People may call Bitcoin a cryptocurrency, but is it a currency at all? Or is it something like an arcade token- a thing which people exchange for ever-escalating amounts of cash?
Many would argue Bitcoin is the latter, but Tesla
The change should come as no surprise for those who've been tracking Tesla's forays into the unknown and ever-shifting world of cryptocurrency. In February, Tesla announced to the U.S. Securities and Exchange Commission (SEC) its plans to convert 8% of its cash holdings into Bitcoin. The move was lauded by crypto- evangelists the world over.
Converting some corporate paper into Bitcoins or taking Bitcoin as payment is nothing new.
Fifteen thousand businesses worldwide take Bitcoin as payment or host crypto ATMs, according to data from Fundera and coinmap.org. And since October, PayPal
And as Tesla's horde of Bitcoins grows, accurately assessing the state of the companies cash reserves will only grow more complicated. Why?
It's Bitcoins volatility that could squash Tesla's narrative of widespread adoption of Bitcoin by consumers and corporations. In fact, due to Bitcoin's volatility, Bank of America
On the consumer end, buying a Tesla Model X SUV would've cost you 4 Bitcoin at the start of 2021, but as of this writing, it would only cost you 2. In acknowledging Bitcoin's ever-changing value, Tesla puts a time limit on any transactions made in cryptocurrency. If you don't place your order soon enough, Tesla will cancel your order, and the price of your shiny new Tesla will change. Imagine grocery shopping and the cost of food suddenly quadrupling mid-check out, and you can get a sense of why many consumers would be leery of adopting Bitcoin over a traditional currency.
In addition, for reasons of volatility, JP Morgan
Given these factors facing both consumers and corporations, it's hard to esteem the significance of Tesla's move.
"Taking payments in Bitcoin is more of a sign of approval for crypto assets gaining mainstream adoption rather than something that customers will do en masse," Luis Cuende, co-founder of Aragon, told Bloomberg. "Tesla, as the coolest car manufacturer keeps on improving their image and brand by positioning themselves as the edgy early adopters."
In other words, the true importance of Tesla's move lies somewhere between two extremes. It stands as a headline that will undoubtedly hype up crypto evangelists. But Tesla's move could also represent the fall of a significant domino in a long chain of events that could forever change the way we pay for goods and services.
- 2. https://www.tesla.com/support/bitcoin?redirect=no