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Nexo

How Buying A Tesla With Bitcoin Is A Catch-22

Tony Spilotro by Tony Spilotro
4 weeks ago
in Bitcoin
0

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.

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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.

btc bitcoin tesla tsla musk

Bitcoin pumped immediately after Musk's tweet, but was used to fake out traders | Source: BTCUSD on TradingView.com

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.

btc bitcoin tesla tsla musk

The Refunds and Buybacks section of the Tesla fine print reveals unexpected risk for buyers | Source: Twitter

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.

According to Wikipedia, “one connotation of the term is that the creators of the catch-22 situation have created arbitrary rules in order to justify and conceal their own abuse of power.”

RELATED READING | BITCOIN IS REPLACING GOLD AT AN “ACCELERATING PACE”

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 the 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.

Featured image from Deposit Photos, Charts from TradingView.com
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Tony Spilotro

Tony Spilotro

I'm Tony Spilotro. Behind the pseudonym, I'm a digital media executive and global remote work leader with a decade of content experience and excellent. Here, I explore my newfound passions pertaining to privacy, finance, economics, politics, cryptography, property rights, and other libertarian-esque views. I am a Bitcoin evangelist, maximalist, and educator whenever I can be, helping to spread its message of freedom from government control, monetary policy mismanagement, and passing the buck - literally – to future generations. My journey from a curious retail crypto investor to a serious Bitcoin advocate, trader, and technical analyst is an unusual one, but life-changing nonetheless and has become less about money and more about a long-overdue revolution. While a firm believer in the laws governing math and science, I am profoundly fascinated by the impact of astrology and astronomy including moon and solar cycles and planetary alignment and their ability to influence and potentially predict markets. It hasn't yet clicked for me as to how to put anything to use, but I consider it my current rabbit hole I can't yet dig out of. My perspective of growing up alongside the internet, the dot com era, the Great Recession, and roots in video games collecting coins and rare items caused Bitcoin to immediately make sense to me. Through all of these lenses, I seek to produce content that is educational and entertaining, and I thank you sincerely for taking the time to read what I have to say. Please follow me on Twitter and feel free to drop me a line if you would like to work together.

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