Elon Musk’s ambitious purchase of $US1.5 billion in Bitcoin paves the way for crypto traders to buy Tesla electric cars using the currency.
This bold move by the world’s wealthiest man sent cryptocurrency markets soaring, with the price of Bitcoin rising by 15.4% to reach a peak of more than US$47,000 on Monday.
Ethereum—the second biggest cryptocurrency—also leapt to a record-breaking high of more than $US1,700 on the news.
Tesla electric cars now in crypto reach
As reported by ABC News, Tesla intends to accept Bitcoins in payment for its range of high-end electric cars. Based on current prices and estimates, you could expect to pay around 0.88 Bitcoin to buy an entry-level car—the Tesla Model 3.
Musk is not revealing when this payment method will be introduced, or how many Bitcoins his company bought, at what price. He also added a couple of provisos. First, the plan is “subject to applicable laws and initially on a limited basis”. Second, Tesla “may or may not” convert Bitcoins into cash when the scheme kicks off.
Either way, Musk’s show of confidence in crypto currency has provided a welcome boost to the digital currencies market.
Why Musk is embracing Bitcoin
Unlike traditional car manufacturers, Elon Musk’s company is not reliant on independently-owned car dealers to sell its electric vehicles. This makes it easier for Tesla to accept digital currencies for its cars.
Bitcoin already has plenty of fans. Liquidity, lower transaction fees and growing public acceptance make it a desirable alternative for those wanting to store value, a little like gold. Bitcoin is also lauded for lack of red tape in international transactions and independence from government interference.
The uptake of Bitcoin physical and virtual debit/credit cards shows that consumers are now looking for ways to use cryptocurrencies for everyday purchases, both large and small.
Richard Lyons—finance professor at Berkeley’s University of California—told AP News that that cryptocurrencies like Bitcoin will increasingly be used for a range of transactions, rather than just storage of value, over the next five years.
It appears that Musk sees the writing on the wall, along with other major players who have already given cryptocurrencies the tick of approval. PayPal now allows users to trade digital currencies on its popular platform, while Square has announced purchase of close to 5,000 Bitcoins.
So, for crypto fans keen to leap into the electric car market—watch this space.
