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When Tesla CEO Elon Musk endorsed bitcoin, the value of the cryptocurrency soared and in doing so demonstrated why merchants and banks are still afraid to touch it.
Tesla recently notified to the SEC bought $ 1.5 billion in bitcoins to diversify investments and create a “stream of bitcoins” to support payments. The automaker’s ad still shot up another rush and all-time highs in crypto markets, leading to processing issues in various exchanges.
Bitcoin’s volatility continues to be a sticking point for payments. Despite skyrocketing in 2020 and hitting a recent high of nearly $ 47,000 as of Tuesday afternoon, bitcoin still fell below $ 30,000 for a time in January. And since it’s famous Tesla CEO Elon Musk, your support doesn’t build a business network on its own.
“[Tesla] it just adds an e-commerce site, “said Tim Sloane, vice president of payments innovation at Mercator Advisory Group, adding that PayPal could influence merchants and consumers more than Tesla (Elon Musk was a co-founder of PayPal).
Bloomberg
PayPal allows its users to buy, hold and sell crypto, providing direct access to 300 million users. President and CEO of PayPal And Schulman He recently said that the company plans to allow these consumers to use crypto accounts as a source of financing for payments at approximately 29 million merchants by March.
“If PayPal allows all of its merchants to accept bitcoin, that will have a much greater impact than Tesla because PayPal will greatly expand the acceptance of bitcoin at all of its e-commerce and point-of-sale accepting locations,” Sloane said.
That’s a more direct link between consumers and merchants than American card brands. Mastercard’s cryptocurrency strategy has led to a partnership with Wirex to support a cryptocurrency card to buy, hold and exchange cryptocurrencies. Visa uses a similar third-party model.
While a universal use case for bitcoin payments has yet to emerge, attention to crypto payments has created options close to central banks, such as stable coins, which are pegged to the traditional currency to avoid volatility.
Tesla’s move has sparked speculation that other big firms will follow suit. RBC, for example, suggested that Apple could link the buying and selling of bitcoins to its digital wallet and payment app, according to Reuters.
The automaker did not return a request for comment at press time, and its SEC filing did not say when it would begin accepting bitcoin payments. Tesla joins a parade of high-profile investors and supporters of bitcoin and other cryptocurrencies, such as Cram Y Microsoft.
Tesla’s support is more consistent with early uses of crypto for payments for high-profile items such as cars Y ArtAnd as such it does not easily translate into regular consumer payments.
“I hear from different players in the space that one of the main use cases for bitcoin right now is luxury goods because bitcoin has created so many millionaires overnight that they need a place to spend their currency.” Talie Baker, senior analyst at Aite Group, said, adding that bitcoin’s price volatility still works against its use for direct payments. “I think it makes people more aware of bitcoin in general, much like PayPal and Square’s crypto product offerings.”
Beyond all the bull market rumors from last year, the use of bitcoin as a real form of currency is rare. About 15,000 businesses accept bitcoin worldwide, and about 2,300 in the US accept direct bitcoin payments, according to Think, adding California leads the US with more than 400 merchants. There are also only 5,000 bitcoin ATMs worldwide and a little more than a dozen large corporations that accept bitcoin payments.
Tesla’s high-profile investing attention creates a halo effect, argues Donald Kasdon, founder of T1 Payments in a future PayThink column.
“There is a lot of room for growth here as cryptocurrencies go mainstream and some major brands started accepting bitcoins recently,” Kasdon said, adding that accepting bitcoins and other cryptocurrencies can increase customer range and lower customer processing fees conventional payment processors. “I hope that we will see more adoption and acceptance of bitcoin by large corporations over the next five years as more retailers and e-commerce merchants jump on the bandwagon,” Kasdon said.
The Tesla announcement does help legitimize bitcoin as a currency, while the investment confirms the automaker’s trust and belief in bitcoin as a valuable asset, says Daniel Polotsky, CEO of CoinFlip, a cryptocurrency ATM provider.
But since many people see Bitcoin as a hedge against inflation and prefer to hold coins, it would be advantageous for Tesla and other companies to accept additional coins that would improve transactions, according to Polotsky.
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