Cryptocurrency

Tesla to accept Bitcoin payments. Can Bitcoin be a legal tender in India?

Snapshot:

  • Tesla invested $1.5 billion in Bitcoin.
  • Impact of the Tesla investment.
  • Cryptocurrency markets in India.

Besides putting a pause to our everyday lives, 2020 had been a year with quite a few shifts that can be labelled as unusual. To state a few: 

  • The removing of RBI’s banking ban by the Supreme Court.
  • Bitcoin surpassing its all-time high since 2017.
  • Mass adoption of cryptocurrencies in India. And
  • The crypto markets reaching a $1 trillion market cap. 

Overall, Bitcoin has had an incredible journey in 2020 and is continuing to have so in 2021 so far. Its bullish run has also got the investors to compare it with gold! At the time of writing, BTC is valued at $46,325. A surge in the price (A few days ago BTC was valued at $33,087.37) however was the outcome of Elon Musk’s Tesla acquiring a whopping $1.5 billion worth of Bitcoin.  

Tesla to accept payments via Bitcoin!

Not only did the tech giant acquired such a humongous worth of Bitcoin, but the company has also stated that they will soon start accepting payments through Bitcoin. 

TESLA invests in Bitcoin:

Investments in Bitcoin is different than an investment from a tech giant like Tesla. That too for an amount which most definitely asks for a double head turn without even saying anything. No investments in Bitcoin other than the all-time high in 2017, had got as much attention as it has since the richest man on the planet Elon Musk invested in Bitcoin. 

Here are what the Bitcoin advocates are saying about the investment:

  • If any lesser mortals had made the decision to put part of their balance sheet in Bitcoin, I don’t think it would have been taken seriously. But when the richest man in the world does it, everyone has to take a second look.

Thomas Hayes, the managing member at Great Hill Capital LLC in New York, told Reuters.

  • One by one, corporations will add Bitcoin to their balance sheets and it couldn’t get bigger than Tesla. Imagine if 100 companies start putting even 1% into Bitcoin, what that is going to do to demand and supply.

Vijay Ayyar, head of Asia Pacific with cryptocurrency exchange Luno in Singapore, told Bloomberg.

  • The crypto craze is entirely driven by short-term speculative momentum/mania. For all the noise I keep hearing about how high Bitcoin may go, the noise around how it will be used in everyday life is deafeningly silent.

Jeffrey Halley, a senior market analyst at Oanda Asia Pacific Pte, told Bloomberg.

  • “This is a surprise that is also not a surprise at all. Elon Musk has been talking about bitcoin for a long time. The number of users on ZebPay did more than double right after the news. It’s a sign to other companies that bitcoin is a solid reserve asset for any balance sheet. We hope central banks will join in and that this news helps nudge the government to buy, not ban bitcoin and let every Indian do the same. Now if tomorrow Tesla also buys a billion dollars of dogecoin, that will be a surprise.”

Rahul Pagidipati, CEO of ZebPay, told LiveMint.

  • The argument for bitcoin is evolving. It used to be negative (reasons to buy), but suddenly there are positive reasons, and that’s why you see bitcoin at (new highs).

Mohamed El-Erian, the chief economic advisor of Allianz, told CNBC.

  • “If this becomes a trend in corporate treasuries the downside of staying on the sidelines will only become costlier over time,” said Maya Zehavi, a blockchain consultant, told Reuters.
  • Tesla’s move to put some of its corporate reserves in bitcoin may be a signal that it expects the cryptocurrency will emerge as another store of long-term value alongside the dollar and gold. Companies are very careful when it comes down to their reserves. This doesn’t appear to be a flash in the pan. It appears to be something that may be a fundamental change.

Graham Tanaka, president and chief investment officer of Tanaka Capital Management in New York, told Reuters. ‘

  • In an expansionary, monetary environment, you want scarce assets. The scarcest asset in the world is Bitcoin. It’s digital gold. Gold will lose out to Bitcoin in reallocations. If we bought gold instead of Bitcoin, we would be down $2 billion. It would have been a disaster. Once people start thinking about what they want, which is a non-sovereign, safe-haven store of value, they’re going to realize that Bitcoin does the job of gold better, and you’re seeing all of the institutional flows move out of gold into Bitcoin.

