A Tesla for a bitcoin: Musk drives up cryptocurrency price with $1.5 bil purchase

Nice one Elon, he basically de-risked crypto for all the other companies with his Tweet. When more companies start disclosing their crypto purchases (Possibly AAPL next) then we see $50k BTC easily. It's not going away.

And the blind sheep easy money lovers, will run to deposit their faith and savings in this dirty and speculative bubble

'Easy money' hahaha you have no clue what you're talking about. Enjoy being poor.

@Kentarogaijin

What makes this bubble "dirty"? Are the stock market, property and bond bubbles "clean" bubbles?

Are the people who bought Bitcoin for under $4k back in March and now up 10x in under 12 months losers?

@Robliib

I think the Tesla news is a double edged sword. On the one hand it helps to pave the way for other corporates to follow suit, but at the same time, a controversial figure like Musk will bring unwanted attention. If Apple follows suit, then I'd say it's been de-risked.

Institutional money is wanting to get into crypto but yes because it's risky and highly speculative the only "legitimate" way for them to get in is through things like GBTC or ETH from Grayscale which actually trade on the big exchanges, ARK already made a killing on GBTC. Musk yes is controversial but he is a trend setter and has a huge cult following, like it or not. Him using Tesla money to buy actual BTC is a big step for further legitimization/acceptance of the asset and yes Apple would further give credit to it. Musk is just the first to put his hand in the cookie jar and admit it, but I'd bet plenty of other companies have already dabbled in crypto and I'm guessing we'll hear about it sooner than later. Risky or not, snake oil or not, if you are willing to take the risk to buy it and then eventually profit from it, then you are definitely not a loser. Can't win a lottery either unless you buy a ticket.

Accepting payment in bitcoin is very different from pricing in bitcoin.

Why not set the price of a Tesla 3 to 1 BTC?

Probably because Musk knows the whole thing can collapse in a heartbeat and become worthless.

The fact that Tesla continues to set the price in USD shows that he actually doesn't trust the value of BTC, in fact he seems to like Dogecoin more.

Why would he price it in BTC when the price of BTC fluctuates based on people buying and selling it? Listing in USD and getting charged the equivalent amount of BTC makes more sense than paying a flat BTC cost because BTC does not have intrinsic value backed by precious metals like normal currencies.

 because BTC does not have intrinsic value backed by precious metals like normal currencies.

You may want to check on those normal currencies being backed by precious metals!

Yeah I think he is suggesting letting people pay with BTC if they want to and obviously price it at whatever price BTC is at that point in time. Then Tesla could decide to convert that to cash or keep the BTC as is, if it goes up they win and if it goes down they potentially have a write off for a loss, he could actually benefit both ways maybe. I'm sure he has some highly paid CPAs on the payroll to make those calls. Again, buy a car with crypto or buy a house with crypto or even groceries, Musk is making the point that this will become quite common in the not too distant future.

@Roblib

I agree that corporate money helps legitimise. Microstragey was the first and Square has dabbled a little. Tesla is the biggest most famous company for sure. I just would have liked some less controversial corporates to get in before Tesla. The biggest risk Bitcoin faces these days is government feeling threatened by it and banning it. If they decide to do that they will use criminals/terrorists/manipulation as the excuse. A guy like Musk brings risk that other corporates wouldn't. That's the double edge sword.

@egads man!

BTC does not have intrinsic value backed by precious metals like normal currencies.

Hate to break it to you, but normal currencies are not backed by anything other than trust/belief, just like Bitcoin.

Yeah I agree with you, the risk is always there for government to step in and try to "control" things. Even though they can't control crypto currency they CAN and will find ways to make it harder to buy or sell and that could affect the exchanges even though they run legitimate businesses. That's the little voice in the head always saying, maybe it's time to sell and walk away from the casino LoL.

BTC does not have intrinsic value backed by precious metals like normal currencies.

