By Tsering Namgyal for BAR
February 10, 2021
After years of being in the background often seen with suspicion by the regulators, it seems the world’s most cryptocurrency is finally going mainstream. The record-breaking prices have so far have been driven by the purchase of bitcoin by institutional investors on Wall Street. That has, in turn, attracted many retail investors who were hoping that Bitcoin is finally going mainstream.
The latest record-breaking spree came after Elon Musk said that his car company Tesla has purchased $1.5 billion worth of Bitcoins and might even consider accepting Bitcoins in the near future.
This is a huge development for the Bitcoin industry because Elon Musk and Tesla are as mainstream it can get. The world’s richest man even used #bitcoin tag on his twitter bio advertising about his bullish view on Bitcoin. He even once wrote on twitter “In retrospect, it was inevitable,” perhaps implying that Bitcoin will become as mainstream as any currency in the future.
Economists such as Milton Friedman has said that e-money that travels peer-to-peer from one address to another is inevitable but warned how it might be used for financial crime due to lack of transparency and its anonymous nature.
As soon as it became clear that Tesla has filed with the SEC about its Bitcoin purchase, the price of the digital asset jumped, pushing the prices nearing nearly $45,000 for the first time.
“We updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity,” the SEC document filed by Tesla showed.
In other words, Musk has finally walked the talk, finally making good on his bullish view of Bitcoin and that the Tesla founder is long known as a fan of Bitcoin. However, this is not the first time that Elon Musk has talked up the prices of digital coins in the past.
Earlier this month on Feb. 4, Musk tweets “Doge”, in reference to a cryptocurrency based on a popular internet meme. He later tweeted, “Dogecoin is the people’s crypto.” and “I am become meme, Destroyer of shorts.” Dogecoin surged more than 60%.
Elon’s interest in the money transfer business is well-known. Paypal, for instance, emerged after its predecessor merged with X.com, an online banking company founded by Musk in 2000, which now seems like a long time ago. He has since gone to found many ground-breaking companies from Tesla Inc. to SpaceX to Bowring company while recently having become the richest man in the world after dislodging Amazon Founder Jeff Bezos from that post.
While Musk might have taken Bitcoin mainstream, the global central banks are also creating their own digital currencies. According to the Basel-headquatered, Bank of International Settlements, 67 percent of the global central banks are creating their own central bank digital currencies of which China is the most ambitious. It has already piloted its CBDC known as DCEP in several cities in China.
Already, the observers are saying that after Tesla’s move, more corporations are likely to buy Bitcoin as a reserve on their balance sheets, and that should further increase the demand for Bitcoin. Amongst those likely to purchase the digital currency include Apple and twitter.
That is quite a far cry from skeptics who believed that Bitcoin “will be regulated into oblivion” or would gradually disappear as the central banks release their own digital currencies. But the latest attempt by Musk to purchase the cryptocurrency is symbolic of how Bitcoin might become commonplace as more and more institutions adopt it. And how Bitcoin reacted has given the world’s largest currency a major vote of confidence as evidenced by its gravity-defining performance.
Now, it further remains to be seen if more institutions jump into the fray and start buying Bitcoin and how the governments react to its record-breaking price.