Bitcoin is once again seeing a massive jump in its value following Tesla's decision to invest $1.5 billion in the cryptocurrency. As well as sending BTC's value soaring by 16% to $44,141, the investment once again highlights the mainstreaming of Bitcoin. However, don't expect Microsoft to be following Tesla's lead just yet.
Microsoft, despite already using Bitcoin, is unlikely to invest in the cryptocurrency by buying coins. That does not mean Tesla has not lit the way for other companies wanting to buy BTC. In a Securities and Exchange Commission filing, the company became the first automaker to embrace Bitcoin, saying it will soon accept BTC as a form of payment for its vehicles.
Tesla will “begin accepting bitcoin as a form of payment for our products in the near future … initially on a limited basis, which we may or may not liquidate upon receipt.”
Speaking to CNBC, analyst Dan Ives expects Tesla's action to “have a ripple effect across corporations around the global,” He describes the investment as a “potential game changing move for the use of bitcoin from a transactional perspective.”
Is Microsoft Tempted by Bitcoin?
Could Microsoft be one of corporations that follows Tesla's lead and directly purchases BTC? It remains very unlikely and it has nothing to do with Microsoft's view on crypto. In fact, the Redmond giant has been a consistent supporter and investor in blockchain technologies for years.
However, investment in Bitcoin and using the currency within its organization does not mean Microsoft will invest fiat currency towards purchasing coins. Microsoft's journey with cryptocurrency seems to be more focused on integration of Bitcoin within its products and services.
Certainly, embracing BTC as a technology concept fits perfectly with Microsoft CEO Satya Nadella's goals for the company. Nadella has been a cloud-first CEO, one who has embraced innovation to drive the company to massive successes. In fact, it was soon after Nadella replaced Steve Ballmer as CEO that Microsoft started to embrace Bitcoin.
Since 2014, Microsoft has been accepting BTC as “a payment option to buy apps, games and other digital content from Windows, Window Phone, Xbox Games, Xbox Music or Xbox Video Stores”. Aside from brief blips where Bitcoin payments were banned because of volatility, Microsoft has remained a long term and early adopter of the currency.
Further to Microsoft's push to integrate Bitcoin as a technology tool can be seen with the company's Identity Overlay Network (ION). Based on the Bitcoin blockchain network, the service provides a different solution to regular username and password systems. Microsoft's solution anchors identifiers to blockchain solutions like Ethereum or Bitcoin, ensuring that users have control over their information rather than their account provider.
Microsoft's heavy investment in Bitcoin as a technology solution fits perfectly with Satya Nadella's love of innovation to drive growth. Integration of blockchain into new products makes sense, but directly investing in Bitcoin arguably does not. Certainly, any such investment would go against the opinion of Microsoft founder Bill Gates.
Gates has taken a flop-flopping position when discussing Bitcoin, seemingly praising it one interview only to lament it the next. Certainly, it seems Gates is more of a critic than he is a fan. During an interview with CNBC in 2018, the former Microsoft CEO-turned-philanthropist, said he would get rid of the cryptocurrency if he could:
“As an asset class, you're not producing anything and so you shouldn't expect it to go up. It's kind of a pure ‘greater fool theory' type of investment… I agree I would short it if there was an easy way to do it.”
So, Microsoft is unlikely to follow Tesla's lead right now and won't be part of a wave of global corporations making a direct investment in Bitcoin. Although, there are some that believe the company is merely delaying the inevitable. Raoul Pal, the founder and chief executive of Global Macro Investor and former Goldman Sachs manager, said last year Microsoft and fellow tech giant Apple will invest in Bitcoin within five years.
Delaying the Inevitable?
It seems that Microsoft and Bitcoin are on an unavoidable course where eventually the company will make an investment. As BTC continues its path to the mainstream within major organizations, it seems inevitable that wider industry investment continues. However, Microsoft and other major companies will be wary of the volatility that still surrounds the currency.
Tesla's investment sent BTC soaring by 16%, arguably making it instantly a less attractive option for other companies. If a giant like Microsoft or Apple entered the BTC market, price unpredictability is likely to continue.
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