In a rare comment from Elon Musk on cryptocurrency, the Tesla and SpaceX founder said that Bitcoin “is quite brilliant.”
He continued:
“Paper money is going away and crypto is a far better way to transfer value than pieces of paper, that’s for sure, but it has its pros and cons.”
Musk also gave Ethereum props on the ARK Investment podcast Tuesday (listen here):
“There seems like there is some merit to Ethereum as well.”
Elon Musk: Bitcoin Is Brilliant, But Tesla’s Not Going Full-Crypto
“Paper money is going away and crypto is a far better way to transfer value,” Elon Musk said. | Source: Shutterstock
It’s a strong endorsement of cryptocurrency and Bitcoin coming from Silicon Valley wunderkind Elon Musk, the billionaire engineer/entrepreneur who made a major play in digital payments when he merged his online banking services startup X.com with Peter Thiel’s outfit a few blocks away to form PayPal.
But despite his high praise for Bitcoin and his belief in the inevitability of cryptocurrency becoming the dominant financial infrastructure for the world, Musk says he won’t be getting Tesla Motors involved in the space:
“But I’m not sure that it would be a good use of Tesla’s resources to get involved in crypto.”
Of course, Bitcoin and cryptocurrency aren’t anything that should be taking up any of Musk’s time. He’s got his hands full working an average of 42 hours a week at Tesla and 40 hours a week at SpaceX. He would know – he organizes his day into 5-minute slots.
Crypto a Big Opportunity for Entrenched Tech Firms
Microsoft’s cloud services platform will support Bakkt, the crypto exchange launched by ICE. | Source: Shutterstock
Tesla is a car company, and SpaceX is an aerospace tech company. They are both very special companies, the only companies in the world that do exactly what they do on the scale they do it. The opportunity to reap years of massive monopoly profits once they reach scale is their most lucrative opportunity and they should remain focused on that.
And Tesla isn’t close to profitable yet, and SpaceX isn’t really profitable either. They have some years of daily battles ahead of them to reach that pinnacle in their own domain.
By contrast, old guard tech titans like Microsoft and Google, who’ve had many years to sit back and reap those kinds of profits, have more than enough extra skin to put in the game, and they are quite smartly diving into the cryptocurrency industry, at least indirectly.
Microsoft’s cloud services will be supporting the New York Stock Exchange’s upcoming Bakkt cryptocurrency exchange, and Google has been, along with Goldman Sachs, one of the biggest corporate investors in cryptocurrency industry firms.
The day Musk made his comments about crypto, Bitcoin, and Ethereum, Google became the first tech giant to add the Bitcoin symbol to the keyboard for its iOS apps.
Tesla May Not Be Getting Into Bitcoin, But Crypto Will Be Getting into Cars
Although it may be many years before Tesla has a good enough grip on its current business to make a serious foray into cryptocurrency, it seems likely to me because of Tesla’s specialty in electric batteries and ultracapacitors.
This will create many opportunities for Tesla to get involved in Proof of Work cryptocurrencies like Bitcoin, because of the very close relationship between the PoW coins and electricity, along the lines of this Reddit user’s comment on the Bitcoin subreddit 2 years ago:
“This is the future of bitcoin. Ability to convert unused electricity to money, and if needed that money can then be used to buy back electricity.”
Efficient.
Why Tesla Will Eventually Dive into Bitcoin
Tesla should use cryptocurrency to decentralize the electric grid. | Source: Shutterstock
One can easily imagine Tesla and other similar high tech energy companies decentralizing the electricity grid. Instead of a centralized power grid with every end user drawing electricity from a central source of mass-produced energy, imagine a decentralized, peer to peer network of electricity production.
Each building that generates and stores its own power from solar (say from Tesla Solar Roof Tiles or Tesla Power Walls) is a full node on this power grid of the near future.
And Bitcoin or another PoW cryptocurrency mediates a sharing economy of electricity among nodes on this network in the fashion described above. It reminds me of how some hydroelectric dams store excess electricity by using it to pump water back uphill, and let the water fall when they want to convert the potential energy back to electricity.
Human civilization is about to produce an epoch-setting tidal wave of affordable, clean, renewable energy. And Elon Musk is leading the charge. Bitcoin can help us get every last bit of value out of all that electricity, with no watt left behind.
So will Elon Musk go full crypto? It’s only a matter of time.
Elon Musk Image from REUTERS / Aly Song
