You are here: Home » International » News » Companies
Business Standard

Can you buy a Tesla with bitcoin? How the crypto payments might work

If Tesla were to accept bitcoin payments the way some other major companies have, customers would transfer bitcoins from their "digital wallets" to another entity that converts them into, say, dollars

Topics
Tesla | Bitcoin

Reuters 

A Tesla car is seen at the V3 supercharger equipment during the presentation of the new charge system in the EUREF campus in Berlin, Germany. Photo: Reuters
Tesla may eliminate the middle man and create its own processing system that can be used to accept bitcoin and liquidate the payments.

Inc expects to allow customers to pay for its electric vehicles with soon, the automaker said on Monday, a move that could expand how the most popular cryptocurrency is used for real-world transactions.

Although has become more of a household name in recent years, it is still mostly used as an investment product rather than a form of payment.

A handful of mainstream brands have allowed customers to make purchases with through third-party processors, but suggested it might accept bitcoin directly as part of a broader plan to incorporate the cryptocurrency into its investment portfolio.

The company made the disclosures in a section of its quarterly securities filing that also detailed its purchase of $1.5 billion worth of bitcoin. If customers buy Teslas with bitcoin, the company may or may not liquidate those payments right away - which some experts read as an indication that might hold on to at least some of the coins and not sell them automatically.

A Tesla representative did not immediately respond to a request for more details.

If Tesla were to accept bitcoin payments the way some other major have, customers would transfer bitcoins from their “digital wallets” to another entity that converts them into, say, dollars and sends the sum to Tesla.

For example, including AT&T Inc and Microsoft Corp have accepted bitcoin through BitPay, a cryptocurrency payment processor. BitPay has facilitated payments for luxury auto dealers, but is not working with Tesla now, a representative said.

Shoppers can also buy items from merchants that have never officially accepted bitcoin by using payment cards that convert the cryptocurrency into U.S. dollars ahead of the transaction.

One digital currency enthusiast, Mason Borda, told Reuters he bought a Tesla Model 3 in 2016 using bitcoin through a company called Shakepay. It allowed him to load up a one-time-use credit card with his bitcoin. Tesla received a cash payment.

Borda, chief executive of cryptocurrency software company TokenSoft, said he regrets the purchase, because of how bitcoin values have soared. When Borda bought the car, each bitcoin was worth about $400. As of Monday, however, it was worth over $44,000. That means the $130,000 spent on the vehicle would be worth more than $14 million in bitcoin today.

“I recommend against purchasing big-ticket items with Bitcoin,” he said. The “novelty” of doing so can quickly fade if the price rises dramatically, he said.

Tesla may eliminate the middle man and create its own processing system that can be used to accept bitcoin and liquidate the payments whenever management chooses to, experts said.

That would be an unusual step, because bitcoin is so volatile: even payments giant PayPal Holdings Inc, which expects to allow cryptocurrencies on its network by mid-year, will settle transactions through Paxos Trust Company - meaning neither the merchant nor PayPal will have to hold the virtual coins.

Tesla founder and CEO Elon Musk, who also helped launch PayPal, has expressed enthusiasm about cryptocurrencies online and industry sources say he has the technological expertise to build the required infrastructure.

If Tesla goes that route, customers would transfer bitcoin into the automaker’s own system. The company will probably have to set a guaranteed exchange rate with customers for a very short period of time, said CoinShares Chairman Danny Masters.

“They will likely continue to price Teslas in dollars and then say, ‘Wire us dollars or send us bitcoin and if you send us bitcoin, the price is good for five minutes,’” he said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, February 09 2021. 07:11 IST
RECOMMENDED FOR YOU
.