This week the crypto market went nuts when Elon Musk revealed his company began accepting Bitcoin as a form of payment for any Tesla model.
While this caused prices to initially soar, reading the fine print reveals a bit of a catch-22 situation for anyone who uses the cryptocurrency to pay. Here’s what you need to be aware of if you’re considering spending BTC on a Model S, Y, or 3.
TESLA BEGINS ACCEPTING BITCOIN AS A PAYMENT OPTION
Elon Musk has been causing the crypto market to pump for one reason or another for several years now, with it at first primarily being cheeky fun the CEO was having with the Dogecoin community.
Over time, the eccentric entrepreneur and visionary became enamored with the cryptocurrency market, often commenting on the state of things. More recently, however, after a rumored chat between Musk and MicroStrategy CEO Michael Saylor where the Bitcoin bull let Musk in on his BTC buying playbook, Tesla revealed it also had bought BTC to add to corporate treasure reserves.
At the same time, the company revealed the plan to eventually support accepting Bitcoin as a payment, which was just enabled on the car manufacturer’s website this week.
Musk’s tweet announcing the addition of Bitcoin payments going live, sent the price of the leading cryptocurrency by market cap soaring higher initially, but a rejection has led to serious volatility since.
READ THE FINE PRINT WHEN BUYING A TESLA WITH BTC
While the selloff isn’t due to the discovery of a clause in the fine print for anyone using BTC to buy a Tesla, there’s some language that makes the situation a lot less positive overall.
Found in the fine print when purchasing a vehicle with BTC, there’s a catch-22 explaining that Tesla, at its sole discretion, can choose how it refunds a buyer – either through BTC or USD.
In plain terms, if the price per BTC is significantly higher than when the buyer spent their coins, Tesla can refund the vehicle purchase in USD instead.
If for some reason Bitcoin dumps hardcore, making that initial BTC now far less valuable than the USD equivalent, Tesla gives you that now cheaper BTC back instead.
Tesla, as the corporation in the power position while making this business transaction in BTC, makes the risk associated with Bitcoin’s notorious volatility as a burden only the buyer bears.
It makes sense from a business standpoint but doesn’t exactly align well with the transparency and lack of third-party control the cryptocurrency space is used to. However, as more controlling corporations get involved in cryptocurrency, the more they’ll seek to control the conditions surrounding it, which might not be so great for Bitcoin as it was meant to be.