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Tesla, Inc. (TSLA) CEO Elon Musk is at it again. The irrepressible entrepreneur, whose tweets are blamed for crashing the price of Bitcoin (BTCUSD) earlier this year, again moved prices in cryptocurrency markets yesterday.
At the B Word conference, Musk disclosed that his private space exploration company SpaceX owned Bitcoin and held out the prospect of Tesla allowing customers to resume purchases of its cars using the cryptocurrency. Musk also said that he owned Ethereum (ETHUSD) and provided commentary on Dogecoin (DOGEUSD).
- Tesla CEO Elon Musk expressed his enthusiasm for cryptocurrencies yesterday, boosting prices of Bitcoin, Ethereum, and Dogecoin.
- Musk’s support for cryptocurrency markets came after the Bitcoin price temporarily dipped below $30,000, raising fears of a prolonged downturn.
- Meanwhile, Square CEO Jack Dorsey envisions a role for Bitcoin in achieving world peace.
Investors, weary of a selloff in crypto markets the previous day, bid up prices for all three coins. Bitcoin price jumped by as much as 3% to $32,805.55, minutes after a video of the conference was released. At 1:49 UTC today, Bitcoin was trading at $32,093, up 1.73% from its price a day earlier.
The price of Ethereum also spiked by 6.3% from its morning valuation, and Dogecoin soared up by 10.9% to trade at $0.2101 in the same timeframe as a result of Musk’s comments.
Musk’s boost to cryptocurrency markets was a relief to investors. Bitcoin had dipped below $30,000 on Monday, raising investor fears that crypto markets were heading into a prolonged downturn.
Bitcoin Has ‘A Lot of Potential’
During yesterday’s discussion, Musk said that Bitcoin has “a lot of potential.” But he discounted the possibility for the cryptocurrency’s base layer to become a medium of transactions because it had scarcity baked into its design. The base layer of Bitcoin consists of its blockchain, which is slow at processing transactions and will only ever mine 21 million Bitcoin.
“The Layer 2 system can scale to become a monetary system for the world,” said Musk. Layer 2 technologies, like the Lightning Network, aim to increase the transaction processing speed by batching them for later reconciliation.
In January, Tesla announced a $1.5 billion investment in Bitcoin and allowed customers to purchase its cars using the cryptocurrency. But it stopped the practice in May due to environmental concerns related to Bitcoin mining.
Musk said yesterday that the company was still researching Bitcoin’s renewable energy usage. “We want to do a bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50% and that there is a trend to increasing that number,” he said. “If so, Tesla will resume accepting Bitcoin.”
Musk’s statements and utterances about Bitcoin and other coins have an outsized effect on the nascent ecosystem, which already has to contend with significant volatility. Yesterday, Musk refuted the suggestion that he personally gained from influencing crypto market movements because he had not sold any of his personal holdings. “I might pump. But I don’t dump,” he said.
The entrepreneur’s involvement with cryptocurrencies goes beyond just Bitcoin. At the conference, he said that Ethereum also had potential to scale and become a monetary system for the world.
Based on his Twitter feed, Musk is also fascinated with Dogecoin, a joke cryptocurrency that was created to mock the crypto ecosystem. Its price has skyrocketed after Musk tweeted about it, and he is reported to be working with its development team.
He used Occam’s razor proposition, which states that the simplest outcome is the most likely outcome, to explain Dogecoin yesterday. “The most ironic and entertaining outcome (for the cryptocurrency ecosystem) is that the crypto started as a joke ends up being the leading cryptocurrency,” he said.
‘World Peace’ With Bitcoin
Meanwhile, Jack Dorsey of Square, Inc. (SQ), another publicly listed company that has Bitcoin investment on its books, had a slightly different take on the cryptocurrency. According to the payments company CEO, Bitcoin could be used to achieve world peace. “My hope is that it [Bitcoin] creates world peace or helps create world peace,” he said. “It may sound a bit ridiculous, but you fix that foundational level and everything above it improves. It is in the long term, but my hope is definitely peace.”
While peace may be a long-term goal for Dorsey, profits should do nicely for now. Square’s Cash App enables Bitcoin trading, and the company reported $3.5 billion revenue (out of a total of $5.06 billion) and $75 million in profits from Bitcoin in May.
Dorsey said that he was drawn to cryptocurrency because its network and community were “deeply principled” and “weird as hell.” The CEO continued, “It just reminded me of the internet when I was a kid.” Dorsey also touted the benefits of decentralization and referred to the current financial infrastructure as a “crazy predatory system” in which intermediaries responsible for providing banking services and facilitating transfers charged exorbitant fees.