Tim Draper, the billionaire Bitcoin (BTC) investor who also invested early in Tesla, reacted to the company’s CEO and the world’s richest man, Elon Musk, by adding #Bitcoin to his Twitter bio to join names like Jack Dorsey and Reddit founder Alexis Ohanian.
Draper, who owns about 30,000 BTC according to reports, told Musk that he would like to pay for the Tesla cybertruck with BTC while promoting his Bitcoin payment processing portfolio company OpenNode. It said:
“Hi, Elon Musk, I would like to buy a Tesla cybertruck. Although I personally prefer to keep my own #bitcoin, you can accept #bitcoin through our company Draper VC OpenNode. “
Because now?
On January 29, Bitcoin started to rise 14% in just 30 minutes, shortly after Elon Musk’s support for Bitcoin started to circulate on social networks.
Many speculated that Musk could have been the high-net worth investor behind Coinbase’s massive Bitcoin buildup last week.
In the past few days, Coinbase’s prize has skyrocketed to around $ 200, compared to Binance. This generally indicates significant buying activity from American investors.
However, Musk did not keep up with the biological change and, overnight, the increase was reversed. Bitcoin rose from $ 33,000 to more than $ 38,000 and fell to $ 33,000.
Draper probably tweeted about Musk due to Musk’s interest in Bitcoin and the positive market sentiment around BTC.
In a recent interview with CNBC, Draper said he is actually buying more Bitcoin. Draper also said that he does not intend to sell BTC in the future, expressing his strong belief in Bitcoin as a “currency of the future”. It said:
“In fact, I’m just buying more [Bitcoin]… I have no interest in selling my #Bitcoin for dollars. Why would I take the currency of the future and sell it for the currency of the past? “
On-chain data shows that Draper is not the only one focused on long-term gains. In fact, the activity of “HODLing”, which indicates the intention of Bitcoin investors to maintain BTC for a long time, has reached record levels.
Will Bitcoin ever be used as currency?
Bitcoin is increasingly being considered a store of value and an alternative to gold as a safe haven asset. In the past few months, however, the correlation and the inverse correlation between Bitcoin, gold and stocks has declined.
In addition to the massive price gains, the fear of inflation and the large injection of liquidity by central banks generated great interest among institutional and high net worth investors.
But while acceptance of BTC is becoming more and more common, the question remains whether Bitcoin would ever be used as a currency and medium of exchange like the dollar today.
Ironically, when the price of Bitcoin is in a clear upward trend, investors are less likely to sell or spend their BTC. Draper himself is suggesting that he will probably pay the $ 40,000 for Cybertruck with dollars instead of the “currency of the future”.
However, if Bitcoin’s price stabilizes in the future at a price level high enough and there is less volatility, BTC could become more attractive for daily payments.
Meanwhile, as the network gains more users and needs to scale, Bitcoin’s blockchain network may become inefficient for daily use in the first tier.
At that point, second-tier scale solutions like Lightning Network and secondary chains like Liquid, for example, can become the blockchain “apps” to process small payments instantly. These interoperable platforms are likely to have their own tradeoffs with varying degrees of distrust, privacy and decentralization.