It has a different intrinsic value than traditional (FIAT) currencies.

First, as another poster mentioned above, FIAT currencies are not backed by precious metals anymore. They are pegged to precious metals, but banks/governments do not have the same value of precious metals in their coffers as the value of their currency in circulation. Rather, banks are allowed to lend X dollars, for every actual dollar they have. It's been decades since currency was backed by currency.

Instead, currencies are backed by the confidence in the entity that issues them. In the case of FIAT currencies, this means the value is in the confidence in the government issuing the currency. In the case of cryptocurrencies, the faith is in the strength of the system. On top of this, there is value provided in not needing to go through the banks for large transactions, or even to store huge amounts of money. The banks only serve the common man because there are no alternatives for the common man. The banks have taken advantage of this forever, due to their being no other options.

Cryptocurrencies will eventually offer those alternatives. It's why the banks talk so bad about cryptocurrencies - they are undermining the banks' business, and there is nothing they can do about it.

@Strangerland

They are pegged to precious metals, but banks/governments do not have the same value of precious metals in their coffers as the value of their currency in circulation. Rather, banks are allowed to lend X dollars, for every actual dollar they have. It's been decades since currency was backed by currency.

Actually, it even worse than this! They are no longer pegged to precious metals at all. Nor does the fractional reserve system exist anymore. It all starts with the stroke of a keyboard at the central banks of the world. Literally comes out of thin air!

Which is the biggest bubble waiting to pop? Bitcoin or Tesla?

If you're smart you don't really care because you can make money as it goes up or down. You trade on those kind of names, you invest in names like Apple or Microsoft or Amazon.

Which is the biggest bubble waiting to pop? Bitcoin or Tesla?

I'd say Tesla for sure! But they're kind of tied at the hip now. Tesla may just be the thing that brings Bitcoin down in this cycle. Still, I'd be more comfortable buying BTC at these prices than Tesla.

Actually, it even worse than this! They are no longer pegged to precious metals at all. Nor does the fractional reserve system exist anymore. It all starts with the stroke of a keyboard at the central banks of the world. Literally comes out of thin air!

You are half right. Commercial banks, not central banks, print money at the stroke of a keyboard. A bank in the US has to have four cents on deposit with the Federal Reserve for every dollar it lend, meaning 96 cents out of every dollar lent is money created out of thin air, not by a central bank but by a commercial bank. Central banks use deposit requirements, overnight lending rates and bond sales or purchases to fine tune the amount of new money added to the economy to control the inflation rate. If a bank over lends and at the end of a business day has insufficient reserves for the amount of money lent, it borrows from the central bank at the "discount rate". The next day it has to pay that money back with interest. Raising or lowering that discount rate is one of the major ways central banks promote or stifle lending and in this manner control the growth of the money supply.

Maybe it is just me ,I can't put a finger on it, but there just seems to be this vague air of disrepute about Mr. Musk, as if there is less to him and his companies than he makes them out to be. Maybe it is because I am inherently doubtful of anything that seems cultish in nature.

Which is the biggest bubble waiting to pop? Bitcoin or Tesla?

Neither. Cryptocoins are currencies, that allow the common man to run all his financial transactions without paying a fee to the banks, and without the oversight of the government. Tesla is a car that drives like an ipad, is ridiculously fast, better to our planet, and doesn't require gas.

Neither of these are bubbles. Oil and banks are the bubbles. While their time is limited, bitcoin and Tesla are going nowhere.

Cryptocoins are currencies, that allow the common man to run all his financial transactions without paying a fee to the banks, and without the oversight of the government. 

Who are you kidding? I don't pay a bank to use my money. The "bank", actually a credit union, pays me interest on the money in my accounts. I pay cash for everything I buy. If I don't have the cash on hand I don't buy. Pretty simple.

