If there is one name that every crypto investor in the world is well aware of, it is Elon Musk. Elon Musk, the founder of SpaceX and Tesla, is constantly on the headlines of various news in the crypto world because of his sporadic actions and tweets. He might be the only person on the planet who has the ability to crash the crypto market or make its value rise at his own will without facing much repercussions.
Elon Musk has inspired a legion of new investors to invest in the cryptocurrency market. If you too wish to be a part of these investors, you can click here to do so. That being said, Elon Musk’s actions constantly get him into trouble as they get him into the spotlight. His out-of-the-blue tweets have caused millions of investors around the world to lose their hard earned money that they invested in cryptocurrency.
However, if you look at his actions from a purely educational perspective, you will realize that Elon Musk can actually teach us a lot of things about the cryptocurrency market. Experts believe that observing Elon Musk’s actions and words and the effects they have on the market can tell us a lot about how it works and what factors influence it.
To explore further on that exact topic, we are writing this article to list several things we can learn about cryptocurrency from Tesla’s famous founder. Read the article till the end so that you don’t end up missing out on crucial details.
Cryptocurrency is extremely volatile
Many investors, especially the newer ones, believe that the volatility of cryptocurrencies is extremely exaggerated and doesn’t actually exist in the market – at least not on the scale as people make it out to be. However, this hypothesis can be easily disproved with the help of a few tweets – the ones made by Elon Musk just a few months ago.
Just at the start of 2021, Tesla announced that they will be purchasing several bitcoins to facilitate their transactions for purchasing their cars. Following the event of that announcement, which was officially made by Elon Musk on Twitter, bitcoin prices dramatically went high and reached their highest prices till date which was of the $64k mark.
What’s more interesting, however, is that just a few weeks later Tesla renounced their decision of using Bitcoin out of growing concern for the environment. This, too, was stated in a tweet by Elon Musk. And just like before, the market price changed dramatically as soon as the tweet was up.
The only difference was that instead of going up this time, the prices of bitcoin crashed dramatically. It reached an all time low since the start of the 2021 and still hasn’t fully developed from the crash. This just goes on to show how volatile the cryptocurrency market is and how much effect a simple tweet can have on the market.
Major cryptocurrencies are harmful for the environment
Cryptocurrencies are mainly classified into two types – Proof-of-work (PoW) and proof-of-stake (PoS). The prior of these types require mining to function and are seen in the most major cryptocurrencies of the world such as Bitcoin and Ethereum.
On the other hand, the PoS protocol works digitally without ever needing mining to function or to gain access to their cryptocurrency. This is mostly used in newer cryptocurrencies and altcoins such as Cardano and Ripple. While PoS protocols are completely safe and cause no damage to the environment, PoW protocols consume physical power to run mining rigs at a stable rate.
If you want to earn a respectable amount of money via mining, you require giant mining rigs that consume enormous amounts of power. According to recent data, the world’s total Bitcoin operations consume as much energy as the entire nation of Sweden. Since this energy is coming directly from countries that use coal and fossil fuels as energy resources, Bitcoin indirectly is massively hurting the environment.
However, the truth of the matter is that this fact was relatively unknown until Elon Musk brought it to everyone’s attention by cancelling his decision to use bitcoin for Tesla because of rising environmental concerns. This has given a wake up call to a lot of miners and crypto investors around the world and forced them to rethink if their investing or mining practices are morally right.
Many countries have started banning heavy mining operations across the world in order to reduce the environmental harm caused by them. While this has consequently caused Bitcoin’s prices to drop, it has also forced miners to seek renewable sources of energy for their mining operations.
The crypto world is still relatively young
The crypto market is the only market in the world that can be influenced dramatically from the littlest of things such as tweets, articles or even baseless rumours. Elon Musk has only reinforced this belief time and time again with his continuous array of tweets that he keeps dishing out.
In the most recent turn of events, he made several cryptocurrencies, like Shiba Inu Coin and Dogecoin, dramatically rise in value by almost 150 to 400%. He didn’t have to do any special efforts to bring this change, he just made some pop culture references and jokes and bam went up the value.
If he were to do the same thing with the stock market, however, there would literally be minimal difference in the stock’s inherent value. This just goes on to show the clear difference of age and maturity the stock market has that the cryptocurrency market is yet to achieve.
On the other hand, it’s this very volatility that has attracted millions of investors around the world to invest in it. Whatever the case may be, Elon Musk’s tweets have made it well known to the rest of the world that the cryptocurrency market is still extremely young and will need a considerable amount of time to stabilize. This has detracted potential investors from investing in the crypto market after knowing how unstable it is.
There are several things that Elon Musk can teach us about cryptocurrency – whether we use it to learn or not is completely up to us. We hope this article was insightful for you and if it was, please consider following our website for regular updates as it will help us out immensely.