Musk has been a long-time champion of dogecoin, having adopted it as a form of payment in Tesla’s merchandise store. There has also been speculation that the billionaire CEO could use dogecoin as a payments option on Twitter following his acquisition of the social-media platform.
Dogecoin has gained 19% so far this year, and its rise comes as the broader crypto market recovers from the fallout of the collapse of FTX. So far in 2023, two of the world’s largest tokens, bitcoin and ethereum have risen 30% and 18%, respectively. In January, the total value of the crypto market topped $1 trillion for the first time since the collapse of FTX. It’s fallen below that mark over the past week as digital-asset exchange Kraken’s troubles with regulators weighed on market sentiment and investors awaited the latest US inflation data.
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Elon Musk’s fascination with Dogecoin began in early 2021 when he Tweeted about the meme coin. This caused the market capitalisation and value of DOGE to rapidly increase. Musk’s advocation for the currency has likely caused DOGE to become one of the most prominent cryptocurrencies in the metaverse, as before this, people viewed it as a coin with little utility or value.
In 2013, Dogecoin was founded as a fun alternative to existing cryptocurrencies like Bitcoin. The 2013 ‘doge’ meme inspired the name of the network and Shiba Inu logo. Unlike Bitcoin, which was supposed to be limited, Dogecoin is designed to be numerous, with 10,000 new coins being mined every minute and no cap on supply.
“The transaction value of Bitcoin is low and the cost per transaction is high. At least at a space level, it is suitable as a store of value. But fundamentally, Bitcoin is not a good substitute for transactional currency,” adding that even though Dogecoin was created as a silly joke, it is better suited for transactions. “The total transaction flow that you do with Dogecoin is transactions per day has much higher potential than Bitcoin.”
The Tesla CEO is a staunch supporter of Dogecoin. This became clear after a recent Twitter spat between Musk and Binance CEO Changpeng Zhao. The billionaire investor and founder of SpaceX raised concerns on behalf of Dogecoin holders regarding the recent DOGE problem at cryptocurrency exchange Binance. The issue resulted in numerous erroneous dogecoin transactions with some users reporting that their accounts were frozen.
Musk asked Zhao (CZ), “What’s going on with your Doge customers?” adding that, it “Sounds shady.” Meanwhile, Musk had also endorsed Dogecoin, over Ethereum saying that DOGE can be used to make Decentralised Finance (DeFi) more accessible to everyone. DeFi systems, is a blockchain-based form of finance that does not rely on financial intermediaries such as brokerages, exchanges, or any banks to offer services. Such platforms allow users to keep custody of their Ethereum-based crypto assets.