Elon Musk, the Tesla billionaire behind the "comic story" that helped dogecoin become one of the most popular cryptocurrencies this year, and explains why he supports the meme coin over other cryptocurrencies such as bitcoin, ethereum, and others.
The bitcoin price has plummeted over the past month, falling by around 25% and hitting the value of Ethereum and other major cryptocurrencies — together with the meme-based dogecoin.
Musk, talking to Time journal after being named Time's adult of the year, said dogecoin can be used for transactions more effectively than bitcoin "and has a lot more potential."
What Elon Musk explains about Dogecoin?
"Bitcoin illustrates this well and is the best mover on this," Musk talked about in a video shared to Twitter via Time.
"Bitcoin has a small transaction volume and has a high transaction fee. While bitcoin is probably suitable as a store of value, in essence, it is not a very good substitute for conventional money. Although it was created as a silly comic story, dogecoin is more desirable when used for transactions," Musk said, explaining, "all transactions are circulating so that its transaction rate, measured in daily transactions, is significantly higher [than bitcoin] and it has a whole lot better expertise."
Musk, who also informed the journal that he does not believe dogecoin, bitcoin, ethereum, or every other cryptocurrency will completely replace fiat currencies.
Musk tweeted that "Tesla will sell some merchandise with doge to observe how well it does," following the example set by fellow dogecoin enthusiast and expertise investor “Mark Cuban” who brought dogecoin to assist for NBA group merchandise for the Dallas Mavericks.
What does Elon Musk Think About Dogecoin and why Would this Matter?
Over the last year, the bitcoin cost has skyrocketed due to speculation that bitcoin will provide protection against the inflation created by using massive stimulus measures like executive Covid-19.
Earlier this year, the famous macro investor “Paul Tudor Jones” gained attention for saying that bitcoin has become the "quickest horse to beat inflation."
Millennials, Musk has stated that he thinks dogecoin's inflationary nature might support it dominating cryptocurrency payments.
"Dogecoin is somewhat inflationary, but the inflationary number is a fixed amount as opposed to a percentage," Musk told Time this week. "Over time, the ability to expand is significantly diminished. This is a good thing because it encourages Americans to spend their money rather than hoard it as a store of value.
Musk's extensive experience with payments makes his capability of understanding the fund's system more valuable than most.
Since I performed a major role in growing PayPal, I may wax poetic about the nature of money for hours," he mentioned. "If you comprehend the money device in terms of how it really works, how it really works, and there aren't many people who understand it better than me.
Bitcoin's price surge, from less than $20,000 per bitcoin a year ago to a peak of almost $70,000 by the end of the month, helped the entire crypto market surge to a combined cost of around $3 trillion.
In spite of this, Musk has denied that his tweets are a factor in bitcoin and crypto expense swings even though his tweets have many times boosted the dogecoin price in recent years, claiming Tesla would stop accepting bitcoin payments as a result of issues related to its environmental impact increasing bitcoin costs by 15%.
"Markets fluctuate all the time without any apparent reason," Musk explained. "So my statements, how are they different from random actions of the stock in any case? I doubt it."
The Dogecoin price has dropped almost 80% since its peak last year, despite increasing, by a staggering 5,000% by December 2020 — leaving bitcoin, ethereum, and the vast majority of cryptocurrencies behind.
Ethereum, the second-largest cryptocurrency after bitcoin, has rocketed 500% over the year, exceeding bitcoin's rally amid a surge of interest in ethereum-based non-fungible tokens (NFTs) and decentralized finance (Defi).
Many ethereum competitors have also soared amid speculation that ethereum might lose market share to them.
Dogecoin, which has received support from the likes of Musk and diverse high-profile financial institutions, jumped 5,000% last year - whatever the case, the dogecoin is now down more than 80% since its peak in may and Musk's highly anticipated look on Comedy Central on Saturday night are both live.
Since then, Musk has urged dogecoin developers to enhance the meme-based cryptocurrency with faster transaction instances and decrease prices with a view to "beat bitcoin palms down."
Additionally, the bitcoin and crypto market remains highly volatile and fell drastically in recent weeks, wiping almost $1 trillion worth of cost out of the mixed market.