In recent news, Tesla’s CEO, Elon Musk, went public with a tweet that hailed a first proper step in integrating cryptocurrency into our daily life. Announcing it where he could get the most traction from all the generations together, his tweet called out for interested buyers to pay for Tesla’s electric vehicles in bitcoin. But with all first steps in the right direction, Tesla has hit a pothole in incentivising this transaction method.
The main reason behind this expeditionary move by Tesla is to acquire most of the original cryptocurrency. This is because, according to him, they will not be exchanged for hard cold cash. Unfortunately, due to the uniqueness of such a medium of transaction, the convenience of using it has been sacrificed.
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Challenges & Factors
Evidence to this can be attested within the Bitcoin Payment Terms and Condition, where it has been stated that transactions pertaining to this medium must be committed within a window of time. If the exchange has not been completed within the said time, then the value of the commodity in bitcoin expires, which will lead the customer to summon for another window of time.
This is because of the volatile behaviour of bitcoin since the exchange rate can go up or down, which will be bad for either the customer and the seller making this medium of transaction harder to adopt on a massive scale.
The fault also lies in the tax rules followed by the United State’s for cryptocurrencies. Unfortunately, even the customer support team has been found to be lacking to aid any potential buyer in corresponding purchases with the medium of bitcoin.
Analysing the document that contains the terms and conditions for purchasing EVs via bitcoin, it’s fair to say that they have not made it attractive for anybody looking to utilise such a payment method to acquire a vehicle. This can be observed in the warning that says Tesla won’t compensate for payments if sent to an incorrect alphanumeric address and that they will only allow exact amounts for payments. Furthermore, there is no discount for the ones who are willing to try this new payment method. These factors are the main reasons why people who are even ready to be the first pioneers in this transaction method shy away.
Other companies accept bitcoin as payment, but the customer’s bitcoin is converted to fiat currency and then transferred to the merchant’s bank account. This model of the transaction can be observed by AT&T who has deployed it to accept the future mode of payments.
Another factor one must take in my mind before shelling out bitcoins to purchase a Tesla is the element of depreciation. The fact that 60% of the vehicle’s value is gone once the car rolls out of the showroom is a big deciding factor to the ever-changing value of bitcoin. Here, one might feel cheated of gratification if they see the price of BTC (bitcoin) soar when they drive out a new car ‘model S.’ Though one can say to the point that depreciation does affect electric vehicles slower than fossil-fueled ones. With that in mind, a Tesla vehicle can be a better financial investment than any other car, but that still does not seem to be a winning scenario if the worth of bitcoins rises.
Due to these factors mentioned above, Tesla finds it hard to incentivise their new method of transaction.
New methods and innovations come with a set of challenges initially; however, it might change in the future if bitcoin shows some stability which can only be attained if it becomes further regulated. Though it might not happen tomorrow or the day after, it is possible to stay positive and expect it to surely happen soon since everyone is trying to get onto the crypto craze.