The world of cryptocurrency, especially Bitcoin, is brimming with an aura of surprise and ambiguity. Hence, when the news of Tesla buying USD 1.5 Billion worth of Bitcoin came out, it virtually shook the tech-universe prominently. Due to such a massive announcement, the market of this particular cryptocurrency rose above the mark of USD 47,000 overnight in the USA. Conversely, in Asia, the growth rate was almost around 6.3% as a whole. The organization had also offered a notification that it will accept Bitcoin as a payment method as well.
But, why does it matter? In essence, Tesla is the first automaker in the world, which will recognize BTC to be a potential currency. It, sequentially, will prompt the credibility of the same to grow even more, especially among the non-tech populace. Due to this reason, the value of Bitcoin will grow even more aggressively than before. And, it will help those individuals to earn a huge amount of revenue who have been saving their BTC since the beginning. So, let’s unearth this context a bit more to improve our know-how in this aspect.
What Had Exactly Happened?
Tesla, the brainchild of the tech-genius, Elon Musk, had announced an investment worth of USD 1.5 billion on Bitcoin. It was done during a regulatory filing alongside the SEC (US Securities and Exchange Commission) to complete the annual revenue report.
In the filing-based report, Tesla had stated that its official board had announced an updated version of the January investment policy. According to them, it will proffer more flexibility to diversify their revenue-earning platform without jeopardizing the operating liquidity.
Subsequently, Tesla had also announced that it had made an investment in the market of Bitcoin in January. The organization intends to utilize the same further by obtaining digital assets from the same for either a long-term or short-term period.
Moreover, the company also proclaimed that it expects to accept the cryptocurrency as a method of payment in the near future. However, it did not specify how the whole transaction procedure will be operated. Furthermore, the date of initiating the payment module has been kept unknown as well.
Why Was Bitcoin Chosen?
Unlike 2009, the utter reign of Bitcoin in the world of cryptocurrency has been restricted by the other available options. Due to this reason, the popularity of the same has decreased by a small amount in recent years as well. So, why did Tesla choose BTC instead of something, which is much younger and less volatile?
The main reason behind this is the existing popularity of the Bitcoin market. To be precise, Bitcoin has been the only cryptocurrency in the market, which has managed to survive more than a decade since its inception and has been the most popular crypto on the Immediate Edge app and various other platforms. Additionally, during the emergence of COVID-19 pandemic, the module has grown massively in terms of value as well.
Hence, it can be expected that the development of the same will not be subdued in the impending future as well. However, this is not the only factor, which prompted Elon Musk to go for BTC. There is a lot more to it. Let’s learn more about this aspect.
- Variegation: Since its inception, Tesla has been quite popular in the tech-world due to offering a sublime amalgamation of innovation and novelty. Hence, they do earn a decent amount of revenue throughout the year as well. Due to this reason, the organization wants to invest the excessive quantity of capital in Bitcoin. It can help them to diversify their earnings and aid them in acquiring even more cash while limiting the risk of losing anything. However, considering the volatility of the Bitcoin market, such a huge investment could prove to be a dicey business for Tesla. Thus, they will need to variegate their assets properly to get the most out of it.
- Managing the Brand: Elon Musk has always supported Bitcoin since its inception in the market. However, he did not endorse the same only due to its uniqueness or potential to become better. He admired its image of a well-constructed decentralized asset even more. In all honesty, it fits with the persona of the Tesla brand, which also deals with innovation and invention. Owing to this reason, it will become easier for Elon Musk to maintain the image of his company while stabling his over revenue-earning practices.
Since the unearthing of the news, many people have also considered it to be a publicity stunt from Elon Musk. However, that does not seem to be the case here. The prime motive of Musk here was to diversify his monetary base and work through the pedestal properly. And, as of now, it seems to be working pretty decently.
How Will It Affect the World of BTC?
As mentioned before, the price of BTC had already begun to rise right after the announcement was made by Tesla. Owing to the brand image of the same, more people will start investing in the same market, which, sequentially, help it in growing even more. Furthermore, the move might also prompt other prominent organizations throughout the world to do the same as well.
Hence, the demand and supply of the market will increase even more. Additionally, the proclamation of Tesla using Bitcoin as a mean of payment can turn the world of currency upside down too. If this strategy becomes successful, then the regular payment method, which is used throughout the world, can change as well.
The brand image of Tesla has been quite prominent since its inception, especially due to its affiliation with Elon Musk. Hence, their sudden move in the market of cryptocurrency, especially Bitcoin, will raise a few eyebrows as well. Moreover, the rate of the same will be increasing from now on pretty continually as well. Thus, if you are considering investing in the market, then it will be the best time for you to do it. However, if you are a newbie in this aspect, then it will be better for you to put in a small amount of capital into it. Otherwise, you might become prey to the volatility of the market.
Andrew is a writer that does most of his work on cryptocurrency-related topics. While he’s primarily interested in Bitcoin, he also follows major altcoins and the innovative ideas that new cryptocurrency and blockchain projects are bringing to the table.