Why Tesla’s decision to accept bitcoin as payment is unlikely to be followed by other companies

Why Tesla’s decision to accept bitcoin as payment is unlikely to be followed by other companies

Elon Musk announced this week Tesla has begun to accept bitcoin as payment for all models of its cars in the US.

From a transactional perspective, the billionaire's crypto-related announcements have been game-changing for bitcoin. That is quite evident from statistics showing crypto-related keyword searches on Google such as "invest in bitcoin" and "how to trade crypto" have seen more than a 1,015% jump in search volume since January alone, according to data from Semrush.

But some crypto experts say this is an unstable choice for Tesla and could deter other companies from following. Here are four main factors that make the cryptocurrency an impractical and costly method of payment for corporates.

Volatility

With a market cap that now exceeds $1 trillion, bitcoin has quickly acquired a status of being a digital global store of value and reserve asset. But hourly price fluctuations make it extremely volatile, impractical, and a costly payment method for corporates, according to Megan Kaspar, co-founder of crypto investment firm Magnetic. That makes the currency a "poor medium of exchange" and a risky method of payment. Sudden price fluctuations could negatively impact a customer's ability to pay in bitcoin, she said.

A fintech expert said Musk's decision is more like