Aliens, Martian colonies, human clones: In the Full Send podcast, tech guru Elon Musk talked about political, unearthly, underground – and his favorite cryptocurrency: Dogecoin. The memecoin with the cute Shiba-Inu dog face is not only suitable for payments. It is also better suited for this than Bitcoin, says the Tesla boss.
Dogecoin or Bitcoin: An Unequal Showdown
Dogecoin manages 33 transactions per second, compared to seven for Bitcoin. Thus, Musk is right when he claims that “the actual transaction throughput of Doge is much higher than that of Bitcoin”. Also, the fact that the Dogecoin blockchain produces new blocks every 60 seconds and not every ten minutes like Bitcoin, the Tesla BOSS cites as evidence of a more suitable means of payment.
In addition, there is the different supply quantity. With Bitcoin, the supply of new coins decreases continuously due to the halving that takes place every 210,000 blocks and thus about every four years. With its circulation volume limited to 21 million units, the cryptocurrency is thus a deflationary asset. Whether Bitcoin is suitable as a means of payment or not much more as a store of value is therefore a much debated question.
Dogecoin, on the other hand, is highly inflationary. For each new block, the supply amount increases by 10,000 coins. 132 Billion Dogecoin are already in circulation. A circumstance that, according to Musk, is also “good for use as a transaction currency”.
The “Musk effect”
He provides the proof of this himself: since January, there is merch from Tesla also against Dogecoin. SpaceX followed suit later. Musk has also announced dogecoin acceptance for the underground tunnel system of his Boring Company.
On the other hand, he maintains an on-off relationship with Bitcoin. In January 2021, Tesla bought Bitcoin for $ 1.5 billion, but a little later sold a first part of it profitably. According to the latest quarterly figures, Tesla has now also separated from 75 percent of the remaining Bitcoin. The criticism of the Bitcoin environmental balance seemed a grateful pretext.
With various tweets, Musk, on the other hand, repeatedly causes price jumps in the crypto market – especially with Dogecoin. A study has examined the effect of crypto-related tweets by Elon Musk on the price of Dogecoin. The result: “For all 47 events, there is a price jump of about three percent after the announcement of the information”.
Course impact of tweets / Source: Lennart Ante
The ”Musk effect” is cancelling out with Bitcoin. However, according to the investigation, Dogecoin had “significant positive abnormal returns and trading volumes after such events”.
According to them, Dogecoin “shows an immediate and very large price spike, followed by another 45-minute price increase”. After that, ”the returns fall back to the level of the first price peak”. The study thus attests a ”positive price effect that lasts for at least two hours”.
But podcasts and Youtube videos don’t seem to have such a wide viral reach. The Dogecoin price has barely reacted to Musk’s recent statements.