release, Starbucks would not only be working with Bakkt to create its platform, but it would also be using it to accept crypto payments in its coffeehouses.

"As the flagship retailer, Starbucks will play a pivotal role in developing practical, trusted and regulated applications for consumers to convert their digital assets into US dollars for use at Starbucks," said Maria Smith, vice president of partnerships and payments at Starbucks.

"We believe that Starbucks' reported adoption of BTC as an accepted form of retail payment is a clear case of retail adoption. The fact that customers will be able to pay using bitcoin not only helps increase the overall usability of the currency but should also increase awareness and understanding of bitcoin and cryptocurrencies in general, given Starbucks' market share. Additionally, if a retail corporation on the scale of Starbucks has determined that it is in their best interest to accept bitcoin as a form of payment, it is a clear signal that there is a significant consumer population ready to use cryptocurrency as a form of payment on a day-to-day basis."

As for the immediate conversion of BTC, Smith said it should be similar to how a U.S. company converts payments made in euros into U.S. dollars: "There is a big difference between retail adoption of bitcoin or other cryptocurrencies and those same corporations being able or willing to deal with the exchange rate risks inherent in any multinational organization. Starbucks instantly converting bitcoin payments into fiat currency does not impact the retail use case for bitcoin any more so than a US company converting payments made in Euros into USD impacts the retail use case for Euros."

First announced in 2018, the initiative is called "Bean to cup." Initially, Starbucks mentioned that it was considering using a "Traceability technology" for its coffee-tracking system, without specifying that it necessarily would be a blockchain.

"The use of blockchain in the food supply chain is a very interesting one for several reasons. If you're a building constructor, you're very likely to buy your hammers all at one place. Firms like Starbucks source their coffee beans from hundreds of thousands of small farmers to meet demand. Some of those farmers won't even be registered business in their home countries. It is impossible to maintain trust when dealing with such large scale long-branched supply chain. Instead of making one entity to hold all the data and attest it's correct, a smarter idea would be to create a collaborative blockchain based database where every party is liable to their part."

"Currently, when you buy coffee from Starbucks the only information available is the type of coffee and the country where it was grown. By utilizing blockchain, Starbucks will be able to provide its customers with endless amounts of new information, such as when the coffee was harvested, when it was shipped, what farm it came from, and potentially even the farming techniques used as that farm."

Cointelegraph has reached out to Starbucks to clarify why it would need a blockchain and how exactly it could benefit the coffee farmers, among other things, but has not heard back as of press time.