Tuesday, September 21, 2021

Did Elon Musk Just Certify Bitcoin As The Future Currency?

Elon Musk tweeted on Wednesday that the option to pay for Tesla vehicles via Bitcoin was now live and that they will not be further processing Bitcoin to fiat currency. This comes after Tesla reported in its SEC filing that it had invested $1.5 billion into Bitcoin in early February. Needless to say, we can see the future of bitcoin. And it’s pretty bright!

Last year, 2020, was surely one of its kind. As a worldwide global pandemic daunted the economies, imposed nationwide lockdowns and restrictions, and ushered recessions, one financial asset was on the rise. You guessed it right! Bitcoin, the world’s most famous cryptocurrency, witnessed a staggering rise in its value as it crossed the $50,000 mark in early 2021. 

Bitcoin being the first-ever digital currency was introduced as an alternative to the present financial system which has witnessed several fraudulent transactions in recent years. In comparison, crypto trading being decentralized has not reported even a single unauthorized transaction to date. Just a decade ago, investors and speculators questioned Bitcoin for its decentralized framework and security concerns. Cut to present, although decentralized, Bitcoin has managed to stay a reliable technology and answered its critics very well.

In 2009, Bitcoin was valued at par with peanuts and only a few crypto nerds would be seen mining it just to keep the digital currency as a collectible. Well, in today’s date that digital currency has become anything but a collectible, rather has paved the way for an entire digital industry to emerge

It is of no surprise that Bitcoin dominates the headlines with its rise and fall. It has also caught the eye of many notable investors and major corporations namely Tesla and MasterCard.

Industry Giants Approving the Future of Bitcoin

Now, initially designed as a payment tool, Bitcoin has gained traction in many parts of the world but is very rarely seen being used for commerce due to its high volatility and transaction costs. Albeit such factors, it has managed to rope in major financial institutions like PayPal, JP Morgan, Goldman Sachs, and the like. These corporations have started providing crypto-related services as more and more investors take to purchase the cryptocurrency. Most institutions are also considering converting their cash reserves into crypto form only to hedge or reduce their exposure towards any risks in case a crisis like the one in 2008 emerges.

Reports suggest that if the trends continue, Bitcoin is likely to hit $100,000 in value by the end of the year. Quite presumably this analysis is backed by forecasts on a certain stock-flow model which has a 94% correlation to Bitcoin’s price action.

Now, Bitcoin has also taken to various other industries. According to personnel at North America’s largest crypto miner organizations, Bitcoin mining will soon be able to aid the development of technologies that require the use of renewable energies. This will in turn allow room for quicker returns on ‘green investments’. Another UK-based private jet company, PrivateFly, started accepting Bitcoins for its services. The company also revealed that 19% of its sales have accrued via Bitcoin and also offers its members to store Bitcoins for future sales.

Some analysts have also predicted big changes in the crypto market in the forthcoming years as many institutional investors enter the markets after its surge to an all-time high. Moreover, it is highly likely that crypto will be floated on NASDAQ adding further credibility to the digital currency and the blockchain. While many investors await a verified exchange-traded fund (ETF), there is no certainty. An EFT would allow people to invest in Bitcoin easily but the demand to invest in crypto cannot be automatically generated with a fund.

The Debate Continues

The outlook of the most celebrated crypto in the world is however a subject of much debate still. As the so-called “crypto evangelists” proliferate the media, many educated professionals suggest that the crypto market is forming a bubble that could explode over the next few years. Economics and Public Professor at the esteemed Harvard University suggest that there is an increasing “overwhelming sentiment” amid crypto investors and that “there is no reason to panic” due to the asset’s high volatility.

Regardless, the debate goes on. Although investing in bitcoin would’ve fetched investors thousands of dollars even in today’s value, it doesn’t necessarily mean that it is too late to invest in the crypto now. There might’ve been dips in its worth over a period of time, but even a meager investment today can make your return manifold in the longer run.

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Siddharth Kulkarni
Siddharth is an incoming FMV Analyst and B.Com Hons graduate from Delhi University. Siddharth holds several positions of authority at a college level at various societies namely The Young Entrepreneurs Society and The Hult Prize. He is an enterprising youngster who is passionate about learning and growing as a person with each successive day. He is a hardworking and self-confident individual who possesses zeal and grit and loves to work with details. Being a sportsperson as well as an academic achiever, he love to surround himself with healthy competition.

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