Elon Musk, Tesla and SpaceX boss, has always backed Dogecoin, a cryptocurrency based on memes. A couple of months back he revealed he had invested in Dogecoin besides Bitcoin and Ether.
A former fan of Bitcoin, Musk says that Dogecoin has an advantage over Bitcoin and other cryptocurrencies and believes it to be the most promising cryptocurrency for trading.
Bitcoin transactions have a lower transaction value and an increased cost per transaction. It is appropriate as a value store, at least on a spatial level. Musk, however, said that Bitcoin is fundamentally not a good replacement for transactional currency.
The billionaire said that despite its origin as a prank coin, Dogecoin is better suited for transactions. He believes that Dogecoin’s gross transactions have a much higher potential than Bitcoin.
While proponents of Bitcoin agree that the asset is a store of value, they also claim that it is tailored to be a useful peer-to-peer financial mechanism that can be used for transactions. The supporters give the example of El Salvador that has legally adopted Bitcoin as a medium of financial transaction.
While Musk doesn’t hate fiat currency, he said cryptocurrencies have more benefits.
The fiat currency gets diluted according to the ruling government and with this dilution, it ends up being a destructive tax on people, especially for those who possess significant cash savings, Musk said.
Financial experts, on the other hand, warn that cryptocurrency is volatile, dangerous, and a hypothetical investment. They caution that one could invest in crypto when they can afford to lose.
Musk also said that while Dogecoin may be inflationary, it has a definitive number, unlike Bitcoin. According to him, it motivates individuals to spend rather than hoard as a stock of value. He recently became the world’s wealthiest individual replacing Jeff Bezos, the founder of Amazon.