Tesla, Bitcoin and the Global Cryptoeconomy — Discover Three Growth Vectors
Tesla’s $1.5m investment in Bitcoin last week follows a similar move by MicroStrategy, which acquired some $425m of BTC in 2020. While this strategy increases the liquidity of the firm’s balance sheet, the real goal is to expand payment options for Tesla customers — which have a strong persona match with Tesla’s target market: Affluent, well-educated, upwardly mobile males in the 30–45 year old age range. Elon Musk is known for being a highly intelligent risk taker and strategic thinker. This mindset has vaulted him to the #2 position in the Forbes’ Real-Time Billionaire List.
These developments bring to the fore three basic dimensions of the near-term prospects for cryptocurrencies worldwide: Industry adoption, currency expansion and the pace of sovereign asset implementation. Let’s examine these three bellwether topics individually.
Tesla’s strategy is as much a reflection of its CEO’s psyche as it is about the durable goods manufacturing sector. More appropriately this is about the mindset of the technology-centric emerging autonomous vehicle industry. If we were to handicap the target industries we would place Internet-media, Technology, Consumer Electronics, Financial Services and e-Commerce at the top of the list. Apple, Alphabet, Facebook (Libra-Diem) and definitely Amazon. Facebook’s renamed Diem Association is primed to release — at least in limited trials — their crypto later in 2021. Apple has high ASP-hhg margin electronic products, a perfect avatar match and massive cash on its balance sheet — making a BTC move in 2021–2022 quite probable. And then comes Amazon — e-commerce, electronic products and services have become woven into consumer lifestyles. A 2021–2022 BTC here is also a high probability.
(Crypto) Currency Expansion
Bitcoin as legal tender for B2C payments is the obvious starting point for cryptocurrency expansion. According to CoinMarketCap Bitcoin is valued at . Meanwhile, Statista estimated BTC at 66% of cryptocurrency market share at the end of 2020. So where does that leave Ethereum (ETH), Tether, Cardano and XRP — the number 2–5 market share ranked cryptocurrencies? For the next 2–3 years any new adopters — industries and vendors — are likely to stay with BTC as the “stable” and “tested” market leader. Nevertheless, there will surely emerge a vendor, in a given industry segment with a unique target persona and geographic niche that will serve as a “best fit” for a currency beyond Bitcoin. More to follow on this topic.
Sovereign Asset Implementation
Thirdly, what impact — if any — will Tesla/BTC have on the adoption of digital assets by sovereign governments … most notably China, Russia, South Korea, Japan and the US? China’s “Digital Yuan” tops our list of the sovereign assets with the shortest time-to-market. Although Tesla/BTC will have little direct impact on the most conservative of crypto adopters, namely sovereign governments, it is in fact one more proof point that may ease the otherwise risk-averse central banks in the world’s largest economies. Advanced trails of digital rubles, wons, yens and greenbacks are anticipated in our 3–5 year time horizon.
1 — Tesla/BTC is the spark that has lit the cryptocurrency ‘mainstream’ fuse
2 — Expect other merchant-BTC announcements in 2021 to trickle in and an avalanche in 2022
3 — Look for Ethereum (ETH), Tether, Cardano and XRP beginning in 2023
The digital yuan will lead to several more sovereign government crypto asset rollouts in 2022–205
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