Join our community of smart investors

Why bitcoin can't be a currency

That nice Mr Musk is selling the top-of-the-range Tesla S for £131,000, but the question is: should Bearbull pay for his shiny new car in conventional currency or dig into his bitcoin wallet since Tesla (US:TSLA) now accepts the cryptocurrency?

The exchange rate for bitcoin is the vital factor. In this mental exercise, if Bearbull buys at the current exchange rate then the motor costs him only B3.33, but if he is unfortunate enough to buy at bitcoin’s lowest exchange rate since just the start of 2020, then the price becomes B37.4. To make that price differential clearer, let’s turn the currencies around and express them in pounds. At the current $1.40 exchange rate, at best Bearbull pays just £11,650 for his Tesla S, about 30 per cent less than the cost of a Vauxhall Astra; at worst, the price becomes £1.47m – enough for about 80 Astras.

To continue reading...
Join our Community of Smart Investors
  • Independent full-length company analysis
  • Actionable investment ideas and recommendations
  • Expert investment tools and data
  • Stock screens from Algy Hall
Have an account? Sign in