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Articles

Elon Musk Sends Bitcoin Value into the Stratosphere

The rise and rise of the world’s original cryptocurrency from the purchase of two Papa John’s pizzas to USD 1.5 billion in investment from Tesla, Inc.

Bitcoin has seen stunning fluctuations in its value since 9 February 2021 when Elon Musk, the CEO of Tesla Motors, announced his company had made a hefty USD 1.5 Billion investment in the world’s premier cryptocurrency.

Elon Musk became the richest person in the world in January 2021, when his net worth hit USD 185 billion and he replaced Amazon CEO Jeff Bezos, whose wealth amounted to USD 184 billion on that day.

Besides being early investor, CEO, and product architect of EV maker Tesla, Musk is the founder, CEO, CTO, and chief designer of SpaceX; founder of The Boring Company; co-founder of Neuralink; and co-founder and initial co-chair- man of OpenAI.

His public embrace of Bitcoin came the month after the centibillionaire became the world’s richest man when his net worth hit USD 185 billion, surpassing Amazon CEO Jeff Bezos USD 184 billion.

How Tesla’s investment in Bitcoin has boosted its value it can be observed from the fact that these days one Bitcoin is trading in narrow range of USD 50,000. On 5 March 2021, value of this currency opened at USD 48,500 (just over PKR 7.7 million @ PKR 159 per USD).

On 7 February 2021, one Bitcoin was trading around USD 38,873, but its value surged to above USD 46,000 on 9 Febru- ary 2021, when Musk shocked the world by disclosing Tesla had invested USD 1.5 billion in Bitcoin. He also revealed that very soon America’s leading EV maker would start accepting Bitcoin cryptocurrency for selling its automobiles.

With this announcement, investors starting making hefty investments in Bitcoin and its value exceeded USD 57,490 by 19 February 2021. Soon after Tesla’s investment, Bitcoin also set a new record as the total value of this digital currency in circulation hit USD 1 trillion mark for the first time.

Nevertheless, a few days later, Musk issued another statement saying the value of Bitcoin was increasing in an abnormal manner. Unexpected spikes in Bitcoin value also shocked everyone in the United States and elsewhere and the American government officials and analysts started raising concerns about unprecedented growth in the value of this digital currency in the preceding weeks. They also declared this cryptocurrency most vulnerable to shocks and fraud, and urged people not to make any investment in it. Consequently, by 28 February 2021, the value of Bitcoin plummeted to around USD 45,000, from where it slowly surged to around USD 48,500 in the first week of March.

Just two days after Tesla CEO announced his company’s strategic investment in this digital currency, the value of Bitcoin crossed the average car price in the United States (USD 44,000) in February 2021, much to the shock of everybody. Many Americans worried about manipulation in Bitcoin value and its side-effects on the economy.

So far, the United States, Canada, European Union, Australia, and Finland are the only countries to allow legal trade of Bitcoin and some other leading cryptocurrencies. These countries, however, are using their security agencies to ensure this digital currency is not utilized in drug trafficking, illegal trade of weapons, terrorism, and other unlawful activities.

Online trading of this digital currency is being conducted in many countries that have legally banned it. Bitcoin is also being traded on several currency and stock exchanges in the United States and in some other countries.

The Eight Major Cryptocurrencies

More than 1,600 cryptocurrencies are in circulation around the world today. However, Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH), Bitcoin Cash, Ethereum Classic, Zcash (ZEC), Stellar Lumen (XLM) and Bitcoin Satoshi’s Vision (Bitcoin SV) are the eight leading cryptocurrencies in the world at present.

Bitcoin was the original cryptocurrency introduced in 2009. In 2013, the United States legalized trading of Bitcoin currency and the US Treasury Department issued guidelines for trading this digital currency.

Some US States had already allowed the use of Bitcoin well before this decision of the US Treasury Department. Some other countries have likewise declared this cryptocurrency legal, causing its value to soar as massive investments have poured in.

When the US government legalized Bitcoin in 2013, the value of this currency was just around USD 13. Today, this digital currency is being traded in the range of USD 50,000.

How to Buy Cryptocurrencies with Fiat Currency

The potential buyers of Bitcoin or any other cryptocurrency are required to open their cryptocurrency exchange account, update their personal identification information, a method of online payment and a secure internet connection. Common methods of investing in Bitcoin are bank account, debit, and credit cards.

Bitcoin ATMs are operating in countries which have declared this digital currency legal. Therefore, account-holders of this currency can get Bitcoin from its ATMs and through P2P exchanges.

Fiat Currency

Government-issued currencies like Dollar, Euro, Pounds, Yen, and other such currencies are called fiat currencies that are being used to buy Bitcoin or any other cryptocurrency through online payment.

In the United States, some famous cryptocurrency exchanges are Coinbase, Kraken, Gemini, and Binance. Furthermore, the crypto- currency buyers must use secure internet to maintain security and privacy of their information. It involves two-factor authentication along with the use of a strong password.

Importantly, by opening an account with any reliable exchange, accountholders can buy and sell any cryptocurrency, including Bitcoin. Further, the people have a choice to utilize hot or cold wallets.

Hot wallets are available online all the time while cold wallets are based on paper or hardware system. Hot Wallets can be operated from cellphone, laptop, computer and tablets, whereas cold wallet consists of paper and hardware which can be kept offline for security.

For example, the information maintained in the cold wallets can be stored in a USB that can be kept offline. In the cold wallet, paper wallet is considered the most secure option for maintaining Bitcoin currency and its related information.

History of Bitcoin

Satoshi Nakamoto was the name used by the person or persons who developed bitcoin, authored the bitcoin white paper, and created and deployed bitcoin’s original reference implementation – as part of which they also devised the first blockchain database, in the process, becoming the first to solve the double-spending problem for digital currency using a peer-to-peer network.

However, perhaps fittingly, the true identity of this person or consortium remains a mystery to this day.

In 2009, this Bitcoin was first made available online for commercial purposes. Nakamoto shared cryptography mailing list “Bitcoin P2P e-cash paper” that was linked to white paper, “Bitcoin: A Peer-to-Peer Electronic System” and both these links are still available online which provide information about basic concepts of this currency.

The first online economic transaction occurred on 22 May 2010, when an individual from Florida purchased two Papa John’s pizzas by paying 10,000 Bitcoins. Today, the value of 10,000 Bitcoins runs into millions of dollars because the value of each coin is equal to more or less USD 50,000. Thus, Bitcoin buyers and traders will forever remember historical connection between Bitcoin and Papa John’s Pizza.

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