Electric car maker Tesla announced that it has invested about one and a half billion dollars in Bitcoin and is planning to start accepting digital currency as a means of payment in its vehicle purchases soon.
According to the digital currency trading platform CoinBase, following this statement, bitcoin prices increased by 15.4%, reaching their current value of about $ 44,500.
According to a report published by Time magazine of America, Elon Musk recently unveiled its new strategy towards Bitcoin in documents submitted to the US Securities and Exchange Commission, saying that its investment in digital currency and other assets Alternative backup may grow.
Bitcoin attracts investors for its scarcity and ability to trade safely, but the use of this volatile digital currency has not been widely used as a means of payment for goods and services.
Few companies accept payments in this currency, such as Overstock, and Bitcoin is often used as a store of value similar to gold, and it is also used by those who do not trust the banking system, or criminals looking for a way to launder money.
It is not clear whether other major companies will follow Tesla's footsteps in investing in digital currency or accepting it in transactions, and it is true that paying for a car is a huge purchase for the consumer, which may make Bitcoin more convenient to pay for it, but the large fluctuations in currency rates constitute High risk for any company that decides to accept.
Tesla's stock rose in 2020 to become the world's most valuable automaker (Getty Images)
Increase and diversify returns
"It is prudent to take Tesla to Bitcoin as an alternative asset only," said Anthony Sabino, professor of law at St. John's University.
Last month, Tesla reported that it had cash reserves and an equivalent amount of $ 19.4 billion after selling new shares to take advantage of the price increase. According to Dan Ives of Wedbush Securities, this step gives the company more flexibility to diversify and double its returns. .
Michael Venuto, a co-manager at a hedge fund trying to invest in cryptocurrencies, said that "in addition to adopting it as a store of value for its own assets, it appears that Musk is adopting it as a transactional tool as well" but even with Tesla's support by taking this step. It may take some time for investors to use them to purchase a car.
Edmunds CEO Jessica Caldwell does not believe that digital currency will become popular because most people resort to loans to buy or rent their cars and do not pay cash, adding that most people will not risk at the present time using cryptocurrencies in expensive purchases such as the cars.
On the other hand, experts expect a boom soon for the currency, as Professor of Finance at the University of California, Richard Lyons, believes that the trend towards the cryptocurrency is inevitable, expecting its use in transactions to increase over the next five years.
Tesla announced its first annual net profit during 2020, and its share price rose to become the most valuable automaker in the world.
Late last year, the company joined the "S and P500" index with a market value of $ 824 billion, constituting about 2% of the benchmark index.