It was the tweet of the cryptoverse today on Twitter, when Elon Musk said that “.” It is big news in terms of adoption and signaling, where Elon Musk one of the most influential people in the world said he will start accepting Bitcoin to buy Tesla cars.
The market reacted favorably, sending the price up 4% in the last twenty-four hours.
Almost two months ago it was discovered through a SEC filing that Musk bought $1.5 billion in Bitcoin, which sent the price soaring. In the filing Musk said that Tesla would soon start accepting Bitcoin as a payment method.
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
Today it seems that Musk came through on his word, setting up Bitcoin as a way to buy Tesla cars.
Bullish on cryptocurrencies
Not only is this great for Bitcoin, but it could be another signal that other cryptos could be accepted in the future by Tesla. In the filing it says that they may invest in other digital assets besides just Bitcoin in the future. If Tesla has success with using Bitcoin as a form of payment, it’s only natural that if they also have other cryptocurrency assets that they will accept those as payment as well.
This may open the door for other digital currencies that focus on payments, for example Bitcoin Cash has had a huge focus on being a currency over a store of value, making it’s use-case for payments and global adoption over other functions. For example, Ethereum which is doing really well, is not focused on payments but on being a smart contracts platform for decentralized applications (Dapps).
Time to hodl or spendl
The ironic thing about Tesla accepting Bitcoin as a payment method is that over the years BTC has changed it’s focus from a currency, to a store of value. Due to this shift, many within the crypto community don’t use BTC for spending — they just hold it, using it as a form of digital gold.
This use case has many benefits, but one of them is not spending, in particular when BTC fees exceed tens of dollars per transaction, which makes it not a good use for spending on smaller amounts. Being that cars are more expensive, it will be a curious case to see if BTC users decide to spend their BTC or continue hodl’ing it.
was originally published in OKEx Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
