Tesla Buys $1.5B in Bitcoin, Will Accept as Payment

[AdamMacDon]

Damn it !

Elon should have bought Bitcoin a year ago when it was at $4,000.

He could have then stopped building cars and opened a hedge fund.

Utter silliness.

And I really do need to ask the Bitcoin fanboys - what happens on the day when a customer buys their Tesla with Bitcoin and the currency goes down 5% before Tesla can convert it to an actual dollar ?

What if Tesla decides not to convert the Bitcoins for a month and it keeps sliding ?

Please don't tell me Bitcoin could also go up. Of course it can. But that's not the point.

It's a wild gamble. And if it was such a sure thing, why didn't Elon spend his own fortune on Bitcoin instead of spending shareholder dollars? Oh yeah - it's quite painless to gamble with other people's money.

A wild gamble where the chart average out trends only in a Northeastern direction... Not much of a gamble. Sure it corrects massively after each bubble, but take a look at this chart and show me where in the last 8 years it lost value for any significant amount of time. Nobody will make you sell on the low, this isn't a poker game where you run out of chips you're done. You can just wait out the lows. Note how small that first bubble looks, even though it was MASSIVE at the time.

As for how buying cars with BTC would work, I'm not exactly sure, but it seems like a silly move to me, I'd use my rapidly depreciating cash for buying depreciating assets, not my BTC.

 

[Cleo-n-Company]

A wild gamble where the chart average out trends only in a Northeastern direction... Not much of a gamble. Sure it corrects massively after each bubble, but take a look at this chart and show me where in the last 8 years it lost value for any significant amount of time. Nobody will make you sell on the low, this isn't a poker game where you run out of chips you're done. You can just wait out the lows. Note how small that first bubble looks, even though it was MASSIVE at the time.

As for how buying cars with BTC would work, I'm not exactly sure, but it seems like a silly move to me, I'd use my rapidly depreciating cash for buying depreciating assets, not my BTC.

You make a good point in regards to the mystery of how BTC would work with a car purchase. And an even better point that lots of investors would probably not spend their BTC on a depreciating asset.

So given all of that - Tesla's BTC strategy seems like a pretzel of a gamble.

For your sake - I'm assuming you hold BTC - I wish you nothing but Northeastern chart direction. But if there's an extended Southeastern trend... yikes...

 

[AdamMacDon]

You make a good point in regards to the mystery of how BTC would work with a car purchase. And an even better point that lots of investors would probably not spend their BTC on a depreciating asset.

So given all of that - Tesla's BTC strategy seems like a pretzel of a gamble.

For your sake - I'm assuming you hold BTC - I wish you nothing but Northeastern chart direction. But if there's an extended Southeastern trend... yikes...

In my opinion the buying cars with BTC is more of a sales gimmick by Tesla than anything else. Unless you have 90% of your portfolio tied up in BTC (yikes) I can't imagine many crypto investors opting to spend crypto when they could use fiat instead.

As for southeastern trends, it all depends on perspective. I've been through several years of downturns, but again, averaged out my position is still up by a factor of 5 or 6 over several years (not counting the latest spike). On the other side, my S&P 500 hasn't even doubled. My house has "only" gone up 80% in 4 years.

If you can stomach the waves of crypto you will almost certainly see good increases in value. That being said, it's not for the risk averse. Then again the dude who threw his $110 million dollar net worth into a rocket and electric car company is probably far more cozy with risk than I am

 

[daniel]

Whether it's bitcoin or houses or tulips, the market always goes up. Until it goes down. Bitcoin has no real, legitimate use. Its value is entirely based on people buying it in hopes that it will continue to go up.

Let me repeat that: The only reason bitcoin has the market price it does is because people are convinced that it will go up, so they buy it in hopes of selling it later for more money.

Nobody other than a currency speculator buys and sells money in hopes that it will go up. Ordinary people, from wage workers to CEOs, get money for their work or as interest and dividends from their investments. Then they spend it or invest it. They don't put it in a "wallet" and wait for it to increase in value.

Bitcoin is speculation and nothing more, and it's based on people who buy it, not to use it, but to sell it later for a profit.

People buy TSLA (and other stock) because they expect the company to be successful. Tesla (and other companies) create value by building stuff or by providing needed services. Bitcoin is not an investment. It's a currency whose principal uses are the black market, the dark web, and ransomware. And the very things that it's supporters tout as its strengths (lack of regulation and inability to track) are what make it useless as real currency: Lack of regulation means that its price fluctuated wildly, and currency to be useful needs to be stable; and its secrecy means that when you are defrauded there's no remedy.

It's a wild gamble. And if it was such a sure thing, why didn't Elon spend his own fortune on Bitcoin instead of spending shareholder dollars? Oh yeah - it's quite painless to gamble with other people's money.

Bingo!

 

[AdamMacDon]

Whether it's bitcoin or houses or tulips, the market always goes up. Until it goes down. Bitcoin has no real, legitimate use. Its value is entirely based on people buying it in hopes that it will continue to go up.

