Can you buy a Tesla with bitcoin?
The automaker recently said it expects to allow customers to pay for its electric vehicles with bitcoin soon.
The news comes after the company bought $1.5 billion worth of bitcoin on February 8.
Let’s take a closer look at how the payments might work.
Up until now, the world’s most popular cryptocurrency has been mostly used as an investment product rather than a form of payment.
Tesla's move that could change that.
The company suggested it might accept bitcoin directly as part of a broader plan to incorporate the cryptocurrency into its investment portfolio.
A handful of mainstream brands already allow customers to make purchases with bitcoin through third-party processors.
Companies including AT&T and Microsoft have accepted bitcoin through BitPay - a cryptocurrency payment processor.
The difference with Tesla is that it might eliminate the middleman.
Analysts expect the company would then set a guaranteed exchange rate with customers for a very short period of time.
Daniel Ives is the managing director of investment firm Wedbush Securities.
‘’I think it's something that could really start to change, from a commerce perspective, how we use bitcoin, and, as we've seen before, Musk leading the charge in terms of in an area that's new and innovative. It's not the first time. But this is really, I view it, as almost a seminal moment in terms of where we are, in terms of bitcoin from a transaction perspective, and the fact that now Tesla and Musk are putting their name behind.’’
If customers buy Teslas with bitcoin, the company may or may not liquidate those payments right away - which some experts read as an indication that Tesla might hold on to at least some of the coins and not sell them automatically.
Tesla founder and CEO Elon Musk has expressed enthusiasm about cryptocurrencies online.
Industry sources say he has the technological expertise to build the required infrastructure.
Here’s equity strategist, David Borun.
"I would say that he (Musk) is one of the few, if not the only CEO of a large company, that they could get away with this kind of stuff. And when I say get away with, I don't mean in any sort of nefarious way. I simply mean that investors and most companies don't necessarily want their CEO going off into left field and investing in something new. They want him to concentrate on the current operations of the business. But Musk has had a long story, a long history of using Twitter especially to comment on things that are ancillary at best to Tesla's core businesses, and the investors, because of his reputation as an innovator and a forward thinker, are very tolerant of his forays into other areas. And he's been successful in the past.‘’
But using bitcoin – which is volatile by nature – to buy real-life goods can be tricky.
One digital currency enthusiast, Mason Borda, told Reuters he bought a Tesla Model 3 back in 2016 using bitcoin through a company called Shakepay.
He now says he regrets the purchase, because of how bitcoin values have soared.
Back in 2016, each bitcoin was worth about $400.
As of February 8, it was worth over $44,000.
That means the $130,000 Borda spent on the vehicle would be worth more than $14 million in bitcoin today.