Musk is well positioned to direct the direction of the future journey of the cryptocurrency
Three months ago when Elon Musk revealed that Tesla had bought $ 1.5 billion in bitcoin, digital currency fans claimed the move would accelerate its wider adoption as a tool for corporate finance.
On Wednesday, however, Musk withdrew his approval, swearing that you will accept cryptocurrency It undermines the justification for using Tesla as a payment for cars and as a destination for parking its spare money.
As usual, Musk’s comments provided instant fuel for crypto traders as well as ammunition for the terrifying crypto tribes on Twitter. But it was more difficult to know whether his announcement would affect broader perceptions of the currency or what role Musk’s views would play in the next phase of the adoption of cryptography.
“He’s always saying things every two days and it’s not consistent,” said John Coffee, a professor at Columbia Law School. Tesla’s intentions pushes bitcoin into the mainstream As for the use of the corporation, it seemed secondary to interest in pure financial speculation, Coffee added. “I think his first investment was much more of a currency investment than anything else.”
Behind Musk’s love affair with bitcoin has been the impact it has had on market prices it’s hard to ignore it. The price of the currency rose 15 percent on the day Tesla’s investment was revealed, and fell by 6 per cent within 24 hours of this week’s announcement.
Last fall Musk jokingly denounced dogecoin – another cryptocurrency he strongly promoted – and came a few days later “The commotion” on US television, dropping its value by 15 percent.
“It has certainly become the most important factor in cryptography,” said JP Thieriot, CEO of Uphold Crypto Exchange. This impact goes beyond Musk’s ability to move prices, and Thieriot helps shape how people think about digital currency.
Musk, however, cannot force cryptocurrencies to be the main commercial use. He said this week that Tesla had withdrawn from accepting payments in currency due to the effects of energy-intensive “mining” in the validation of transactions – known specimen he has ignored it in the past.
Many cryptography experts said he accepted that Musk’s change of heart meant he wasn’t suitable for bitcoin payments. Other companies that previously accepted bitcoin as a payment, including Dell and Microsoft, also left later.
“I don’t think a lot of people want to spend their bitcoin,” said Wilson Withiam Messari, an analyst at crypto research group. “If there really was money behind it [Tesla] did you really do that? “
Musk’s change of heart extended beyond the issue of payments. He also vowed that his electric manufacturer would be an active participant in the bitcoin market, and said he would “not sell bitcoin.”
The engagement shocked Tesla with Wall Street and came two weeks later $ 101 million profit from selling part of its stake, raising concerns that the company’s performance would increasingly be tied to the cryptocurrency trade.
The commitment not to sell could reassure some investors, but it also weakened Tesla’s case by using the currency as part of the day-to-day corporate operations of the corporation.
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Tesla chief financial officer Zach Kirkhorn told Wall Street two weeks ago that the liquidity of the bitcoin market justified Tesla’s cryptocurrency because it meant the company could actively buy and sell it.
He said that flexibility was especially important when Tesla had higher demands for funding for its Texas and Texas plants. Germany while dealing with the extreme financial stresses in the supply chain caused by the shortage of semiconductors.
“Being able to get our money in very quickly is very important to us right now,” Kirkhorn said. With a tweet promising to block the company’s cryptocurrency investment, Musk has torpedoed that justification.
Some proponents of bitcoin have said that Musk has helped corporate treasurers pave the way for bitcoin to become more widespread, encouraging other companies to see it as a valuable holding – even if they have been almost no examples others announced that they were buying foreign currency.
Bitcoin’s initial excitement sparked interest – even among treasurers – which is likely to continue beyond its final round, said Rayne Steinberg, CEO of the digital asset management team Arca. “People were talking about that. He got into zeitgeist.”
Some corporate treasury experts, however, said the flirtation with Tesla’s cryptocurrency holdings did nothing to encourage wider adoption.
“It created a conversation between the treasurers, but I don’t think it changed anyone’s opinion,” Jerry Klein told Treasury Partners in New York. The main conditions for treasurers to keep the value of their companies ’money were to completely reject cryptocurrencies, Klein added.
But if Musk’s work on bitcoin hasn’t changed the state of the currency business world, his recent intervention has created another solution: become a monarch to make future cryptocurrency an opponent of bitcoin or even a substitute for bitcoin.
Its reputation for attracting attention to bitcoin’s high energy consumption – and the fact that many of its network members are in China, based on coal-fired power plants – could accelerate the search for alternatives, according to followers. -Co surveys millennials and Gen Z, who are big buyers of cryptocurrencies, showed that they were also very concerned about climate change, Thieriot told Uphold. “Eventually, those things need to come together,” he said.
Musk’s comments sparked immediate attention among crypto-currency backers who say they have fewer adverse effects on the environment. Meanwhile, Bitcoin Zero – a carbon-neutral version of bitcoin – and Cardano are one of the networks that use so-called proof of participation to validate transactions, consuming less energy.
Most newer networks, however, have made efforts to gain a share of attention and crypto investment. Most of the attention shifted is to ether, the digital token used in the ethereum network. With a total value of $ 440 billion, its tokens are worth almost half of bitcoin.
Ether is already being used by some investors as digital money, and the move to a long-planned equity system could be completed next year, putting it in a strong position to get more support, Withiam said. Messari analyst.
Musk has not shown a hand in which cryptocurrency he will win when he moves away from bitcoin, only saying it would be a token that consumes less than 1 percent. His open comments will allow crypto investors to guess and ensure that all eyes for the next clue about his thinking will be fixed in his tweets.
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