Date
16 July 2019
Tech billionaire co-founder Elon Musk said there has to be "some kind of constraints" on the creation of bitcoin and other cryptocurrencies. Photo: Reuters
Tech billionaire co-founder Elon Musk said there has to be "some kind of constraints" on the creation of bitcoin and other cryptocurrencies. Photo: Reuters

Musk praises bitcoin but says he won’t get involved in it

Tech billionaire Elon Musk said bitcoin could be a valuable way to transfer money, but clarified that he would not want to get involved in the digital currency.

“Bitcoin’s structure is brilliant but I don’t think it would be a good use of Tesla’s resources to get involved in crypto,” the founder of Tesla and SpaceX said in a podcast released on Tuesday.

Musk is no stranger to the financial technology ecosystem. He co-founded the online financial services and e-mail payment company X.com in 1999. The firm was renamed PayPal in 2001 and developed into a global online payment giant.

“The bitcoin structure was quite brilliant. It seems like there’s some merit to ethereum as well, and maybe some of the others,” Musk told Cathie Wood, the host of ARK INvest’s FYI podcast.

“Paper money is going away and crypto is a much better value for a transfer of value than pieces of paper – that’s for sure, without a doubt.” 

He said one of the advantages of cryptocurrency is its fluid ability to work its way around trouble: “It bypasses currency controls.”

But Musk also highlighted a “flaw” in the digital currency: “It is very energy-intensive to create an incremental bitcoin at this point.”

He is also in favor of imposing “some kind of constraints” on the creation of cryptocurrencies.

In a blockchain network such as bitcoin and ethereum, Proof of Work (PoW) is popularly used as an algorithm to enable trustless consensus in transactions. 

In the case of bitcoin, miners – those who create the cryptocurrrency – use high-powered computers to solve complex math problems and verify transactions. They compete against each other to complete the transactions on the network, and the winner receives a new bitcoin as a reward.

During the process, miners need a lot of energy to power the use of computers, mainly application-specific integrated circuits or ASICs. Other cryptocurrencies that are similarly structured as bitcoin also use intensive energy for mining.

While talking up bitcoin, Musk stressed that cryptocurrencies are currently not on Tesla’s road map: “I don’t think it would be a good use of Tesla’s resources to get involved in crypto.”

In October last year, Musk tweeted that he “wanna buy some bitcoin”, sparking intense speculation that he was entering the crypto space.

He explained in Tuesday’s podcast that he was referring to the fact that “bitcoin and ethereum scammers were so rampant on Twitter”.

“Then I got my account got suspended ’cause obviously there was like some automatic rule that if you try to sell bitcoin or something … and I was just joking,” he said.

After soaring in late 2017, bitcoin and other cryptocurrencies have been losing their appeal since last year, with major players in the financial and tech industries talking against them.

But there are also many supporters. Twitter co-founder and chief executive Jack Dorsey predicted that bitcoin would become the “native currency of the internet”.

He said earlier this month: “It feels [bitcoin is] the one that wants to be currency the most, versus others that are doing more general purpose things or distributed computing … I think [the altcoin space] has generated some really amazing ideas, but I’m focused on currency and the transactional aspect.”

Meanwhile, crypto fans were elated by news that JPMorgan Chase is launching the first US bank-backed cryptocurrency, JPM Coin.

It will be recalled that the bank’s CEO, Jamie Dimon, had been bashing bitcoin in the past, calling it a “fraud” and threatening to fire any employee trading in the cryptocurrency for being “stupid”.

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