Laszlo Hanyecz said he wouldn’t purchase a Tesla using Bitcoin. Hanyecz knows what he is talking about: he paid 10,000 Bitcoins for two pizzas in 2010, worth about $446 million at current prices.
It was the first known crypto-currency commercial transaction. The price of Bitcoin stood at less than a penny back then. On Tuesday, the day after Tesla said it purchased $1.5 billion in Bitcoin and would consider the digital currency for the purchase of vehicles, reached an all-time high of about $47,000.
“Personally, I am not too interested in Tesla,” Hanyecz wrote in an email. “If you give it five years, I think the Bitcoin you’d spend will be more valuable than the car.”
Of course, what distinguishes Bitcoin from a standard fiat currency is uncertainty. A dollar is not going to be worth any more or less tomorrow. Some people purchased Lamborghinis with their winnings during the Bitcoin frenzy of 2017. Other Bitcoin investors watched as the price declined by more than 80% the following year, before quadrupling last year.
People tend to treat Bitcoin as a risky investment, rather than as a checking account. Average monthly transactions of various cryptocurrencies processed by BitPay dropped 27 percent as Bitcoin rallied, especially in the latter part of last year. According to researcher Chainalysis, merchant-related transactions accounted for 0.3 percent of cryptocurrency expenditure in 2020, with the remainder dominated by a trade explosion.
Bitcoin transactions are a concern for businesses, too. Musk was more eager than anyone to take the risk, dating back to his position as co-founder of PayPal, the groundbreaking online payment company, and, more recently, to his obsession with the Dogecoin meme currency. Tesla’s bet on Bitcoin follows a few others who have invested as a hedge against inflation, including MicroStrategy and Square. When Bitcoin increased, the moves lifted their stock prices, but it can easily go the other way. It also makes earnings analysis a lot more complicated for investors and corporate finance departments.
“For most people, buying a car is a big financial decision, and it’s unwise to introduce another potentially life-changing factor on top of that,” said Hanyecz. Although he said he didn’t regret buying those pizzas, Hanyecz said it’s easier for people to use a credit card.
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