Welcome to my all new blog.

Elon Musk Directs Bitcoin As A New Payment Norm For Tesla Cars

Elon Musk tweets For Bitcoin

In a major boost to Bitcoin choosing, circulation and usage, Tesla, prominent EV maker from America, has come up with an idea of accepting this digital currency as a new mode of payment for its cars. The company also claims to be managing bulk of Bitcoins in form of cash instead of fiat currency. It is notable fact that the EV car company is regarded as the most valuable one on stock market.  During its annual reporting to the Securities and Exchange commission, the company made a declaration, “to begin accepting bitcoin as a form of payment for our products in the near future … initially on a limited basis, which we may or may not liquidate upon receipt.”

Besides, the company also proclaimed to have invested heavily in bitcoin, around $1.5 billion which is a strategy to “invest a portion of (the company’s) cash in certain specified alternative reserve assets”. As per its record listing, there is around $19 billion in cash and company also holds cash in equivalent amount, as per what its latest balance sheet dated December 31st indicates.

 

Elon Musk Taking Test Drive

On knowing about the development, Mr. Daniyal Rashid, Head of Thematic Research at GlobalData, was all full of joy and excitement and in fact, summarized the whole narrative about bitcoin for our easy grasp, when he said, ”This is a massive move by Tesla. By accepting bitcoin as a form of payment, Tesla is unleashing the first major consumer experiment in not just bitcoin but crypto-currency as whole. Tesla, being the fifth largest company in the world by market cap, will send out a bold statement if it can successfully integrate bitcoin payments into its business.

The main sticking point will be the volatility of the crypto-currency. The firm cannot accept $35,000 for a Model 3 today and then $29,000 tomorrow- it is just not good business. In bitcoin, swings of 10-20% in price in a matter of days are not uncommon. However, if adoption of bitcoin becomes more widespread, volatility is likely to fall.

If Tesla were to fail in successfully implementing bitcoin, it could be a detrimental blow to the crypto-currency, signalling to investors that it has no future as a payment mechanism. A further worry for the crypto-currency is that the purchase of $1.5 billion of bitcoin by a single actor in a public manner has sent the price through the roof. Bitcoin jumped over 15% to a new high of $44,000 this Monday. This sort of hype-based price power should be worrying to investors and consumers alike- especially if this is to be used as medium of exchange. If Elon Musk can help dictate the price of this asset with a tweet or large order, the same could happen to send the price back down. The task of purchasing a vehicle should not be speculative. Consumers who may have thought of buying bitcoin to use as a substitute for fiat-could very easily end up with more or less than they bargained for”.

 

Echoing the sentiment that is somewhat similar, Mr. Eric Turner also butts in, who is VP Market Intelligence at Crypto-currency Research and Data firm Messari, “I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move. “One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well.”

No surprises that such an announcement has stimulated new life and a force of legitimacy resulting in the price going high of bitcoin (XBT) by 13% in morning trade while shares of Tesla have also gone up by 2% during premarketing trading.

 

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp

Related Articles