The electric car maker Tesla is shifting $ 1.5 billion in Bitcoin. So far, CEO Elon Musk viewed cryptocurrencies as a playground.
The cryptocurrencies are organized decentrally, so there is no central management and no marketing department. The different coins can be happy that there is Elon Musk, who beats the PR drum for them. The Tesla and SpaceX boss has driven the price of cryptocurrencies such as Bitcoin, Ethereum or Dogecoin upwards via the short message service Twitter. With the result that these means of payment managed via the blockchain have climbed to new highs.
Bitcoin gained over 11% on Monday and was trading well above $ 43,000. This was due to a message from Tesla. The papers published on Monday, which were filed with the SEC, shed new light on the “crypto love” of CEO Musk. From these papers it can be seen that Tesla has invested $ 1.5 billion of its cash reserves in Bitcoin since the beginning of the year.
Musk stated that he wanted to diversify his liquid funds more broadly. Tesla had $ 19 billion in cash at year-end. Musk is not the first company leader. However, it is advancing into a different order of magnitude. A few weeks ago, US companies Microstrategy and Square announced that they had invested $ 400 million and $ 50 million of their cash in Bitcoins, respectively.
Pay for electric cars with cryptocurrency
“We assume that we will allow Bitcoin as a means of payment for our products in the future,” writes Tesla in the documents filed with the SEC. However, this depends on the legal basis and would initially only be practiced to a limited extent, the company relativizes. This would give the cryptocurrency, which until now has mainly been kept for storage of value and for speculative purposes, for the first time widespread use as a means of payment. A few weeks ago, the global payment service provider PayPal announced that cryptocurrencies such as Bitcoin and Ethereum would be included in the global payment system that is used by 325 million users.
Tesla shares climbed 1.5% to $ 865 at the start of trading Monday. The course of the electric car manufacturer is as steep as that of Bitcoin. A year ago, the paper was quoted at just over $ 150.
However, the Tesla CEO is doing the Tesla CEO a disservice to the idea, which has received a lot of impetus in recent months, namely that Bitcoin could establish itself as a store of value and an alternative to gold. If an influential personality can inflate the value of Bitcoin by over 10% or more than $ 110 billion with a tweet, it would also be possible for a short message that is negative about Bitcoin to trigger a similar downward movement. It has little to do with a decentralized currency that is supposedly borne by the global user community.
Joke currency promotes
Musk’s approach is also met with skepticism because he repeatedly “plays” with crypto currencies. With individual PR tweets, he gave Dogecoin a breathtaking price increase in January. According to Coinmarketcap.com, the “meme coins” – memes are pictures with funny texts, for example on the social media platform Reddit – have been the eighth largest cryptocurrency with a value of over $ 16 billion in the past few days, which were supposedly just created as a joke ascended. And Musk doesn’t have to say big words. Just as it was enough if he added “Bitcoin” to his Twitter profile, the addition “former managing director of Dogecoin” or a picture of a rocket taking off with the text “Doge” led to a price jump.
That is not a fundamental justification. It is often assumed that Elon Musk not only wants to revolutionize space travel and electromobility, but also money. In the dispute between small investors and hedge funds over the shares of the US company Gamestop, he sided with small investors and against the “financial establishment”.
Yesterday’s musicians for tomorrow’s currency
The old rapper Snoop Dogg and Gene Simmons, the bassist of the seventies glam rock band Kiss, recently surfed the Dogecoin wave. These personalities, who are not exactly known for their financial market expertise, also push the currency via their tweet account. On Blockchair.com it can be seen that half of all Dogecoins in circulation of almost 79 billion coins are concentrated in one wallet and the majority of the remaining coins are in a few other wallets. This makes the “joke currency” vulnerable to any speculation.
In all of these highs, Ethereum seems to be the most “meat on the bone”. On Monday, an Ethereum contract was traded for the first time on the US options exchange CME. The Ethereum Foundation, based in Zug, is driving the transition to Ethereum 2.0. The blockchain is changing from the energy-intensive “proof of work” (mining) to “proof of stake”. This is to solve problems with scaling and high energy consumption. Thanks to the digital contracts, so-called smart contracts, which are integrated into the coins, the cryptocurrency becomes the operating system for decentralized financial applications.
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Post source: Elon Musk ignites the Bitcoin rocket