Key takeaways:
- Elon Musk stated that Tesla would start accepting Dogecoin as a payment method for various merchandise
- The decision to accept DOGE came after Musk praised the world’s largest memecoin as a better transactional currency than Bitcoin in a Time interview.
- Musk was selected as the Time magazine’s Person of the Year
The price of Dogecoin (DOGE) shot up by more than 30% after Elon Musk Tweeted about the electric car manufacturer’s intent on making some of the merchandise purchasable with DOGE.
Elon Musk called DOGE a better payment method than Bitcoin in a recent TIME interview
Time magazine’s renowned yearly Person of the Year annual issue came out yesterday and featured none other than Tesla and SpaceX CEO Elon Musk on the cover. Time editor-in-chief and CEO Edward Felsenthal said that Musk, as the world’s richest person and the owner of a vast business empire, is emblematic of a “massive shift” happening in modern society, with the power of traditional institutions and governmental authority eroding in favor of individuals.
In a TIME magazine person of the year interview, Musk shared his views on a variety of topics, among which was also the topic of digital currencies and their role as widely used payment methods.
After briefly mentioning his history with PayPal and identifying key parameters of the discussion, Musk said, “Fundamentally, Bitcoin is not a good substitute for transactional currency.” The tech billionaire finds Bitcoin a suitable store of value asset, at least at its base level (meaning no Layer 2 solutions, such as Lightning Network), but believes that it does an adequate job as a method for everyday transactions.
On the other hand, Musk believes that Dogecoin could be one of the better candidates to facilitate the immense transactional flow of digital transactions taking place each day.
“Even though it was created as a silly joke, Dogecoin is better suited for transactions.”
When challenged by the interviewer to explain why he thinks Dogecoin is better than Bitcoin when it comes to transactions, Musk explained that Dogecoin’s total transaction flow has a much higher potential than Bitcoin. Although DOGE is slightly inflationary, its relative inflation is expected to decrease over time, since its inflation rate is not relative but instead a fixed, absolute number. In short, if the price of DOGE increases, the relative inflation decreases. Musk believes that these characteristics make DOGE an excellent payment method since it incentivizes people to spend and not hoard it as a store of value.
A day after the Time interview was published, Elon Musk tweeted about making Dogecoin an accepted payment method for Tesla merchandise.
The market responded with great enthusiasm – as investors flocked to DOGE in large numbers, the price of the world’s largest memecoin shot up by over 30% in a single hour before retracing by over 10%. At the time of this writing, DOGE is changing hands at $0.1911, up over 20% in the last 24 hours.
