You can buy a Telsa with Bitcoin, but the reasons why you shouldn’t say a lot about the market.
Imagine being Elon Musk. You tweet that you bought a hat for your dog on Etsy, and Etsy’s share price jumps 8%.
There should be an ETF that just buys anything Musk mentions in a tweet. It’d be a killer.
Last week, Musk announced that you could now buy Telsa cars with Bitcoin. This followed revelations earlier in the year that Tesla had invested US$1.5bn in the crypto-currency.
So is this the “widespread adoption” we’ve been promised?
We’re not there quite yet. Telsa were making it clear that there were still risks involved with using Bitcoin as a medium of exchange. From their T&Cs:
The price of Bitcoin can be volatile and subject to upward and downward movements. With respect to final payments: (i) if you transmit less than the Bitcoin Price, we will keep your payment and apply it to the amount due and you will be required to pay the outstanding balance; (ii) if you transmit more than the Bitcoin Price, you will not be entitled to reimbursement of the excess amount.
Am I reading that right? If the price of Bitcoin (relative to US dollars) moves against you, you have to pay more. If it moves in your favour, they just keep it?
(Musk really is a genius.)
But what about if you need a refund?
If you are entitled to a refund of your payment or to a buyback, we reserve the right to refund to you either the exact Bitcoin Price that you provided to us at the time of purchase or an amount of US Dollars that is equivalent to the US Dollar price of the product that you purchased, at our sole and absolute discretion, taking into consideration operational efficiency. The same applies to all fees and incidental costs to which you are entitled. THE PRICE OF BITCOIN CAN BE VOLATILE AND THE VALUE OF BITCOIN RELATIVE TO US DOLLARS MAY DECREASE OR INCREASE BETWEEN THE TIME THAT YOU MAKE YOUR PURCHASE AND THE TIME THAT WE PROVIDE A REFUND OR BUYBACK.
(That’s them putting that bit in All Caps. I guess they felt they needed to shout that bit.)
So they get to choose whether to pay you back in USD or in Bitcoin, depending on which one makes most financial sense to them?
That leaves you carrying the risk of a large fall in the Bitcoin price, and large falls are relatively common still.
So, it doesn’t look like it makes all that much sense yet to purchase Telsa in Bitcoin just yet.
But that’s ok. Elon Musk is, once again, giving us a taste of what the future will look like, even if reality still lags behind.
But this also shows us that the whole crypto-space is still in the early stages of adoption.
As an investor, that’s exactly what you want to see.
If Bitcoin was fully baked in as an alternative currency, the window for making early gains would be gone.
There’s no money to be made coming late to the party.
But as far as global currencies go, Bitcoin is still far and away the youngest and freshest kid on the block.
So I think Bitcoin still has a big future ahead of it. And there’s still lots of money to be made if you know what you’re doing.
And I’m not one to be betting against Elon Musk.