Elon Musk Thinks Bitcoin is Clever But Can’t Be the Primary Financial Database
Elon Musk, the often controversial CEO of Tesla, recently shared his thoughts on crypto and Bitcoin during the Third Row Tesla Podcast, saying he is generally ‘neither here nor there on Bitcoin’. However, he did concede that the Bitcoin whitepaper, written by Satoshi Nakamoto, was ‘pretty clever’.
Musk’s criticism of crypto and Bitcoin was centered around its use for legally questionable transactions, which are a major hurdle towards adoption. Different countries treat digital assets differently, but the general consensus is that crypto transactions are a threat to economic stability, since they are beyond the purview of regulators and government authorities.
The case for crypto isn’t helped by the fact that Bitcoin first rose to mainstream prominence due to the infamous Silk Road black market on the dark web. The black market was responsible for all manner of illegal transactions, specifically involving drugs. Its founder, Ross Ulbricht was arrested in 2013 by the F.B.I and is currently serving a double life sentence without the possibility of parole.
Speaking about the use of crypto for illegal transactions, the Tesla CEO said:
“This sort of gets the crypto people angry, but there are transactions that are not within the balance of the law…and there are, obviously, many laws in different countries. And, normally, cash is used for these transactions. But, in order for illegal transactions to occur, cash must also be used for legal transactions. You need an illegal to legal bridge. That’s where crypto comes in.”
However, according to Musk, Bitcoin’s utility will be limited to certain cases, and it is unlikely to become a primary financial database:
“Where I see crypto as is effectively a replacement for cash,” said Musk. “But not as a replacement for a primary — I do not see crypto being the primary database.”
Musk’s views on Bitcoin are more lenient than those of billionaire investor Ray Dalio, who considers Bitcoin not fit for a medium of exchange or store of value.
“There are two purposes of money: a medium of exchange and a store-hold of wealth,” said Dalio. “And Bitcoin is not effective in either of those cases now.”
Despite these views, there are numerous proponents of Bitcoin who believe the digital currency will be at the forefront of the upcoming paradigm shift in the global economy. However, if regulators are to be believed, there is a long way to go before any digital currency can assume mass adoption.
Even Facebook’s Libra project ran into regulatory roadblocks, raising concerns around privacy, value assessments and the structure of its currency in light of securities laws.
At the time of writing, Bitcoin is trading around $8,345, up over 16% this year from its January 1, 2020 price of $7,175.