You can now buy a Tesla with a Bitcoin. Elon Musk made this announcement via Twitter but it came as a surprise to no one. The American automaker recently invested $1.5 billion into Bitcoin in February and now it plans to acquire more cryptocurrency by selling its cars.
What’s really unique is that Bitcoin payments made to Tesla will not be converted into fiat currency. Furthermore, Bitcoin will be reflected in their balance sheet as well.
Similar to Tesla other companies are also inching towards adding Bitcoin as a potential payment option. For example, Jack Dorsey owned financial payment platform Square recently acquired $170 million worth of Bitcoins after an initial $50 million investment in the cryptocurrency.
Square’s total investment in Bitcoin represents 5% of their entire cash on hand. Meanwhile, Tesla’s $1.5 billion represents around 7.5% of their total $19 billion cash-on-hand.
Major financial institutions including Mastercard and BNY Mellon also want to offer Bitcoin services to their users resulting in a more mainstream acceptance of cryptocurrencies in general.
But with so many major institutions jumping on the bandwagon, what will happen to Bitcoin? Will it rise because of mainstream acceptance or fall?
Tesla Accepts Bitcoin – What Will Happen Next?
Bitcoin is in a limited amount. There are only 21 million Bitcoins present in the entire world. As of February 2020, 18.3 million Bitcoins have been mined. Fast forward to one year later, and the number has increased to 18.6 million.
Therefore with a limited supply and ever-increasing demand, Bitcoin continues to surge. Add to this mix, the major financial institutions and companies like BNY Mellon and Tesla respectively and you can expect the price of Bitcoin to surge even higher.
Tesla made clear its intention to hold incoming Bitcoins in the form of payments, which will further cause an increase in the crypto’s price.
All of these steps from major players indicate their willingness to treat Bitcoin similar to fiat currencies. Will customers spend their Bitcoins to buy a Tesla? remains to be seen.
While Cryptocurrencies could become one of the dominant methods of transactions, at present, payments in cryptocurrencies, especially Bitcoin is far from significant.
Analyst Dan Ive from Wedbush securities predicts that less than 5% of all transactions would be in Bitcoin. The current major use of Bitcoins for millions of users is a long time investment.
Furthermore, Bitcoin investment from Tesla and Square is sure to cause a ripple effect in the entire industry. Soon 5-10% cash of every major company could become invested in Bitcoin.
Needless to say, Bitcoin’s price is far away from crashing any time soon. In 2021, Bitcoin was at its lowest with a value of $30,525.39 on Jan 11. Since then, the crypto grew multiple folds each month eventually crossing $60,197 on March 14.