Elon Musk again threw a big message into the cryptocurrency market. On the 24th (local time), it attracted attention by declaring that it would also accept bitcoin as a payment method when selling Tesla vehicles through Twitter.
This is more than what was predicted.
Musk attracted great attention by revealing in early February that “Tesla has purchased $1.5 billion worth of Bitcoin.” At the time, Tesla said, “Sooner or later, it plans to recognize Bitcoin as a means of trading.”
The move that made it possible to purchase Tesla cars with bitcoin was an extension of that.
■ Bitcoin holdings exceeded $5 billion… Confidence in “replacement of the monetary function of gold”
Elon Musk’s’Bitcoin Love’ is famous. From time to time, they are pouring out comments in support of Bitcoin.
Not just words. Musk actually holds a lot of bitcoins. Companies such as Tesla and SpaceX and personally owned bitcoins are reported to exceed $5 billion.
Musk once said in a tweet sent to a friend in February 2018 that “I only have 0.25 bitcoins that my friend gave me a few years ago.” Therefore, most of the bitcoins you currently have are those purchased within the last three years.
So, why is Elon Musk so interested in Bitcoin?
Anthony Skaramuch, who served as the White House Public Affairs Commissioner during the Trump administration, once argued, “Musk sees the future from two main perspectives.”
first. Renewable energy replaces fossil fuels.
second. Bitcoin will deprive the currency of gold and other assets.
Musk’s focus on Tesla’s electric vehicles is according to the first conviction. On the other hand, showing a lot of interest in Bitcoin can be seen as being related to the second view of the future.
■ Brand management effect… The image of’innovator’ is similar
Market Watch, a media specialized in economics in the United States, approaches from a different perspective. Marketwatch analyzed four main reasons for Elon Musk’s interest in Bitcoin in February, when Musk announced that he had “purchased $1.5 billion worth of bitcoin through Tesla.”
first. Diversification of assets
Tesla said in a filing with the US Securities and Exchange Commission (SEC) that “Bitcoin is a great opportunity to diversify cash and cash equivalents.”
Most companies generally stock up excessively with cash or cash equivalents. This is to minimize the risk burden while securing liquidity.
However, Tesla said, “We have changed the policy so that cash assets other than the amount necessary for securing liquidity can be diversified and invest more flexibly to maximize profits.”
Of course, such a policy is also risky. In particular, if the price fluctuations are large, like Bitcoin, it is a considerable burden.
In fact, it was analyzed that Tesla made at least $1 billion in valuation due to the bitcoin surge in early February. This was more than $721 million in revenue from selling 500,000 electric vehicles in 2020 alone.
However, if the price of bitcoin plummets, it could lead to asset loss in an instant.
second. Promotional stunts
Public relations stunts refer to events designed to attract public attention. Tesla’s use of Bitcoin can also be viewed in a similar dimension.
When Musk announced in February that he had “purchased $1.5 billion of Bitcoin,” many analysts defined it as a’promotional stunt’. It made people watching Tesla not bored.
As declared at the time, Tesla incorporated Bitcoin as a payment method. To translate the analysis at the time as it is, it means that he has successfully performed “another public relations stunt”.
third. Brand management
Bitcoin started with an ambition to destroy fiat currency. In that respect, the creators of Bitcoin, including Satoshi Nakamoto, had a strong image of’Idol Destroyer’.
This has many aspects similar to Elon Musk’s reputation.
Musk also has an ambition to destroy the fossil fuel-driven automobile market. In addition, Tesla is destroying the traditional grammar of the automotive market by selling directly to customers without going through an agency.
Marketwatch analyzed that “Bitcoin’s image of distributed assets is similar to what Tesla and Elon Musk have shown so far.”
fourth. A new paradigm to replace the dollar
When Tesla revealed that it had purchased $1.5 billion worth of Bitcoin, many experts analyzed that “it could be a barrier to escape from the influence of dollar hegemony, which served as the key currency of the world after World War II.”
There are still many people with anticipation that Bitcoin will be the means of payment in the future. They hope that blockchain and Bitcoin, which are decentralized systems, will replace the dollar-centric global financial system.
Marketwatch analyzed that Tesla’s purchase of bitcoin and recognition of it as a payment method could be seen as a move towards such a paradigm.
■’PayPal’, the first departure, is the pioneer of the Bitcoin revolution
Musk has established itself as an innovator through electric vehicles, batteries, and space company SpaceX. But Marketwatch stressed that “one of Musk’s early adventures was payment.”
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Elon Musk invested most of the $22 million he earned by selling an internet company called Zip2 in a new venture called X.com. X.com will later become a payment company PayPal.
Now famous for Tesla and SpaceX, Musk’s starting point was the payment business. Marketwatch pointed out that “PayPal is one of the pioneers of the Bitcoin revolution.”