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