Tesla and Bitcoin: What's going on?

In March Elon Musk, the CEO of Tesla Tweeted that you can now buy a Tesla with Bitcoin. Tesla is the first car manufacturer to accept the popular cryptocurrency. But they're not the first company to accept Bitcoin. Others that accept Bitcoin are; Microsoft, Burger King, KFC, Subway, Norwegian Air and Amazon, although Amazon doesn't directly accept Bitcoin (yet).

Elon has also Tweeted more recently suggesting that Tesla may in the future accept Dogecoin. Dogecoin is a fairly new cryptocurrency that was created as a joke which has turned somewhat serious with 117 billion Dogecoins in circulation. Everybody hears stories about what if they invested in Bitcoin in 2010. Well, if you bought £10,000 of Dogecoin in March 2020, in May 2021 you'd have £25.8m.

What is Bitcoin?

Bitcoin is a virtual currency that first made an appearance in 2008. There are pros and cons to the use of Bitcoin you may want to consider before investing heavily and buying a Tesla.

Pros:

Anonymity 

Your cryptocurrency transactions cannot be traced. This means that no government or authority can monitor the source of your funds. While this can be good, it can also attract criminals.

Transparency

All transactions are stored in an open ledger known as a blockchain. While your personal details will not be revealed, people can view the exact amount of all transactions.

Think of it as a transparent banking system where your identity is kept private. Plus, no one can manipulate the data, making cryptocurrency a very secure payment method.

Accessibility

Because cryptocurrencies like Bitcoin are not regulated by any government, anyone can access it anywhere in the world. This has made making payments using cryptocurrency a simple and straightforward process, even for people in remote countries.

The value of Bitcoin is also the same wherever you are in the world. Think of it as a worldwide currency.

Control

With Bitcoin, the money is yours and only yours. You have full control over it. You're not at the mercy of the bank.

Cons:

Complexity

If you're not tech-savvy, you don't have much hope with using cryptocurrencies. Along with storing crypto, there are a lot of terminologies that can be difficult to understand. Cryptocurrencies are very similar to buying and selling stocks.

Uncertainty

We're very much still at the start of crypto. Tesla accepting Bitcoin and, apparently, Dogecoin at some point is only the beginning of big manufacturers accepting crypto. Will crypto continue to become more and more popular? It's very likely but nothing is certain.

Volatility

Because of the decentralised nature of Bitcoin, it fluctuates A LOT. As of December 17, 2017, you needed $20,000 to purchase just one bitcoin. Just a few days later, on the 24th, the price dropped to $14,626. The current value as of 12/05/2021 sits at $56,143.20.

13/05/2021 UPDATE:

One day after we posted this article Tesla decided to stop accepting Bitcoin because of the power it takes to produce it. In short; mining Bitcoin is bad for the environment.

Tesla is looking into accepting other cryptocurrencies that don't use as much power to produce.

Here's a breakdown of cryptocurrencies that use the least power in kilowatt-hours consumed per transaction:

1. XRP - 0.0079
2. Dogecoin - 0.12
3. Cardano - 0.5479
4. Litecoin - 18.522
5. Bitcoin Cash - 18.967
6. Ethereum - 62.56
7. Bitcoin - 707

The question is, which one of these will Tesla choose to accept?

Needless to say, NOTHING IN THIS ARTICLE IS TO BE TAKEN AS ADVICE. 

DO NOT invest in or buy any cryptocurrencies without doing your own due diligence.