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ANALYSIS

Elon Musk’s Complex Relationship With Crypto


Last week, technology entrepreneur and Tesla CEO Elon Musk said that Bitcoin’s (BTC) structure is “quite brilliant,” adding that digital currency is “a far better way to transfer value than pieces of paper.”

Notably, that was perhaps the most straightforward comment on cryptocurrencies and blockchain from Musk so far, as he normally tends to avoid the topic. However, there have been a few encounters between the tech mogul and crypto to date — after all, given Musk’s previous experience at PayPal, he couldn’t pass up the innovative digital payment method.

Here’s how his relationship with crypto has evolved since 2014, when he made his first public comments about Bitcoin.

October, 2014: Elon Musk argues that Bitcoin will be mostly used for illegal transactions

On Oct. 8, 2014, Musk was interviewed by Walter Isaacson on stage at Vanity Fair’s New Establishment Summit. At some point, Isaacson asked the Tesla CEO whether he thought that Bitcoin would be disruptive to fiat currencies, to which he replied:

“I think Bitcoin is probably a good thing. I think it’s primarily going to be a means of doing illegal transactions. But that’s not necessarily entirely bad. You know, some things maybe shouldn’t be illegal.”

Musk then added:

“It will be useful for legal and illegal transactions. Otherwise, it would have no value as a use for illegal transactions, because you have to have a legal-to-illegal bridge.”

The entrepreneur followed his comments by disclosing that he didn’t own any BTC at the time.

November 2017: Musk clarifies he is not Satoshi, says he owns “part of BTC”

On Nov. 22, Sahil Gupta, who is allegedly a former intern at SpaceX, wrote a Medium entry speculating that Musk could be Satoshi Nakamoto, the original creator of Bitcoin.

Specifically, Gupta emphasized Musk’s background in economics, experience in production-level software and history of innovation to postulate that Musk could have invented Bitcoin.

The theory was very soon disproved by Musk himself, who tweeted that Gupta’s suggestion “is not true.” The SpaceX CEO added, however, that he now had “part of BTC” a friend sent him a few years back.  

December 2017: Musk says that he has never heard about Bitcoin

On Dec. 22, Neeraj K. Agrawal, an employee of nonprofit crypto research institution CoinCenter, took to Twitter to ask Musk whether he created Bitcoin, to which the tech tycoon replied that he “never heard of it,” linking a satirical article on The Onion titled “Bitcoin Plunge Reveals Possible Vulnerabilities In Crazy Imaginary Internet Money.”

January 2018: Musk references crypto hype to promote a flamethrower  

In January 2018, when major altcoins were enjoying their all-time highs following the Bitcoin’s record-breaking ascent, Musk used the consequent crypto hype to promote a flamethrower released by his tunnel construction firm, the Boring Company:

“The flamethrower is sentient, its safe word is ‘cryptocurrency’ and it comes with a free blockchain.”

February 2018: Musk comments on Twitter crypto scams, reveals how much BTC he is holding

In February last year, the SpaceX CEO addressed a growing Twitter trend, whereas scammers would pose as famous figures like Musk or Donald Trump and trick users into sending them cryptocurrency.

Replying to one of the tweets asking why such spamming was so widespread, Musk claimed that he had already contacted Twitter CEO Jack Dorsey regarding this issue.

“I literally own zero cryptocurrency, apart from .25 BTC that a friend sent me many years ago,” he also disclosed, which seems to check out with the aforementioned comment about his crypto holdings.

At the time, his BTC tokens amounted to around $2,531. As of now, that number would be even more modest, being set at around the $975 mark.

Interestingly, just few days prior to Musk’s tweet, Tesla’s Amazon Web Service’s (AWS) software container was hacked by cryptojackers. Specifically, fraudsters accessed Tesla’s AWS access credentials by penetrating a nonpassword-protected Kubernetes software container. Then, they used that container to mine Bitcoin for an unknown amount of time. The attack was well coordinated, as the hackers set up their own mining pool software, then connected the malicious script to an “unlisted” endpoint, and kept their CPU usage at a low level to prevent being spotted.

Prior to that, in December 2017, an owner of a Tesla S electric car reported that he had been mining Bitcoin with his car’s supercharger, placing a mining rig in the trunk.

March 2018: Musk is spotted holding a book about cryptocurrencies

In March, a photo of Musk holding a book titled “Cryptocurrencies Simply Explained” surfaced online. The picture was taken at South by Southwest festival, where the entrepreneur allegedly took one item from the crowd to sign. According to the book’s author, Julian Hosp, Musk kept the book.

Source: photo by Ryan Chylinski on Twitter

October 2018: Musk jokes about selling Bitcoin, gets banned from Twitter

On Oct. 22, Tesla CEO provoked some rumors about his company’s involvement with cryptocurrencies by posting a tweet that said “wanna buy Bitcoin?” The image attached to the post was taken from the Cryptocurrency Girls website, which depicts major cryptocurrencies as anime characters.

Later, Musk confirmed it was a gag. “I was just joking,” he said during a recent podcast hosted by advisory services firm ARK Invest. “Bitcoin and Ethereum scammers were so rampant on Twitter, I decided to join in and I said at one point wanna buy some Bitcoin?”

After the tweet, the entrepreneur’s account was briefly suspended “because of some automatic rule against selling Bitcoin or something,” as he explained.

November 2018: Fraudsters steal $157,000 worth of crypto after hacking verified Twitter accounts

On Nov. 5, British news agency Telegraph reported that fraudsters stole 120,000 euros (around $157,000), after posing as Musk and promoting a fake cryptocurrency giveaway on Twitter.

Specifically, the hackers broke into Twitter accounts of clothing retailer Matalan and Pathé UK, the British arm of the French filmmaker, and posted messages advertising the giveaway. Since both accounts were verified, the followers were more likely to take their message at face value.

The post claimed that Musk was leaving Tesla and was giving away free Bitcoin via a typical form for Twitter crypto-related scams: The followers were encouraged to send a small amount of Bitcoin to a given wallet address and promised a much larger amount in return.

According to the Telegraph report, more than 300 people had fallen victim to the scam.

February 2019: Musk says that Bitcoin’s structure “is quite brilliant,” adding that there is “some merit to Ethereum as well”

On Feb. 19, ARK Invest published a podcast featuring Musk, who made his stance on cryptocurrencies clearer, and — for the first time since 2014 — made some serious comments on the topic. At first, however, when the interviewer asked Musk to go off-topic and talk about cryptocurrencies, he started to laugh it off. “Crypto? Seriously?” he exclaimed.

Nevertheless, in response to a question about whether Bitcoin will become the only native cryptocurrency of the internet, Musk said:

“I think the Bitcoin structure was quite brilliant. It seems like there’s some merit to Ethereum as well, and maybe some of the others.”

Musk then stressed that “it would not be a good use of Tesla resources to get involved in crypto,” because his company is “trying to accelerate the advance of sustainable energy.” Thus, he pinpointed crypto’s high-energy consumption as one of its disadvantages:

“One of the downsides of crypto is that, computationally, it is quite energy intensive. So there have to be some kind of constraints on the creation of crypto. But it’s very energy intensive to create the incremental Bitcoin at this point.”

As for the pros, Musk noted that he liked cryptocurrencies for their ability to transfer value and bypass currency controls:

“It bypasses currency controls. Paper money is going away, and crypto is a far better way to transfer value than pieces of paper. That’s for sure.”





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