Elon Musk is a South African-born American entrepreneur who co-founded PayPal (an electronic payment firm) and formed a company called SpaceX that makes launch vehicles and spacecraft. Musk was also a significant investor in the electronic car manufacturer Tesla.
Recently Elon Musk decided to invest $1.5 billion in the cryptocurrency Bitcoin. Since this investment, the price of Bitcoin has jumped to a record high. But what is Bitcoin and why did Elon Musk choose to invest so much money in this digital currency? Keep reading below to find out more:
What is Bitcoin?
Bitcoin, often labeled as a digital currency, a cryptocurrency, or a virtual currency is a type of currency that is completely virtual. It is basically an online version of cash. Like cash, Bitcoin can be used to buy products and services, though very few shops currently accept this type of currency.
However, some companies are beginning to change their payment options. For example, in October last year, PayPal announced that it would allow its customers to use Bitcoin to buy and sell products.
Why Did Elon Musk Invest in Bitcoin?
When the richest businessman in the world gives his support to a virtual currency, you know it is big business. Elon Musk believes that the virtual currency Bitcoin is a “good thing”. Thanks to this, the value of Bitcoin has risen significantly. So much so that a single Bitcoin went from $3600 in March last year to more than $27,000 now.
If you are interested in trading digital currencies like Elon Musk, then there are some crucial things you should think about before buying cryptocurrency e.g., choosing the right cryptocurrency exchange. Marketplace Fairness made a list of the top Australian exchanges to help you find an exchange that is the best fit for you and your situation.
Was this Investment Expected?
Back in January, Elon Musk changed his Twitter bio to #Bitcoin. He also speculated that digital currencies will be the “future currency of Earth”. However, despite the tweets and speculations, this huge investment still comes as a surprise to many.
What Does This Mean for Tesla Shareholders?
While it is hard to say what the long-term effects of this investment may be, Tesla shares are currently trading slightly higher than they were before the investment was announced. Fans of digital currency will likely appreciate Elon Musk’s attempts to diversify, while more cautious investors may be more wary of the venture.
It also raises question marks over whether Musk’s recent social media activity could be considered market manipulation. It could even expose Tesla to potential cyber-attacks or security breaches targeting the company’s Bitcoin holdings.
Although there are a few concerns surrounding the investment, Elon Musk and Tesla believe that it will give them the flexibility they need to diversify and maximize their returns on cash.
How Did Elon Musk’s Investment Affect the Value of Bitcoin?
The price of Bitcoin has risen dramatically over the last few days, thanks to Elon Musk’s $1.5 billion investment. In fact, evidence suggests that the value of Bitcoin increased by over 13%, reaching an all-time high of over $44,000.
Thanks to Elon Musk’s $1.5 billion investment, we expect to see the value of Bitcoin continue to rise over the next few months as other investors flock in. Tesla was the first major company to invest in Bitcoin and many others are likely to follow suit. This will help to legitimize Bitcoin and reinforce its viability as a serious investment.