Let me repeat that: The only reason bitcoin has the market price it does is because people are convinced that it will go up, so they buy it in hopes of selling it later for more money.

Nobody other than a currency speculator buys and sells money in hopes that it will go up. Ordinary people, from wage workers to CEOs, get money for their work or as interest and dividends from their investments. Then they spend it or invest it. They don't put it in a "wallet" and wait for it to increase in value.

Bitcoin is speculation and nothing more, and it's based on people who buy it, not to use it, but to sell it later for a profit.

People buy TSLA (and other stock) because they expect the company to be successful. Tesla (and other companies) create value by building stuff or by providing needed services. Bitcoin is not an investment. It's a currency whose principal uses are the black market, the dark web, and ransomware. And the very things that it's supporters tout as its strengths (lack of regulation and inability to track) are what make it useless as real currency: Lack of regulation means that its price fluctuated wildly, and currency to be useful needs to be stable; and its secrecy means that when you are defrauded there's no remedy.



Bingo!

So avoiding inflation is useless? Real returns on cash holdings are negative, so you're losing money holding it in fiat. Bitcoin is not useless, it's a great long term value store versus the USD, which the fed is busy devaluing at a staggering rate. You should read Second Chance by Robert Kiyosaki for an idea of how much money the average saver is losing due to inflation. The options are either: remain in debt and avoid holding cash, or store your value somehow else. Could be real estate, tulips, or BTC, but cash is gonna keep dropping.

 

[Cleo-n-Company]

So avoiding inflation is useless? Real returns on cash holdings are negative, so you're losing money holding it in fiat. Bitcoin is not useless, it's a great long term value store versus the USD, which the fed is busy devaluing at a staggering rate. You should read Second Chance by Robert Kiyosaki for an idea of how much money the average saver is losing due to inflation. The options are either: remain in debt and avoid holding cash, or store your value somehow else. Could be real estate, tulips, or BTC, but cash is gonna keep dropping.

I used to love spending my cash in Canada

First time I went, the exchange rate was so favorable - the itinerary included the Ritz Carlton in Montreal... Chateau Frontenac... skiing in Whistler... sigh. If I went today it would be a lot of Tim Hortons.

 

[AdamMacDon]

I used to love spending my cash in Canada

First time I went, the exchange rate was so favorable - the itinerary included the Ritz Carlton in Montreal... Chateau Frontenac... skiing in Whistler... sigh. If I went today it would be a lot of Tim Hortons.

Hah I always cringe going to the US because things cost a fortune. It's good for our position as a trade partner to the US, but awful for tourists going down south. Back in 2012 I managed to buy a bunch of greenbacks when the price was on par with the CAD. Boy I miss those days.

 

[daniel]

So avoiding inflation is useless? Real returns on cash holdings are negative, so you're losing money holding it in fiat. Bitcoin is not useless, it's a great long term value store versus the USD, which the fed is busy devaluing at a staggering rate. You should read Second Chance by Robert Kiyosaki for an idea of how much money the average saver is losing due to inflation. The options are either: remain in debt and avoid holding cash, or store your value somehow else. Could be real estate, tulips, or BTC, but cash is gonna keep dropping.

No sensible person keeps sizable holdings in cash. Cash is for near-term expenses and unforeseen emergencies that would require immediate spending. Your logic of holding bitcoin as a protection against inflation assumes that it will hold its value or rise. But since it has no real value (only market value supported by speculation) it is an extremely risky holding.

One indication of the uselessness of bitcoin as a currency is that at present the average cost of a single bitcoin transaction is about $23. This is up from about a dollar a year ago, and it has been as high as $60.

 

[electricar]

I don’t know so I’m asking - is blockchain bullet proof or could Bitcoin be hacked? IFinex is already distorting the value using Bitfinex and Tether and that’s legal. I wonder what nation/state actors and criminal actors could accomplish? What if one day it just disappeared?

 

[Ostrichsak]

I don’t know so I’m asking - is blockchain bullet proof or could Bitcoin be hacked? IFinex is already distorting the value using Bitfinex and Tether and that’s legal. I wonder what nation/state actors and criminal actors could accomplish? What if one day it just disappeared?

One of the primary functions of blockchain (even though people don't talk about it much) is that it's virtually un-hackable. Do a little high-level research on Blockchain as a technology (try to get away from all of this cryptocurrency static for useful info) and you'll likely see that it was developed as the answer to hacking.

 

[Matias]

No sensible person keeps sizable holdings in cash. Cash is for near-term expenses and unforeseen emergencies that would require immediate spending. Your logic of holding bitcoin as a protection against inflation assumes that it will hold its value or rise. But since it has no real value (only market value supported by speculation) it is an extremely risky holding.

One indication of the uselessness of bitcoin as a currency is that at present the average cost of a single bitcoin transaction is about $23. This is up from about a dollar a year ago, and it has been as high as $60.

