How Bitcoin Allows You to Secure Yourself and Earn More

- Advertisement -

Tesla’s CEO, Elon Musk, recently stated that his business has purchased Bitcoin for US$1.5 billion (almost A$2 billion). The statement sparked a wave of excitement and a sharp rise in the price of the contentious cryptocurrency.

In the near term, this price increase has been beneficial to Musk. Tesla’s Bitcoin investment had risen to almost $1 billion in value at one time. Is the excitement, however, sustainable? I believe there is a strong likelihood that the price of Bitcoin will collapse to its intrinsic worth, which is zero, during the next year.

Tesla will lose roughly A$1 billion if Bitcoin loses half of its current value, which is not implausible given its extraordinarily volatile previous behavior. Elon Musk, who owns almost a fifth of Tesla, would be out A$200 million. In contrast, because I do not hold Bitcoin, I will lose nothing, implying that I will have outperformed Musk by A$200 million.

Why is Musk’s decision so Bad?

Tesla’s stockholders do not benefit from Musk’s actions. They might just buy some Bitcoin to be exposed to the growth and fall of the currency. They no longer have a choice; if they want to invest in Tesla electric automobiles, they must also be susceptible to Bitcoin’s whims.

Musk isn’t doing his admirers any favors to sell bitcoin in Dubai, however. His ideas are frequently published in various media as a “rock star CEO” with over 40 million Twitter followers.

Musk’s public endorsement of Bitcoin may encourage some of his followers to invest in this high-risk speculative asset. They may not be in a position to tolerate losses on their investment as effectively as a multimillionaire.

He’s also not doing the planet’s residents any favors. The process of creating Bitcoins (known as “mine”) necessitates the expenditure of enormous quantities of energy to run specialized computers that solve complicated but ineffective mathematical problems.

Estimates of how much energy they squander vary. According to some estimates, Bitcoin manufacturing consumes more power than Argentina, Poland, Norway, or Switzerland combined. Even by the most conservative projections, it produces more carbon emissions than Estonia. And as Bitcoin’s popularity grows, this will only rise.

What will the price of Bitcoin do?

Is it realistic to expect Bitcoin to drop half its value in a year? It does, after all, have shape. It decreased to A$10,000 in February 2018 after peaking at A$24,000 in December 2017. It sank to A$8,000 in March 2020 after rising to A$16,000 in July 2019.

Bitcoin might be the most pure illustration of a speculative bubble ever seen. It follows in the footsteps of several well-known bubbles, such as the South Sea bubble, the Dutch tulip frenzy, gold around 1980, the dotcom boom of 2000, and the US housing market prior to the global financial crisis of 2008.

Previous bubbles, on the other hand, had more going for them. Shelter is provided by houses. Gold has industrial use and may be used to make jewelry. At the very least, the South Sea Company and young tech stocks promised future payouts. Tulips, too, can be praised for their aesthetic value. Unless you can resale Bitcoin to a “bigger idiot,” there is no profit. It’s a Seinfeld asset: a wild guess based on nothing.

Bitcoin’s limitations

Bitcoin proponents frequently claim that the currency’s value originates from its restricted quantity. This is compounded by the fact that in the past to sell bitcoin in Dubai, dissident users have generated “forks,” resulting in schismatic bitcoins like Bitcoin Cash.

Even if we accept the restriction at face value, the production of new coins remains unrestricted. There are already tens of thousands of them, including Litecoin, Tether, and Dogecoin. In any event, just because something is scarce does not always make it valuable.

Another proponent of Bitcoin claims that it might be used to make payments instead of traditional cash. More over a decade ago, the first Bitcoin purchase was made: two pizzas for 10,000 bitcoins.

Despite the excitement, just a few merchants accept Bitcoin, and few people pay with it. A Sydney art gallery that accepts Bitcoin says that no one has ever purchased anything with it, while a pub that accepts it reports that no one has used it in years. Bitcoin is not accepted at various crypto conferences. On Amazon, you can buy a t-shirt that says “I accept Bitcoin,” but you can’t pay with Bitcoin.

Musk wants to colonize Mars, so it’s possible he’ll make Bitcoin legal tender there. However, it would be better for all of us if he kept it off Tesla’s balance sheet until then.

Previous Articles:

- Advertisement -
- Advertisement -
- Advertisement -


- Advertisement -

Must Read

Read Next
Recommended to you