‘Much Higher Potential’ – Elon Musk reveals why he backs Dogecoin on Bitcoin and Ethereum amid huge drop in crypto prices

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Elon Musk, the Tesla TSLA billionaire who helped ‘joke’ rival bitcoin dogecoin become a major cryptocurrency this year, explained exactly why he supports memecoin over bitcoin, ethereum and other cryptocurrencies.

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The price of bitcoin has fallen sharply over the past month, losing around 25% of its value and hitting the price of ethereum and most other major cryptocurrencies, including memes-based dogecoin.

Musk, speaking to Time magazine after being named Time’s Person of the Year 2021, said he believes dogecoin is better suited for transactions than bitcoin and has “much higher potential.”

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Tesla billionaire Elon Musk adopted dogecoin as a pet project this year, even after … [+] he added billions of dollars of bitcoin to Tesla’s balance sheet.

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“Bitcoin is an interesting example and the main driver on this,” Musk said in a video shared on Twitter by Time.

“Bitcoin’s transaction volume is low and the cost per transaction is high. Bitcoin may be suitable as a store of value, but fundamentally, bitcoin is not a good substitute for transactional currency. Even though it has was created as a silly joke, dogecoin is better suited for transactions, “said Musk, explaining,” the total transaction flow you can do with dogecoin, trades per day, is considerably higher [than bitcoin] and it has much higher potential. “

Musk, who also told the magazine that he doesn’t believe dogecoin, bitcoin, ethereum or any other cryptocurrency will completely replace fiat currency, now said via Twitter that “Tesla will make certain products purchasable with doge and see how it goes, ”following in the footsteps of Mark Cuban, another dogecoin supporter and technology investor, who added dogecoin backing to NBA Team Dallas Mavericks merchandise in March.

The price of bitcoin has skyrocketed over the past 12 months as traders and investors bet it will act as an inflation hedge created by the government’s massive Covid-19 stimulus measures. In May 2020, famed macro-investor Paul Tudor Jones made headlines when he revealed that he believed bitcoin to be the “fastest horse to beat inflation.”

However, Musk said he believes the inflationary nature of dogecoin could help it dominate the crypto payments space.

“Dogecoin is slightly inflationary, but this inflationary number is a fixed number as opposed to a percentage,” Musk told Time this week. “So that means that over time its percentage of inflation actually goes down. That’s actually a good thing because it encourages people to spend rather than accumulating it as a store of value.”

Musk also said his background in the payments industry means he understands better than most how the monetary system works.

“I could really talk about the nature of money for hours on end because I played such a big role in the creation of PayPal,” he said. “My understanding of the monetary system at a fundamental level of how it actually works, of its detailed workings, there are very few people who understand it better than I do.”

The massive rise in bitcoin prices, pushing bitcoin from less than $ 20,000 per bitcoin around the same time last year to nearly $ 70,000 last month, has helped the broader crypto market reach a combined value of about $ 3 trillion.

However, Musk has denied that his tweets are a factor in bitcoin and crypto price fluctuations even after his tweets have repeatedly increased the price of dogecoin over the past few years and his message that Tesla will stop trading. accepting bitcoin payments due to concerns about its environmental impact caused the price of bitcoin to drop. by 15%.

“The markets are moving all the time on the basis of nothing as far as I know,” Musk said. “So are the statements I make materially different from the random movements of the stock that might occur anyway?” I do not think so. “

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The price of dogecoin has lost almost 80% of its value since peaking in May of this year but remains on the rise … [+] 5,000% since December 2020, leaving bitcoin, ethereum and most other cryptocurrencies in the dust.

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Ethereum, the second largest cryptocurrency after bitcoin, has climbed 500% over the past 12 months, far outpacing the bitcoin rally amid renewed interest in non-fungible tokens (NFTs) based on Ethereum and decentralized finance (DeFi). Many of Ethereum’s competitors have also skyrocketed as investors bet they could gain market share from Ethereum.

Dogecoin, aided by backing from Musk and other top investors and influencers, has climbed 5,000% in the past year, although the price of dogecoin is now down nearly 80% from its all-time high set in May before Musk’s high-profile appearance on the Saturday Night Live comedy show.

Since then, Musk has called on dogecoin developers to upgrade memes-based cryptocurrency with faster transaction times and lower fees in order to “beat bitcoin hands down.”

The broader bitcoin and crypto market also remains very volatile and has fallen sharply in recent weeks, wiping out nearly $ 1 trillion in value from the combined market.

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