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On Monday this week, Tesla announced it had purchased $1.5 billion worth of bitcoin. The announcement came through a filing with the SEC (Securities and Exchange Commission), the EV manufacturer said:
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets.
Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
This has given the cryptocurrency a massive boost and pushed the bitcoin price over $43,000, which is a record high. Bitcoin’s price has been steadily increasing since the start of the year because demand from institutional and retail sectors has also increased. However, it is a fairly volatile cryptocurrency and in January alone, the price dipped below $30,000. So, while it’s up one month and down the next, the interest from Tesla seems to have a positive upswing into bitcoin, which may set the pace in the coming year.
It’s obvious that Musk carries a lot of clout and through posting encouraging messages on social media, like he’s done recently for bitcoin and dogecoin, he has influenced people to buy into the digital currencies.
He also said on the new social medial chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.” A sentence from Musk promoting bitcoin was enough to rattle the markets and lately, his Twitter feed has been filled with tongue-in-cheek endorsements, which has triggered interest by a lot of people to invest in cryptocurrencies.
In mid-December, we reported on Tesla boss, Elon Musk tweeting about bitcoins when he was approached by MicroStrategy CEO, Michael Saylor about investing in the cryptocurrency. And this week, Mr Saylor expressed his gratitude to Musk via Twitter for taking the step in bitcoin.
"Congratulations & thank you to @elonmusk & @Tesla on adding #Bitcoin to their balance sheet. The entire world will benefit from this leadership"
The announcement from Tesla also revealed the company will accept bitcoin as a payment method in the future for buying its products. Tesla is known for its trailblazing strategies, and it would be the first car manufacturer to transact in bitcoin. Perhaps this move is also a response from the EV manufacturer to its customers who have requested that Tesla accept bitcoin for vehicle purchases.
What Is Bitcoin?
The definition from Investopedia describes Bitcoin a digital currency created in January 2009. It follows the ideas set out in a whitepaper by the mysterious and pseudonymous Satoshi Nakamoto.1 The identity of the person or persons who created the technology is still a mystery. Bitcoin offers the promise of lower transaction fees than traditional online payment mechanisms and, unlike government-issued currencies, it is operated by a decentralized authority.
What is Dogecoin?
According to the official website, Dogecoin is a decentralized, peer-to-peer digital currency that enables you to easily send money online. It was created by IBM developer Billy Markus and Adobe data scientist Jackson Palmer in 2013 as an alternative to Bitcoin and a parody of the online cult around cryptocurrencies.
The Doge cryptocurrency has increased by 1030% over the last month. In January, it was trading around $0.0075c and this week it’s at $0.085.