Crypto currencies are regulated in most nations and outright prohibited in some. Canada for example prohibits banks from dealing with firms that trade in cryptocurrencies unless the firms are registered with the Canadian government, which in turm binds them to Canadian laws on money laundering, financing terrorists or "politically exposed persons". Some Canadian banks prohibit the use of their bank cards to purchase cryptocurrencies. US law considers crypto currencies to be property for tax purposes. That means you have to declare your holdings on your tax return. I bet a lot of taxpayers with crypto currency holdings don't do this. Businesses in the US doing business in cryptocurrencies must register with US Financial regulators, obey the same laws as banks regarding money laundering and make Suspicious Activity Reports and Financial Transaction Reports just as banks must. There are bills working their way through the US Congress to further regulate crypto currencies.

Laughing at the "common man" comment too. The only people burning for these cryptocurrencies are so they can buy drugs, stolen property, illegal weapons or kiddie porn on line and think they won't get caught. There are probably a few who think that by using cryptocurrencies they are sticking it to "the man", lol.

Who are you kidding? I don't pay a bank to use my money. The "bank", actually a credit union, pays me interest on the money in my accounts. I pay cash for everything I buy. If I don't have the cash on hand I don't buy. Pretty simple.

Sure you do. Transaction fees, account fees, ever make a fast payment on a house etc? Banks are rich off getting a cut of every single non-cash transaction. And we the common man pay that.

Laughing at the "common man" comment too. The only people burning for these cryptocurrencies are so they can buy drugs, stolen property, illegal weapons or kiddie porn on line and think they won't get caught.

Speak for yourself. I've been paid for work with it, and I've paid for work with it.

Now, at the moment, they are not stable, and therefore not used regularly in daily transactions as a result.

But it's been getting more and more stable as the years go by, and once it hits a critical stability, more and more businesses will take it on. And more and more banks will lose those fees.

Which is exactly why the banks are freaking out. Cryptocurrencies nearly represent an existential threat. They don't, because there will always be a use for banks. But their power and influence will wane significantly over the coming decades as they lose relevance in people's transactions.

And that's a good thing.

@Desert Tortoise

You are half right.

Yes, BUT.... the "reserves" that commercial banks are required to maintain are "reserves" held at the Fed and as you point these are not technically "money". These reserves are nothing more than numbers on a spreadsheet controlled by the Fed and backed by absolutely nothing. So while technically there is a fractional reserve requirement, in practice it is not what people think it is and it is based on nothing more than the whim of the central bank.

@Strangerland

Neither of these are bubbles. 

It depends how you think about a bubble. Many people think of it as one time event. Price goes up, price crashes down, asset never recovers. I think a bubble is merely when an assets price gets ahead of itself in a dramatic way. In the case of Bitcoin the "bubbles" are a repeating pattern as Bitcoin goes through it's price discovery. The probability is high there will be a large price correction at some point allowing people to once again claim bitcoin is dead and a fraud. As for Tesla.... it's hard to argue with a straight face that it's value isn't far ahead of itself. It doesn't mean it will cease to exist after the bubble pops.

@Desert Tortoise

The only people burning for these cryptocurrencies are so they can buy drugs, stolen property, illegal weapons or kiddie porn on line and think they won't get caught.

This narrative is way out of date and simply not true. This is the line governments are still peddling so that can move to ban it if they feel the need to.

The only people burning for these cryptocurrencies are so they can buy drugs, stolen property, illegal weapons or kiddie porn on line and think they won't get caught.

Looks like you've exposed Elon Musk for his game.

Even the big banks, realizing they can't stop it, are getting into the game: https://www.cnbc.com/2020/11/20/big-banks-take-baby-steps-toward-commercializing-blockchain.html

Sure you do. Transaction fees, account fees, ever make a fast payment on a house etc? Banks are rich off getting a cut of every single non-cash transaction. And we the common man pay that.

