Tesla CEO Elon Musk has been particularly active in a specific tweet thread aboutrecently.
It started when Bitcoin Billionaires author Ben Mezrich said that, in future, he would never turn down getting paid in Bitcoin—a sentiment that Musk agreed with. But the discussion has continued, and become even more interesting.
While Musk’s tweet received a lot of replies, it was a comment by Parallax Digital CEO Robert Breedlove that got his attention.
Breedlove, who is a bit of a Bitcoin wordsmith, wrote that, “Money is simply a tool for moving value across spacetime. Gold was great for moving value across time, but not space. Fiat currency is great for moving value across space, but not time. Bitcoin is optimized for moving value across both space and time.”
And here, Musk disagreed. He argued, “The thing we call money is just an information system for labor allocation. What actually matters is making goods & providing services. We should look at currencies from an information theory standpoint. Whichever has least error & latency will win.”
Musk has held this position for some time. In January 2020, on the Third Row Tesla Podcast, he explained that Bitcoin had some use for illegal payments on the dark web but that it wouldn’t become the main currency of the future.
“Where I see crypto as is effectively a replacement for cash. But not as a replacement for a primary—I do not see crypto being the primary database,” he said, at the time.
Payment mechanism or store of value?
But this comes back to the payments/store of value debate that still rages on today. This is whether Bitcoin should be used for everyday payments, like buying coffee, or whether it’s more of a hedge against inflation—in this sense, favorably referred to as digital gold.
Dan Held, head of growth at crypto exchange Kraken, explained to Decrypt last month what it means to call Bitcoin “digital gold”. “I don’t need to store my coffee transaction in an immutable ledger. I don’t give a shit if they try to censor my coffee transaction. Go ahead, it’s fine, I'll figure out another way,” he said, before explaining that being able to store value away from inflation was a much bigger mission—that justifies all the expense of maintaining the Bitcoin blockchain.
And this is roughly what another commentator told Musk on the Twitter thread. “Granted; it has latency and transaction costs. But if used as a store of value and transmission of large values, it is massively efficient. Currencies already work as currencies; Bitcoin need not replace them. Rather, $btc is a patch to fix reserve banks inflationary insanity.” wrote the Twitter user, known as “Cerberus.”
A statement that Musk swiftly understood. “Good point,” he replied.