Why Bitcoin Hasn’t Gained Traction as a Form of Payment

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Want to buy your next car with bitcoin? What about your next cup of coffee?

Elon Musk, a longtime advocate for bitcoin, will soon give Tesla Inc.’s customers the chance to buy the company’s electric vehicles using the digital currency. The news—along with Tesla’s move to acquire $1.5 billion of the cryptocurrency for its corporate treasury—sent the price of bitcoin up 25% from Sunday to a new intraday record of $48,226 on Tuesday.

For bitcoin bulls, the announcement was the latest sign of validation for the burgeoning digital currency.

Despite making inroads with investors, bitcoin has been slow to take off as a form of payment. It was originally created in 2008 to operate like an electronic version of cash, allowing two people anywhere in the world to digitally exchange value as if they were physically exchanging cash.

In practice, it hasn’t worked that way. The cost of using bitcoin, and its volatility, have made normal, day-to-day transactions impractical. That isn’t likely to change with Tesla’s acceptance of the currency.

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