This Is How Tesla Could Let You Buy An EV With Bitcoin

Tesla Inc TSLA customers may soon be able to purchase a vehicle of their choice and pay for it using Bitcoin (BTC), but how would that process work? 

Not The First: The Home Depot, Inc HD, Amazon.com, Inc AMZN subsidiary Whole Foods, and even Mark Cuban’s Dallas Mavericks already allow customers to pay for their stuff in BTC. Tesla might take a similar approach to these businesses.

See Also: Elon Musk Tweets Drove Crypto Community Mad But Mark Cuban Says Dogecoin 'Not A Bad Look'

A Go Between: A likely scenario is that if the Elon Musk-led company accepted BTC its customers would transfer their cryptocurrency from their wallets to a processor, which would then convert it to fiat money and send the amount to Tesla.

An example would be BitPay, a company that has accepted payments for Microsoft Corporation MSFT and AT&T Inc T.

Cut Out The Middle Person: Another way forward could be for Tesla to skip a go-between and do it all by themselves. Musk, who is one of the founders of PayPal Holdings, Inc PYPL is no stranger to the payments business. The payments company itself started its users buy and sell cryptocurrencies last year, but it has not gone solo in doing so. 

See Also: PayPal's Cryptocurrency Partner Sees 500% Surge In Trading Volume In A Month

A Volatility Workaround: A roadblock in the broader acceptance of BTC is its sheer volatility. On Monday, the cryptocurrency soared as high as $47,584.10 for a brief window. In the early hours of Tuesday, at press time, it was trading 20.81% higher at $46,644.95. Bitcoin soared past the $45,000 mark for the first time on Monday. 

No fucking way I spend my #Bitcoin on a Tesla.. I already spent 5 grand of #Bitcoin on a sofa today. One hour later came the announcement about Tesla buying Bitcoin, and boom The fucking sofa went up 10% in value in 1 hour..

— Anders Bengtsson (@bengtsson999) February 8, 2021

If Tesla were to use in-house Bitcoin processing, it could set up a guaranteed exchange rate with customers for a short period of time, according to Danny Masters, Chairman of Coinshares, a digital asset management firm, Reuters reported.

"They will likely continue to price Teslas in dollars and then say, ‘Wire us dollars or send us bitcoin and if you send us bitcoin, the price is good for five minutes," said Masters.

See also: How to Invest in Tesla Stock

Price Action: On Monday, Tesla shares closed nearly 1.3% higher at $863.42 and fell 0.56% in the after-hours session. On the same day, Grayscale Bitcoin Trust GBTC closed 20.62% higher at $45.69.