Bitcoin soared over 15% earlier in the week to US$44,500 on the back of news that Elon Musk’s Tesla was to purchase US$1.5 billion in the world’s most famous cryptocurrency.
The move by the electric automaker was made ahead of plans to accept payment in Bitcoin for its increasingly popular top-end vehicles.
Tesla founder Elon Musk said of the investment that it is should be seen as “alternative reserve assets” that may in time increase according to reports.
In doing so, Musk and Tesla would be breaking new ground in the the payments industry as Bitcoin has yet to be used widely as a method to pay for goods and services, in large part still seen by the majority of owners and investors as a form of ‘precious metal‘ similar to gold or silver, albeit in non-physical form.
Hitherto large scale ups and downs in the value of the cryptocurrency could work against the quick adoption of Bitcoin or other similar currencies being adopted as a form of payment, however, especially for items as expensive as next generation automobiles.
“It was wise of Tesla to announce that it will deem its investment in Bitcoin as an “alternative asset.” That is certainly appropriate, because Bitcoin might be coming into greater acceptance as currency, but it is not cash,” Mr. Anthony Michael Sabino, professor of law, at St. John’s University has been quoted as saying not long after the firms announced it owned cash and the cash equivalent of US$D 19.4 billion once the sale of new shares had taken place.
“It certainly seems that beyond embracing it as a store of value for his own trust or his own assets, it does appear that Elon Musk is embracing it as a transactional tool as well,” was a comment added by Mr. Michael Venuto, a co-portfolio manager at Amplify Transformational Data Sharing fund with investments in the cryptocurrency tech industries.
Adding to the speculation and in part giving a boost to the cryptocurrency concept, a finance professor, Mr. Richard Lyons, at the University of California Berkeley was quoted in Japanese media as saying “I think the trend is inexorable,” adding that (Bitcoin and other cryptos) “will become transactional currencies increasingly over the next five years. It’s not going to happen overnight.”