Is cryptocurrency, the next ‘in’ thing? Questions arise after Elon Musk tweets in favour of them

Tesla announced that it plans to begin accepting Bitcoin as payment for its high-end vehicles
Is cryptocurrency, the next ‘in’ thing? Questions arise after Elon Musk tweets in favour of them
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Bitcoin is back in the news with Tesla investing around USD 1.5 billion in Bitcoin. The company announced that it plans to begin accepting the digital currency as payment for its high-end vehicles soon. This announcement by the California-based electric car maker’s sent the rate of Bitcoin skyrocketing to an all-time high, breaching the $44,000-mark for the first time.

Headed by Elon Musk, Tesla revealed the new strategy in a filing with the U.S. Securities and Exchange Commission, saying its investment in digital currency and other alternative reserve assets may grow. In its filing, the company pointed out that it updated its investment policy to be more flexible in further diversifying and maximising returns on its idle cash. As a part of this plan, it said it would invest in certain “alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds” and other assets. “Thereafter, we invested an aggregate $1.5 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,” it said.

Elon Musk
Elon Musk

The company’s decision lends added legitimacy to electronic currencies, which have become more of a mainstream asset in recent years.

First launched in 2009, Bitcoin is a type of cryptocurrency or digital currency that exists completely online. It was created by an unknown person using the alias Satoshi Nakamoto. The currency is decentralized without a single bank to administer it. The currency is stored in digital wallets. In 2010, the first Bitcoin transaction happened when someone purchased two pizzas for 10,000 Bitcoins, which when compared to today’s value, would be worth more than US$100 million. Bitcoin, which made its Wall Street debut in December 2017, has been garnering attention in the past few years. It gained most traction when stocks were tanking with effects of the global economy under pressure due to the coronavirus pandemic last year.

Tesla’s move shouldn't come as a surprise to most as Musk has been tweeting positive messages about cryptocurrencies including Bitcoin and Dogecoin as well as briefly adding hashtag #bitcoin to his Twitter bio. In fact, Musk, who has a criminal record for manipulation in 2018, has been causing fluctuations in cryptocurrencies with his tweets. After he changed the bio of his personal Twitter account to #bitcoin, the value of Bitcoin increased by more than 20 percent to $ 38,566.

Dogecoin
Dogecoin

Meanwhile, Dogecoin, started in 2013 by IBM and Adobe software engineers Jackson Palmer and Billy Markus, which was largely created as a joke based on a popular internet meme featuring a Shiba Inu dog as a mascot, has surged 112% in the last week.

The surge comes after Musk's tweets supporting Dogecoin, which included a picture of a rocket soaring past the moon with the caption 'Doge', and an image from the Lion King that showed himself holding up the dog from the doge meme. He also tweeted ‘Who let the Doge out’. Rapper Snoop Dogg and KISS bassist Gene Simmons tweeted about the coin too.

Meanwhile, Tesla's announcement could be a catalyst in the world of digital currency as it has not only boosted Bitcoin but its alternatives as well.

Analysts believe, after Tesla, many more companies would join in the momentum and will begin accepting digital tokens. In fact, Apple Inc may be the next big company to enter the cryptocurrency market by allowing Bitcoin to be exchanged on its Apple Wallet service and investing some of its own reserves in units of the cryptocurrency. With Musk, who has a criminal record for manipulation, tweeting a number of extraordinary claims about Dogecoin, including the suggestion that it could be the "future currency of Earth", one wonders if it will be.

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