Bitcoin, the global digital currency which has hit mainstream consciousness in recent months thanks to its use on clandestine, black-market, hidden Internet sites like Silk Road, has an unnecessarily unfair reputation for being only good for drug-dealers, hit men and ne’er-do-wells.
But on Wednesday this week, the decentralised, peer-to-peer, cryptographically secure virtual currency was used to buy a used Tesla Model S from Lamborghini Newport Beach in Costa Mesa, California.
Electronic currency for an electronic car.
The car in question, a white Tesla Model S P85 with striking grey 21 inch turbine wheels, was sold for 91.4 Bitcoins, a price which at the time translated to $103,000, to a customer in Florida. In keeping with the usual veil of secrecy and intrigue which surrounds Bitcoin, the Lamborghini Newport Beach has said the buyer has asked to remain anonymous.
Bitcoin was invented many years ago — supposedly by an individual named Satoshi Nakamato (although this is likely a pseudonym) — and relies on peer-to-peer networking and shared computing power to cryptographically create, secure and verify monitory transitions between two independent parties. Because of the way it works, Bitcoin gives its users full control of their transitions, meaning it’s impossible for merchants to add extra charges at the last minute. It’s also completely anonymous if wanted, very secure, and doesn’t rely on a single organisation or bank for its existence.
Just like any other currency, Bitcoin is traded against physical currency, and its value can rise and fall over time. While the value of Bitcoin as a currency remained fairly low from its creation in 2009 until 2011, when its value rose rapidly from $0.30 to $32, before falling back to $2, it has slowly risen in value over the past two years and currently stands somewhere around $700.
But that’s almost a day after China banned its banks, financial institutions and businesses from handling Bitcoin trade, an edict which slashed almost $400 in a single morning.
“We’re a dealership — we’re not in the business of doing any speculation,” Cedric Davy, marketing director for the dealership, told Bloomberg. “For us, it was just important that the money could be transferred into U.S. dollars.”
With the transition cleared yesterday, the car is already on its way to its new Florida home, but Davy says that he’s already had phone calls from other dealerships wanting to know how to accept and process Bitcoin payments.
“Some people want to get out before they get burnt, I feel, so this is probably why we’re going to see some sales in the very near future” of more cars using Bitcoins, Davy said, but added that “It doesn’t seem like it’s hit the car world as much as it hit probably the finance or tech world.”
Did the customer pay too much for a used Model S? That’s a tough call, because the value of Bitcoins fluctuates pretty wildly throughout the day. When the mysterious customer purchased the Model S for 91.4 Bitcoins, it could have been worth less month than it was when the dealer converted that money to U.S. dollars using an online currency exchange service.
At the time we’re writing it, those same 91.4 Bitcoins are worth just $63,020, a complete bargain for anyone wanting a Model S on the cheap. And that makes it very difficult — and unlikely — that we’ll ever see cars advertised with a Bitcoin price, even if the dealer accepts it. In other words, buying and selling in Bitcoins is a little like dabbling in the stock market. You might come out a winner, or you might lose $40,000 of value in an instant.
Nevertheless, we think this story is certainly different. What about you?
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