Can I buy Tesla with Bitcoin? Industry “will take at least years”

Enter 2021.02.10 06:00

Tesla is concerned about weak financial structure due to cash to parts makers and workers
“Bitcoin, not legal currency, will be difficult to buy and sell on domestic flights right now”

The background is drawing attention when Elon Musk, who leads the global electric car maker Tesla, said that it will be able to purchase Tesla electric cars with bitcoin in the future. Bitcoin traded in the market is a cryptocurrency whose value is not fixed and its use is limited due to various regulations. The attention was drawn.

After Musk’s remarks, the price of bitcoin surged, exceeding 50 million won each. Tesla also bought 1.5 billion dollars (about 1.7 trillion won) worth of bitcoin, saying it would maximize cash profits. Thanks to this, the bitcoin price soared to an all-time high. According to foreign media such as Reuters, Tesla has “updated its investment policy to diversify its assets and maximize cash returns” in a data filed with the US Securities and Exchange Commission (SEC). Said.

In the industry, it is questionable whether Tesla’s attempt is realistically possible. For example, Tesla sells’Model Y’, an electric sports utility vehicle (SUV) launched last year in the United States, for $49,990, and as of the 9th, you can purchase Model Y with 1 bitcoin. However, if the bitcoin price falls, you will have to pay more bitcoins when you buy the same Model Y, and vice versa, you will be able to buy Model Y with less bitcoins. This is also the reason for the development of money in the long history of mankind.

Currently, U.S. online payment companies PayPal, U.S. financial companies JPMorgan and Goldman Sachs are handling bitcoin in transactions, but Tesla is the first to allow cryptocurrency to be used to purchase products produced by global manufacturers.

For Tesla, who receives payments in bitcoin instead of cash, there is a risk that the financial structure may become weak. While the Bitcoin payment has not spread, Tesla has to pay cash to its parts partners and workers, but receiving bitcoins from consumers may result in more bitcoin assets than cash assets. If the bitcoin price continues to rise, Tesla’s asset value will increase, but if the bitcoin price declines, the story will change. Right now, Tesla’s ability to pay could be greatly reduced.

Heo Won-ho, director of Coinplug, said, “If you look at the domestic situation, the plan that Elon Musk said to receive the difference in bitcoin is difficult to come true right now.” It is difficult to officially trade because it has not been established.” “There are some small shops where you can pay with bitcoin, but this is at the level of personal exchange,” he said. “It will take years to buy and sell expensive assets such as cars in virtual currency.”

For this reason, the industry interprets that Musk mentioned bitcoin this time as part of the process of diversifying investment destinations by appreciating the investment value of cryptocurrency. In fact, Tesla began securing cash assets with its first annual surplus last year. Although EV sales are on the rise,’regulatory credits’ received from state governments because they do not emit emissions are becoming more cash generators.

Tesla has earned $3.3 billion (about 3.6 trillion won) in regulatory credits over the past five years. Regulatory credits earned last year alone amounted to $1.6 billion. This is an amount significantly exceeding Tesla’s net income of $721 million last year, and without regulatory credit income, it recorded a net loss last year.

Another reason Tesla is paying attention to Bitcoin is that it is a new strategy that responds to the rapidly growing market for not only electric vehicles but also autonomous vehicles. Since communication security is of paramount importance in the era of autonomous driving, Tesla’s decision to receive a car price in bitcoin means that it will also protect vehicle security with a blockchain.

Ko Tae-bong, head of Hi Investment & Securities Research Center, said, “In a situation where the position of cryptocurrency is growing, such as the European Central Bank discussing the issuance of Eurocoin, Musk thought that blockchain would be the best security medium. “We’ve been talking about cyber attacks as the biggest threat to them.”

It is also predicted that Tesla, which caused an electric car boom around the world over Tesla’s purchase of Bitcoin, will spark a wind of innovation in the virtual currency market. Danal Fintech manager Kim Young-il said, “As Musk remarked, it is not very impossible to buy and sell vehicles with bitcoin. Danal Fintech is also using Paycoin, which has a constantly changing price like bitcoin in Korea, to pay for goods. “If you set the time of payment by the consumer and the time of settlement by the seller, you can come up with a payment solution suitable for this,” he said. He also said, “Musk’s statement of bitcoin means that he will bear the risk of price fluctuations in cryptocurrency, and Musk considered bitcoin to be worth it.”