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Bitcoin saga : Facebook announces cryptocurrency Diem, Musk distances from 'hustle'

May 17, 2021 / 10:04 PM IST

Days after Elon Musk announced that his company will not be accepting bitcoins as a mode of payment for Tesla cars, Facebook has announced the launch of its own cryptocurrency, Diem in 2021. Intended to revolutionize the fintech space, the project, formerly named Libra, will make money transfer as seamless as sending photos. 

However, this announcement by the messaging behemoth comes at a time when Musk, a vocal cryptocurrency proponent, tweeted that his company Tesla will not accept bitcoins due to the insane energy consumption trends registered in bitcoin mining. 

With a billion-strong user base Facebook already commands and backed by cash, government securities, and the like, Diem is likely to change the face of cryptocurrency. It will be launched in two sets- a multi-currency coin and one with a specific face value on Dollar and Euro. More importantly, the transfer fee will be cheap, attracting greater people and volume towards the currency. However, there is no word on the ecological concerns this elicits, as addressed by Musk. 

Environmental Concerns for Bitcoin

While Tesla clarified that it will also not be selling all of its existing bitcoin holdings, it was hard not to notice the market frenzy after his tweet.  Bitcoin’s value tumbled to as low as 46,000 dollars per coin from its earlier position of Rs 54,700/coin. Notably, Musk also sold about 10% of its stake in bitcoin close to the announcement. 

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In one of its earlier disclosures, the company also mentioned that it has purchased bitcoins worth 1.5 billion dollars. The cryptocurrency rallied to some stability to around 44,900 dollars per coin post his tweet declaring his intention to not liquidate his current stake in bitcoin, but it has still seen exchange outflows worth 17 billion dollars in the last week.

Citing research by the University of Cambridge Centre for Alternative Finance, Musk highlighted the insane energy consumption involved in cryptocurrency mining. As per his statement on Twitter, “Cryptocurrency is a good idea on many levels and we believe that it has a promising future, but this cannot come at a great cost to the environment.”

This surprising backtrack was met with sharp furor in the crypto community. Bitcoin lost nearly 10,000 dollars in price hours after he announced the discontinuance of bitcoin as an accepted mode of payment for Tesla Cars. 

Delhi-based communications professional Karan Anand thinks that Musk is fully aware of his influential position in the crypto space and leverages it to make profits. “He said Tesla will accept BTC and its prices shot up. He is fully aware of his immensely strong position in influencing cryptocurrency prices and behaves accordingly”, he said.

Crypto analysts also noted a fall of about 0.29% in bitcoin’s volume of large transactions, which indicates the momentum of bitcoin transactions above the value of 100,000 dollars over the past week.  Currently trading at around 44,700 dollars/bitcoin, the market read well into Musk’s tweets of potentially letting go of his bitcoin investments and efforts to improve the efficiency of parody currency dogecoin. Market experts are calling for more responsibility from Musk, given the power his tweets hold over the cryptocurrency world. 

 

 

 
Ira Puranik
first published: May 17, 2021 10:04 pm

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