I never pay any of the above mentioned fees but like I said, I pay cash for everything. I paid my home off years early and no fee for that either. Even my business accounts do not pay those fees.

es, BUT.... the "reserves" that commercial banks are required to maintain are "reserves" held at the Fed and as you point these are not technically "money". 

BS. I never said the reserves held in the Federal Reserve system are not money. They emphatically are! Learn the definitions of M1 and M2. Much of my money is a number in a data base, but I can walk into any branch of my credit union and convert those numbers into hard cash to spend. Demand deposits are M1, the most fundamental measure of liquid money along with cash and checking accounts (and once upon a time travelers checks but those are rarely used today).

I can walk into any branch of my credit union and convert those numbers into hard cash to spend. 

Sure, right now you can. But ask a Greek person how that worked out for them in 2015.

Also, I understand M1 and M2, but, we're getting into the weeds now... Ask 10 economists to define "money" and you'll get 10 different answers.

I get it, you don't like Bitcoin. That is totally fine.

@El RataFeb. 9  01:05 pm JST

And the blind sheep easy money lovers, will run to deposit their faith and savings in this dirty and speculative bubble

'Easy money' hahaha you have no clue what you're talking about. Enjoy being poor.

write it down in ink and save that for the future mate.

Ask 10 economists to define "money" and you'll get 10 different answers.

No you do not. I'm an economist. Economics and the Fed have precise definitions of what constitutes money. Stop making up nonsense and trying to spin it as somehow true when it's not.

Sure, right now you can. But ask a Greek person how that worked out for them in 2015.

Deposits are insured in the US. The US learned that lesson the hard way during FDRs first administration.

Deposits are insured in the US.

And you accuse me of spinning nonsense. Good one.

Speak for yourself. I've been paid for work with it, and I've paid for work with it.

Saying that in no way refutes my statement that most who want crypto currencies want to use it to buy stuff that isn't legal to buy or a few who think they are somehow sticking it to the man by using a cryptocurrency instead of a national currency. That you are paid in a cryptocurrency does not say anything about what you spend it on. At the very least admit that cryptocurrencies very much facilitate illegal activities.

Deposits are insured in the US.

And you accuse me of spinning nonsense. Good one.

I guess you never heard of the FDIC, FSLIC and NCUA.

Hmmmm, let me think.... are they the things that guarantee your money in the bank is safe? Well, at least up to $250k right? Sounds like a lot doesn't it? Unless of course one day you want to be able to retire without being dependent on the government for handouts. Then it doesn't seem like enough does it... Oh, and what happens if a large number of people need to call on this "insurance" at the same time? Hmmmm, out of luck again, because their pool of money just doesn't quite stretch that far....

At the very least admit that cryptocurrencies very much facilitate illegal activities.

Something that fiat cash is never used for right? Forget cash even, something that regulated banks don't play a part in? Common buddy, try using your brain instead of quoting textbooks.

sticking it to the man

You keep banging on about sticking it to the man. Have you considered that people are not trying to stick it to the man, but instead trying to protect what they have earned? You may be content earning sub 1% on a depreciating asset held in your 'safe' credit union. But some of us would rather maintain, or even maybe grow, our assets and purchasing power.

I never pay any of the above mentioned fees

I don't care whether you do or not; someone is. Banks aren't doing it out of the goodness of their hearts, and they didn't get rich off the good will donations of their members.

At the very least admit that cryptocurrencies very much facilitate illegal activities.

So do cash, credit cards, and banks.

What's your point?

You keep banging on about sticking it to the man. Have you considered that people are not trying to stick it to the man, but instead trying to protect what they have earned?

Quoted for Truth.

Elon, crypto currency in general, should be very suspicious that it's value is directly weighed in paper currency. This has nothing to do with the common man becoming rich, but enriching the rich at his speculitive expense, and the world bank vaults with PAPER currency.

No, none of this is correct.

It might well as be Monopoly money.

