Observation | Tesla accepts Bitcoin payments, how far is Bitcoin from becoming a “currency”?

Tesla Will Accept Bitcoin Payments in the US, What Does This Mean?

On March 24, Tesla's US official website showed that the user's purchase interface had a Bitcoin payment option. However, Bitcoin payment is currently only available in the United States, and only Bitcoin is supported as a cryptocurrency. As a result, the price of Bitcoin quickly rose by $1,000. As of press time, the price of Bitcoin is about $56,500.

Just on February 8, Tesla disclosed an announcement stating that the company had purchased $1.5 billion worth of Bitcoin and hoped to accept Bitcoin as a payment method for its products.

Meanwhile, Tesla CEO Elon Musk tweeted on March 24: "You can now buy a Tesla with Bitcoin." Musk also said that Bitcoin payments will be available outside the United States later this year. Tesla only uses internal open source software and directly operates Bitcoin nodes. Bitcoin paid to Tesla will be retained as Bitcoin and will not be converted into legal currency.

Bitcoin may become a mainstream asset

A Bitcoin investor told The Paper: "Tesla should be the first large enterprise to truly accept Bitcoin payments."

He said that some merchants had previously allowed payment with Bitcoin, but in fact they first calculated the dollar price, and then used the current exchange rate to calculate how many Bitcoins needed to be paid, and then middlemen would automatically sell them into legal currency. "They just use Bitcoin as a means of payment, which is essentially no different from paying with RMB or Japanese yen."

The investor believes that if Bitcoin is truly accepted as a payment method, the impact of Bitcoin as a "currency" will be further deepened. If Bitcoin is included as an asset in the balance sheet of a listed company, it will also accelerate the recognition of Bitcoin as an asset by all parties, formulate corresponding rules and laws, and make it easier for the public to accept it.

"Of course, there is still a lot of controversy about whether Bitcoin is a currency," he said.

Yu Jianing, rotating chairman of the Blockchain Committee of the China Communications Industry Association and president of Huobi University, also expressed a similar view and explained that Bitcoin is an application with a typical network effect. The more users who hold Bitcoin, the more frequently they use it, and the better the liquidity, the more prominent the value of Bitcoin will be. For the Bitcoin and cryptocurrency market, the ever-expanding scope and scale of application will release greater market space.

Therefore, Yu Jianing believes that for the mainstream world, if a company as large as Tesla can use Bitcoin for direct payment, then more companies will consider how to eliminate middlemen to create processing systems, how to legally and compliantly accept Bitcoin directly, and how to settle payments based on digital assets. Tesla's attempt will lead traditional finance to re-examine the financial system in the Internet era and accelerate the shaping of a digital financial system.

Li Lianxuan, chief researcher of OKLink, said that this means that Bitcoin has officially become a "means of payment" in the public eye, getting rid of the labels of "niche" and "geek".

He believes that this may help accelerate the process of Bitcoin becoming a mainstream asset. As the fifth largest company in the world by market value and the leader in the automotive industry, Tesla sold 290,000 vehicles in 2020, accounting for 2% of the US market share. Its acceptance of Bitcoin as a means of payment is likely to drive Paypal, co-founded by Musk, and companies in its industrial chain and other companies deeply influenced by Musk to accept Bitcoin as a means of payment, thereby further promoting the popularity of Bitcoin in the traditional business field.

It is difficult to affect the existing payment system

“Since the performance efficiency of the Bitcoin main chain is relatively low, it is difficult to expect Bitcoin to have a significant impact on existing payment methods,” said the above-mentioned Bitcoin investor.

He believes that the Bitcoin main chain is limited by the size of the block and can only process a few transactions per second, so it has little impact on the existing payment system. For large payments such as buying a car, which can wait for a long time, it is no problem to use Bitcoin. However, if Bitcoin is used to pay for small purchases such as buying coffee, the handling fee and waiting time are unacceptable.

The investor said that the impact of Bitcoin on payment depends on the further development of blockchain technology. The current solution generally proposed is the Lightning Network, which roughly means that there are some hub nodes in the network, and then other people can transfer money through the hub nodes, which can be quickly transferred to the account with low fees, but such transactions are not recorded on the Bitcoin chain.

"If we use the off-chain second-layer network, many small transactions will not be traceable," he said.

Yu Jianing also pointed out that Bitcoin, as a payment method, has disadvantages such as long transaction confirmation time, high handling fees and large price fluctuations compared to current third-party payments. Bitcoin can undertake cross-border commodity trading models, but it is not the best choice for mainstream payment methods. In fact, Bitcoin is positioned more as a value storage with gold-like properties. This is also one of the main reasons why Bitcoin has received widespread attention from mainstream investment institutions since 2020 and has begun to accelerate its integration with the mainstream financial system.

But on the other hand, he believes that the blockchain technology behind Bitcoin is an important cornerstone for changing the payment system.

"I think Bitcoin will mainly play the role of digital gold assets in the future, and central bank digital currencies and encrypted stablecoins based on blockchain are expected to become mainstream payment methods in the future," he said.