Michael Saylor, MicroStrategy Inc.’s chief executive officer, in an interview on Bloomberg Television.

  • You’re going to see every company in America to do the same thing. Between corporations adding Bitcoin to treasury funds and the city of Miami also considering adding the cryptocurrency to its balance sheet. It doesn’t have to be a lot. It’s the messaging that matters, you’re seeing the herd here, and it’s coming.

Michael Novogratz, the founder of cryptocurrency investment firm Galaxy Digital, told Bloomberg. (Source: Livemint) 

Also read: The Proposed RBI bill 2021.

Tesla cars’ prices in BTC:

Tesla Model Names Price in USD Price in BTC (10/02/2021)
Tesla Model 3  $37,990 0.83 BTC
Tesla Cybertruck  $39,900 0.87 BTC
Tesla Model x  $79,990 1.75 BTC
Tesla Model s  $99,990 2.18 BTC
Tesla Roadster  $200,000 4.37 BTC

For live Tesla car price in BTC, check the prices by clicking here!

The cryptocurrency market in India:

“Conversations around Crypto in India have always been an emotional rollercoaster since 2018. While bitcoin has been a part of the narrative since 2012, the larger Indian audience pivoted towards bitcoin and cryptocurrencies, when Bitcoin crossed its All-Time High for the first time in 2017 end. 

In 2017 year-end, Bitcoin prices touched nearly $19,000 and the cryptocurrency world was never the same. With legacy banks and mainstream media dubbing it the next ‘Tulip bulb market bubble’, and retail investors entering the market by droves, it can be agreed upon that 2017 and early 2018 was a watershed moment in the history of Bitcoin.” Sumit Gupta, CEO CoinDCX. 

Read more: Onboarding the next 50 million Indians.

 In April 2018, the Reserve Bank of India passed a banking ban on Indian banks preventing them from working with cryptocurrency exchanges. Within 3 months, the banks had to wrap up the business dealings with all the exchanges. CoinDCX was one of the few exchanges that banded together with the Internet and Mobile Association of India (IAMAI) and filed a petition challenging the banking ban in the Supreme Court. After nearly a year of adjournments, the Supreme Court overturned the banking ban and allowed cryptocurrency exchanges in India to work with Indian banks. Within six hours of the judgment,  CoinDCX became the first exchange to integrate banking transfers of all our users. 

In January 2021, the official website of Lok Sabha mentioned on the bulletin board that one of the agenda for the upcoming Budget Session would be ‘The Cryptocurrency and Regulation of Official Digital Currency Bill, 2021’.  The bill is currently in the introductory stage before passing through the official procedure of multiple approvals till it becomes law.

In a recent CNBC live interview, our CEO, Sumit Gupta has mentioned how the initiation of a discussion around cryptocurrency within the government is a positive move for the crypto space in India. Since the bill clearly states a discussion around RBI exploring the CBDC option, it is important to first understand what exactly the government is hinting towards, when they say ‘Private Cryptocurrency’. 

One definite positive outcome that has the bill begets is the brilliant collective work of all the crypto exchanges in India. The exchanges are initiating conversations around the definitive meanings of Private Crypto and initiating discussions with the government and helping them understand the decentralized and public nature of public blockchains

Cryptocurrency Rates in India:

Top 10 Cryptocurrency USD Price INR Price (as of 10/02/2021)
Bitcoin $ 45,406 INR 33,05,337
Litecoin $ 180 INR 13,104
Chainlink $ 26.87 INR 1954
Ethereum $ 1,740 INR 1,26,684
Ripple $ 0.49  INR 36.32

Keep tabs on live cryptocurrency rates in India, here.

Cryptocurrency and RBI’s proposal for Digital Currency.

The RBI’s proposal to explore the Central Bank’s Digital Currency (CBDC) option is not clear enough to comment on. The bill states, ‘To create a facilitative framework for the creation of the official digital currency (CBDC) to be issued by the Reserve Bank of India. The Bill also seeks to prohibit all private cryptocurrencies in India, however, it allows for certain exceptions to promote the underlying technology of cryptocurrency and its uses.

  • What are private cryptocurrencies? 
  • What is meant by exceptions to the underlying technology if a ban is to be issued?

Clarity on various matters is still to be discussed and explored.

Read more: The Proposed RBI Bill.  

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