As might FIAT currencies. It's confidence in the system backing the currency that gives value. People don't have confidence in monopoly money, but they do in FIAT currencies, and are slowly gaining it in cryptocurrencies as well.

Have you considered that people are not trying to stick it to the man, but instead trying to protect what they have earned? 

That might be the most laughable claim regarding cryptocurrency yet. Bitcoin varies in value by tens of thousands of dollars over the course of a few weeks. How is this a reliable store of value? I love how far gullible fools will go to justify a scam they have bought off on.

So do cash, credit cards, and banks

Credit cards and transactions at banks are traceable to individuals and businesses. You cannot pay for drugs on some dark web website with a credit card and not be identified. Banks are required now to know their customers and monitor their transaction histories to look for money laundering or funding of terrorists groups. Same thing buying stolen goods or arranging for sex on something like Backpage when it was still around. Transactions using credit cards or other forms of bank transfers are all traceable. Big deposits and withdrawels require paperwork too. Governments require banks to work with law enforcement. But with cryptocurrencies you can maybe buy stuff like this with a degree of anonymity. This whole line of tripe about cryptocurrencies allowing privacy is just a fig leaf to make it look respectable but it is really all about people wanting to be able to buy that which their governments make it illegal to buy. Anyone remember Pirates Bay? There are millions of people out there wanting to buy stuff that is illegal, from drugs to stolen goods to sex to arranging murders every single day. Pirates Bay did a booming business in contraband until the FBI caught the owner of the site with his laptop open in a Bay Area library. Don't be naive and assume everyone out there, or even those posting on this very site, are nice people with only the purest motives. Some people posting here on JT are doing things that would get them convicted if they were caught. A lot of people advocating for cryptocurrencies are doing things that are illegal and these cryptocurrencies are part of how they think they will get away with it.

I don't care whether you do or not; someone is. Banks aren't doing it out of the goodness of their hearts, and they didn't get rich off the good will donations of their members.

The credit union loans out the money I have on deposit with them and charge an interest rate that is higher than the interest they pay me on those deposits. Those deposits actually allow them to lend many times teh amount that is on deposit and charge interest on those loans. Aggregate this across tens of thousands of customers and that is how they make their money. We don't even have ATM charges as long as we use an ATM at another NCUA affiliated credit union.

That might be the most laughable claim regarding cryptocurrency yet. Bitcoin varies in value by tens of thousands of dollars over the course of a few weeks.

Again, you're hung up on the current state of it, which is temporary, as compared to what it will be when it stabilizes. It's a risky place to put your money right now. So right now, it acts as a way for some people to do currency trading and make some money. Only some businesses are taking it now. But it's silly to think that as it stabilizes and it's actual value is understood by a wider range of people who are more willing to take a stabilized currency, it won't allow them to protect what they've earned, and keep the banks hands out of it.

How is this a reliable store of value? I love how far gullible fools will go to justify a scam they have bought off on.

It's not yet. What I'd like you to explain is how it won't be a reliable store of value when it stabilizes.

Credit cards and transactions at banks are traceable to individuals and businesses. You cannot pay for drugs on some dark web website with a credit card and not be identified.

Exactly. Bitcoin allows privacy for all transactions. It's unfortunate that some of them will be for drugs and other illegal things. But it's not like there isn't financial crime at every level of finance, whether it be drugs at low level, or fraud at massive levels. The fact is, money, in every form, is used for crime. Credit cards, banks, cash, checks, you name it.

Anyways, it's a moot point. Even if they were only used for drugs, there is no way to turn them off due to the decentralized nature to it.

The thing about cryptocurrencies is, they're here to stay. The only thing that can stop them is turning off the internet.

And that scares the hell out of the banks.

How is this a reliable store of value? 

How is your cash a reliable store of value? The US debt is so large there are only two ways out. Default, or Debasement. Which way do you think the Fed and Gov are going to go? Your an economist, surely you can work out what that means for your savings sitting in your credit union.