Bitcoin And Baseball Cards

The Elon Musk Embrace

But Elon Musk announced that he will start allowing people to buy a Tesla with Bitcoin. The Bitcoin celebrants may see this as a big deal, but there is much less here than meets the eye.

First, it’s not clear what Musk’s motive would be in accepting Bitcoin rather than standard currencies for his cars. Perhaps he thinks that Bitcoin is a good investment for his company.

That may be the case, but if he thinks buying Bitcoin is a better investment than expanding Tesla’s production capacities, he has the option to do this whether or not he sells his cars for Bitcoins. It should be little problem for Tesla to buy a few hundred million dollars of Bitcoin any day of the week if Musk thinks this is a good use of Tesla’s funds.

In short, the Bitcoin as investment story really doesn’t make any sense. The decision for Tesla to invest in Bitcoin has nothing to do with whether it sells its cars for Bitcoin.

It is certainly possible that Musk wants to accept Bitcoin just because he thinks it is a cool thing to do. I would never get in the business of trying to read Musk’s mind, but he clearly says many things off the cuff, and it is certainly possible that he has no well-thought-out motive in accepting Bitcoin.

Of course, there is one obvious, less flattering, motive for selling Teslas for Bitcoin. One of the main attractions of Bitcoin is that it allows people to make untraceable transactions. Unlike transfers through bank accounts or credit cards, there is no traceable record of Bitcoin transactions. For this reason, Bitcoin has become very popular among drug dealers and others engaged in illegal activities.

By selling Teslas for Bitcoins, Musk will be allowing these criminals to buy his cars without going through the intermediate step of trading their Bitcoins for traditional currencies. This should make Teslas especially attractive for successful criminals around the world.

Again, I would not try to read Musk’s mind, but an unavoidable implication of his decision to accept Bitcoin is that it makes Tesla far more attractive to criminals than other high-end cars. Assuming that Musk carries through with this move, it may lead to an interesting scenario.

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