Bitcoin price jumped over 22 per cent, taking its value to an all-time high on Tuesday after tech billionaire Elon Musk invested $1.5 billion in the cryptocurrency.
The announcement led to a surge in the price of one Bitcoin, that was hovering around $47,787.54 at 1.00 pm, highest in 24 hours, on Tuesday, as per Coingecko.
In the past seven days, the value of Bitcoin has surged by 43.1 per cent, in which the latest jump was the major contributor.
While announcing the hefty investment in Bitcoin, the electric carmaker also said that it plans to begin accepting the digital currency as payment for its high-end vehicles soon.
The announcement comes amid renewed interest shown by Musk in cryptocurrency and requests from Tesla customers for accepting bitcoin for buying the cars.
Bitcoin has drawn enthusiasts for its scarcity and security, but the volatile digital currency still is not widely used to pay for goods and services. It’s mostly been a store of value, like gold, with some limited merchants like Overstock accepting bitcoin for payment.
Whether other major companies will follow Tesla’s lead in investing in Bitcoin or accepting it for transactions is unclear.
A vehicle is a large purchase, which could make Bitcoin a better fit to pay for it, but the wild price swings in Bitcoin could be a significant risk to any merchant who decided to accept it.
Tesla is in a unique position to accept digital currencies for payment, since the automaker does not rely on a network of independently owned dealerships to sell its vehicles unlike traditional car companies such as General Motors and Ford.
Whether Tesla will get a definitive competitive advantage in accepting Bitcoin remains to be seen.
The automaker could be simply investing in Bitcoin because Musk has been known to have eclectic tastes. Musk launched a Tesla car into space to demonstrate the payload capabilities of his SpaceX company rockets.