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Musk defends Tesla bitcoin move

Says token less dumb than cash.
Zhao Changpeng, chief executive officer of Binance. Image: Bloomberg

Elon Musk called Tesla Inc.’s $1.5 billion Bitcoin bet an “adventurous enough” investment for the company, after one of the industry’s loudest acolytes called out the billionaire’s advocacy of lesser-known Dogecoin.

“Having some Bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P500 company,” Musk wrote in a tweet, in response to a Bloomberg TV interview with Binance Holdings Ltd. CEO Changpeng Zhao.

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Tesla took both the corporate world and the cryptocurrency space by storm when it announced this month it had put $1.5 billion of cash into Bitcoin. That prompted a surge in Bitcoin’s price and has fueled talk about the risks and benefits of adding cryptocurrencies to corporate balance sheets.

Zhao had said in the interview he’s surprised that Musk is a fan of Dogecoin, which has outperformed Bitcoin this year. Musk, the founder of Tesla and the world’s richest man, has tweeted multiple times about the Shiba Inu-themed cryptocurrency started as a joke in 2013. And Binance has recently added Dogecoin futures on its platform to satisfy new liquidity demand.

Zhao wondered in his interview why Tesla opted to buy Bitcoin if Musk is so “gung-ho” on Dogecoin. His remarks prompted Musk to explain the move by Tesla, which is also planning to accept Bitcoin as a payment method.

“When fiat currency has negative real interest, only a fool wouldn’t look elsewhere,” Musk wrote in his two-part tweet. “Bitcoin is almost as bs as fiat money. The key word is ‘almost.’”

The optimism over institutional interest, among other factors, has helped Bitcoin surge more than 400% over the past year. Binance is raking in new users at its fastest pace ever as Bitcoin tops $50 000. The exchange behemoth has been attracting more than 300 000 new user registrations on a day to day basis, sustaining levels above a previous peak in 2017, Zhao said in the interview.

Binance’s own token BNB has also outperformed Bitcoin, though Zhao noted it comes with higher risk than the largest cryptocurrency as well, comparing their volatility levels. Binance Coin started as a loyalty program incentivizing user trades but now powers the decentralised applications on Binance’s own blockchain.

“There’s a lot more activity now in this industry than three years ago,” said Zhao, who also goes by CZ. “We are just at the beginning.”

© 2021 Bloomberg

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