Elon Musk and Crypto

1. Real-time speculation. Crypto's volatility comes from its ambiguity. You can make a handful of transactions with Bitcoin, but we still don't have a universal practical application to anchor this type of money in our daily lives. When the Tesla CEO says people can buy Teslas with Bitcoin, that's a huge step toward a practical, tangible exchange. When he later says Tesla won't accept Bitcoin, it feels like a step backwards even though the changes hadn't really been implemented yet. I think we can still expect to see a lot of financial growing pains with crypto, so no one should be surprised by giant fluctuations in price as big announcements get made.

2. Environmental impact. In abandoning his plans to accept virtual coins for cars, Musk cited the fact that Bitcoin mining isn't particularly eco-friendly. If you hadn't heard, the super computers mining coins through complex mathematical equations use a ton of energy. It's hard to compare the environmental impact of Bitcoin mining versus powering a large banking building, but the energy consumption is definitely substantial. People have known about this for a while and there are some efforts to use cleaner power sources, but that doesn't change the fact that when someone with a big platform makes a statement about this issue, the markets will react.

3. Information overload. This all comes down to a bigger investing issue that we're grappling with more and more. Social media reaches every corner of the globe; a popular figure saying something important on Twitter or Facebook or TikTok means we're all going to hear about it. Like stocks, crypto investing is reactionary; so depending on who's doing the talking and what they're saying, the financial impact can be extraordinary. People talk about whether or not this is market manipulation, but it's hard to view it as anything other than freedom of speech. The internet has always been a hard thing to regulate, and this is just another version of that struggle.