Gold

 

[daniel]

Gold

Gold is probably marginally better than bitcoin since it's actually a solid thing rather than just bits on computers. But gold produces nothing, pays no interest or dividends, and cannot be invested (unless you convert it to cash first). Gold has some actual uses and is pretty in jewelry. But gold, too, when used as a store of value (rather than to make something) is pure speculation. If you find it pretty, keep some around. I have some gold coins that I like because they're pretty. But you should never be storing your wealth in Gold.

 

[Matias]

Gold is probably marginally better than bitcoin since it's actually a solid thing rather than just bits on computers. But gold produces nothing, pays no interest or dividends, and cannot be invested (unless you convert it to cash first). Gold has some actual uses and is pretty in jewelry. But gold, too, when used as a store of value (rather than to make something) is pure speculation. If you find it pretty, keep some around. I have some gold coins that I like because they're pretty. But you should never be storing your wealth in Gold.

Yet people have accepted gold as storage of value for thousands of years.

 

[daniel]

Yet people have accepted gold as storage of value for thousands of years.

Gold has been used as currency, along with other precious metals such as silver and copper, but few people used it as a store of value until fairly recently. And its value fluctuates wildly. Not as much as bitcoin, but far too much to be a sensible store of value. Some investors put a small amount in gold as a hedge, but no sensible investor puts a large proportion of their wealth in gold. Like any other currency (and unlike bitcoin, gold was until recently an actual currency) people kept just enough for anticipated expenses or unforeseen emergencies. An individual might have put their wealth into gold when relocating, just as today a person might sell their house and put the money in the bank when moving. But that's short-term.

Gold produces nothing, and pays no interest or dividends, and its value depends on market forces that can and do go both ways. As an "investment" gold is nothing but a speculation. Only fringe ideologues such as preppers put a large amount of their wealth in gold. Everybody else puts their wealth in their home (which serves the critical purpose of providing shelter) or investments that pay dividends or interest or that grow by producing new value.

 

[ggies07]

Man I miss this show. hahaha.

 

[Mattski30]

Update:
As of time of writing, initial 1.5b is now worth 2.2b.

Maybe more now, but at the time of this writing, Tesla stock has lost over $200 billion of market cap since disclosing bitcoin purchase.

Tesla’s Bitcoin Folies – Smart Solutions

 

[Cleo-n-Company]

Maybe more now, but at the time of this writing, Tesla stock has lost over $200 billion of market cap since disclosing bitcoin purchase.

Tesla’s Bitcoin Folies – Smart Solutions

Guess I'm not quite sure either how accepting BTC is going to result in any actual additional purchases - it's all fluff-n-stuff.

In addition, someone needs to explain how someone who owns BitCoin (and let's assume has some profit from it and feels flush), is going to use it to buy their Tesla. They'll trigger a taxable gain, and let's assume, a reportable transaction to the IRS.

So I ask again... where does BTC acceptance = more sales ? Just hype and flash...

 

[Exelion]

Trading bitcoins doesn't trigger a taxable gain. Trading bitcoins for a commodity doesn't trigger a taxable gain. Only selling bitcoins for cash (USD) for more than someone purchased it for, triggers a taxable gain. Keep in mind taxes are assessed in USD. Government can't tax tulips, seashells, or bitcoins if you trade that for a new car. At least, not yet.

I had to pay almost 10% in taxes when buying a Tesla, which amounted to almost $5,000.00. Now, if I could avoid paying that $5,000.00 by converting cash to bitcoin, then trading the bitcoin for the Tesla, well, that certainly makes it more attractive. And I would certainly do it.

 

[Ostrichsak]

All of this tax talk is obviously from people who don't understand one of the primary pillars of crypto currency and it's deregulated nature.

 

[daniel]

Trading bitcoins doesn't trigger a taxable gain. Trading bitcoins for a commodity doesn't trigger a taxable gain. Only selling bitcoins for cash (USD) for more than someone purchased it for, triggers a taxable gain. Keep in mind taxes are assessed in USD. Government can't tax tulips, seashells, or bitcoins if you trade that for a new car. At least, not yet.

I would advise anyone to consult a tax accountant before assuming that you don't need to declare a taxable gain when you buy a car (or anything else) for appreciated bitcoins. Generally, the IRS considers everything to be taxable. Of course, bitcoin, being hard to trace, does make tax evasion a bit easier.

From this (CNBC) website:

if you unloaded bitcoin in any way last year — by selling it, gifting it to a friend or using it to buy anything from pizza to a Lamborghini — you’re triggering a “taxable event.” And you’re then responsible for paying taxes on the appreciation of the virtual currency from the price at which you bought it, to the price at which you sold (or spent) it.

So, yes: If you buy a Tesla with bitcoins, the law requires you to declare the gain you made on the coins and pay tax on it. You might get away with failing to report, but you might end up paying the tax plus fees and penalties, and you could go to prison if you cannot convince a court that you acted out of well-intentioned ignorance.

Note also that if you "hodl" forever, you never benefit from your gain.