So many people consider bitcoin as a new kind of gold – a reserve asset. But in fact, some companies are already accepting payments in bitcoin.
Tesla would be the first major company to directly accept bitcoin as payment as part of its plan to incorporate cryptocurrencies into the company’s investment portfolio.
While many consumers have expressed interest in this information, not everyone knows clearly how to buy a Tesla car with bitcoin. And what is the difference between direct bitcoin payments with regular bitcoin transactions?
How does bitcoin works?
Bitcoin (symbol: BTC, XBT, BitcoinSign.svg) is a cryptocurrency, which can be exchanged directly with an Internet-connected device without the need for an intermediary financial institution.
Bitcoin works differently from typical currencies: there is no central bank that governs it, and the system is based on a peer-to-peer network protocol on the Internet. Bitcoin supply is automatic, limited, divided according to a predetermined schedule based on algorithms.
Bitcoin is issued to computers that “mine” bitcoin to pay for verifying Bitcoin transactions and record them in a distributed ledger in the peer-to-peer network, via blockchain technology. This ledger uses bitcoin as the unit of account. Each bitcoin can be broken down into 100 million smaller units called a satoshi. Businesses tend to want to pay with bitcoin to minimize costs.
Enterprises are still wary of keeping bitcoin
Some large businesses currently allow customers to pay with bitcoin but through an intermediary money exchange application. For example, AT&T and Microsoft are both accepting bitcoin payments through BitPay, a cryptocurrency exchange payment gateway. BitPay is also a partner of many luxury car dealerships.
Even the payments giant PayPal, which intends to bring cryptocurrencies to its network by mid-year, will execute transactions through intermediary partner Paxos Trust Company. That means neither the merchant nor PayPal has to hold “digital money” and the risks involved.
In August 2020, Square and MicroStrategy announced by US public companies that they have invested in bitcoin. The same month, fund management firm Fidelity Investments announced it would open its first bitcoin investment fund.
The moves confirm the new trend, showing that more and more regulators and institutions will accept the digital currency. According to Fidelity survey data, 36% of investors in the US and Europe already own digital currencies, and 60% believe that digital currencies belong to their investment portfolios.
In fact, in payments that have never officially announced the acceptance of bitcoin, buyers can still use the fast exchange platform to exchange digital currencies before buying and selling.
How to buy a Tesla car with bitcoin?
When Tesla CEO Elon Musk announced that his company had bought $ 1.5 billion in bitcoin and would begin accepting cryptocurrency payments, the price of the currency rose to nearly $ 44,000.
If Tesla accepts bitcoin payments like the way other big companies do, customers will transfer bitcoin from an electronic wallet to an intermediary to convert it into USD and send the money to Tesla. In fact, many people buy goods by using a payment card to convert electronic money into USD before making a transaction.
For example, companies like AT&T or Microsoft accept payments in bitcoin through the BitPay cryptocurrency payment processor. Although it has cooperated with many high-end auto dealers, BitPay is not currently a partner of Tesla.
Experts predict Tesla can ditch the middleman, create its own processing system to accept bitcoin payments, and exchange them for cash whenever they want.
Tesla CEO Elon Musk was also one of the contributors to the construction of PayPal. Sources claim he has the technological expertise to build the infrastructure necessary for Tesla’s cryptocurrency transactions.
If Tesla goes along that route, customers will move bitcoin directly into the company’s system. CoinShares Chairman Danny Masters said the company would have to set exchange rates to transact with customers. “They could continue to price Tesla cars in dollars, then say, ‘Transfer dollars or send us bitcoins,'” he speculated. If you send us Bitcoin, the price will be affordable within five minutes.”
According to Reuters, some experts predict that after a customer buys a product with bitcoin, Tesla will keep some cryptocurrencies, not rush to exchange them for cash. A Tesla representative did not comment on this matter.
So buying Tesla with bitcoin will benefit or not?
Currently, the increase in bitcoin buying power is largely due to speculation. However, there is a paradox that speculation in bitcoin makes Tesla less profitable using bitcoin as a medium of exchange. Compared to the dollar, which has always been relatively stable in value, bitcoin brings too many risks when its value fluctuates regularly at two digits.
Marija Vertimane – senior strategist at State Street Global Markets – thinks that using bitcoin to buy anything – even a Tesla car – will still be extremely difficult due to its immense volatility.
What’s more, with bitcoin’s value tripling over the past three months, analysts wonder how much price volatility will affect buyers of Tesla cars?
“Unless the price of bitcoin stabilizes, in case the price of bitcoin plummets, you will win a Tesla car like a lottery game. Or if the price triples, your Tesla car is too expensive” – Ipek Ozkardeskaya, Swissquote Bank senior analyst, said.
For example, if someone buys a Tesla Model 3 for a bitcoin on Sunday – when it traded for $ 38,000 – then with that same car, people spend only 0.8 bitcoin on Tuesday when the money This electronic is trading at 46,413 USD.
Mason Borda, CEO of TokenSoft, said he bought a Tesla Model 3 with bitcoin in 2016, paying it through an intermediary company, Shakepay. That way Tesla would receive a cash payment.
Borda once shared that he regretted his decision in the past due to the rising bitcoin price. When Borda bought a car, each bitcoin was worth 400 USD, and as of 8/22021, each bitcoin hit a record of more than 44,000 USD. That means the total value of bitcoin in the past Borda used to buy a Tesla car is now approximately 14 million dollars.
“I do not recommend buying items of great value with bitcoin,” Mason Borda said. “It’s the feeling of loss when the currency rises.”
As for the car dealership, they are still afraid of the risks of keeping cryptocurrencies. Christopher Basha is a car dealer in Georgia (USA). He belongs to the group of car brokers receiving direct payments in bitcoin and other cryptocurrencies since 2015, much earlier than Elon Musk’s Tesla.
Basha affirmed that the adoption of digital money is a good marketing method, but it is also quite risky for a broker who is not very tech-savvy. He often sells bitcoin immediately after receiving payments from customers because he is uncertain about the stability of the cryptocurrency.
And even when Basha sold bitcoin instantly, a few minutes of processing on the trading platform cost him an average of $ 300-400 per vehicle sold, due to exchange rate fluctuations. Basha did not dare to keep bitcoin as an investment. Once he forgot the password to transfer bitcoin, he panicked. “There is no middleman to rescue you,” said Basha.
If you still fret about trading with bitcoin, consider the pros and cons below
First, using bitcoin is convenient in transactions. Because bitcoin circulation does not have to go through any intermediary stages or links. Using bitcoin has no limits, is not dependent on space and time when circulating the digital currency.
Second, bitcoin is safe and secure. Through digital currency transactions, bitcoin is done and completed without any personal information, the trader’s identity is secure.
Third, it cannot be counterfeited, since bitcoin is not physically present.
Fourth, transaction costs are low. Because it does not go through any intermediary stage, the transaction entity only has to pay the transaction processing fee with small expenses.
Fifth, do not pollute the environment. Transactions are done through the Internet, the computer system that processes the data of digital money – bitcoin, so the cost of electricity is low.
Firstly, due to the use of money, gold and silver are “visible, mechanically determined objects,” so digital money has not yet penetrated the subconscious of subject society, many owners may not have knowledge about the use of digital money so there is no intention to use it in transactions.
Second, using digital money – bitcoin is relatively complicated because it has to go through a computer technical device, so not all subjects are proficient in using computers to conduct cryptocurrency transactions.
Third, due to its anonymity when trading digital money, so criminals can use it to cause damage to owners, can be stolen, abused, used for money laundering./.