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By: Dylan DeMarco February 11, 2021
In somewhat big news, Elon Musk and Tesla announced a $1.5 billion purchase in the
cryptocurrency Bitcoin, subsequently causing it to reach a record high of almost $50,000. Musk also announced that Tesla would even accept Bitcoin as a form of payment. The fact that Bitcoin is reaching record highs is welcoming news to Bitcoin lovers and obviously owners, but its use as a payment method is still very much in question. The cryptocurrency was originally made in the midst of the Great Financial Crisis of the late 2000’s when people started to have doubt about the general efficiency of fiat money. It has seen great jumps in value in 2017 and most recently 2020, but its use of payment is still a question that needs to be answered.
For starters, Bitcoin and its use of an electronic ledger, Blockchain, make it extremely effective against counterfeiting, and its ability to be sent anyway around the world is a big perk as well. The idea of a decentralized system where digital currency can be sent anyway and get people rich is undoubtedly intriguing. On the other hand, the intrinsic, volatile nature of the cryptocurrency along with its somewhat high transaction fees and potential taxes worry many people in regard to its use as payment. For luxury type goods like Tesla cars, for example, Bitcoin could find a nice home since a third party could easily act as a middleman that takes the Bitcoin from the buyer and sends it as cash to a company like Tesla in exchange for a small fee of around 1%. For something small like a meal, it will be hard for Bitcoin to be the choice of payment since it does take a lot of time and incurs fees anywhere from $2 to upwards of $18. Even so, it would be unwise to doubt the everyday payment potential of Bitcoin considering it has been a “David” like currency in a “Goliath” like financial world.
Musk has been an active supporter for Bitcoin for a while even rallying another meme
cryptocurrency, Dogecoin, most recently. Regardless of what people believe, Bitcoin and Tesla seem to be two giants that are here to stay for the imminent future. Both their futures and what it can exactly hold, Bitcoin in particular, is a question that remains unanswered, however. Could we see more companies espouse Musk’s optimism and follow Tesla’s lead of accepting Bitcoin (and other cryptocurrencies) as a form of payment? Or will Bitcoin’s volatile nature and other related issues cause it to be too risky and instead remain merely as an attractive but somewhat idealistic, fairytale like idea?
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