Tesla CEO Ilon Musk opened another discussion on Twitter in which he explained to his readers why Tesla stopped accepting bitcoin and what he thinks Dogecoin should be to become the currency of the world.
Elon Musk, in the past an ardent supporter of bitcoin, has changed his point of view, and informed the public about the shortcomings of the first cryptocurrency. Musk questioned the decentralized nature of the currency, and recalled the recent drop in hash rate, which occurred due to the power outage in China.
It happened on April 10, when a huge number of mining farms in China temporarily failed, blockchain transactions became slower, and the BTC exchange rate fell by 10% because of it.
“Bitcoin is actually very centralized, and the vast majority is controlled by a handful of large mining companies,” wrote Elon Musk, responding to a tweet claiming Dogecoin was highly centralized. “The only coal mine in Xinjiang flooded, nearly killing miners, and the bitcoin network’s hashing rate is down 35%. Does that sound ‘decentralized’ to you?” he added.
These two months were very dynamic for the first cryptocurrency. Bitcoin rose to its high of $64829 in April, but after numerous speeches by the billionaire, it had already fallen to $42000, and in just one week the value of bitcoin fell by 20%.
Much attention was drawn to Musk’s response on the SNL show when he was asked to comment on a tweet that said investors would bite their nails when Musk sold his bitcoin assets in the next quarter. Elon Musk responded with many words : “No doubt about it.” Musk later clarified that Tesla has no plans to sell bitcoin, but BTC has already managed to fall more than 10% in the meantime.
Last week, the billionaire announced that Tesla will stop accepting bitcoin as a form of payment because bitcoin mining is energy-intensive and therefore bad for the environment. Tesla will only consider cryptocurrencies that are more than 100 times greener than bitcoins.
Dogecoin is more environmentally friendly than bitcoin because, unlike bitcoin, it has no coin issue limit, so Dogecoin mining is not as energy intensive. This also makes the currency more convenient for replacing fiat money, because in the long run the value of one coin will not rise much.
Bitcoin, on the other hand, is limited to 21 million coins, which creates an organic scarcity like gold or diamonds. There are fewer of these precious metals than there are people who want to buy them, so their price will only go up, just like bitcoin.
Dogecoin does not have this property, so Musk sees it as the future of cryptocurrency. But the currency is not perfect, the Tesla owner agrees that Dogecoin needs to speed up block creation time by 10 times, increase block size by 10 times and reduce fees by 100 times. Then it will easily replace bitcoin. Such statements attract the attention of investors, which positively affects the currency rate.
At the beginning of last month Dogecoin was worth $0.05, and on May 8 the cryptocurrency reached its peak of $0.72. In just a month and a half, the coin has risen 144 times. Now Doge has fallen to $0.42 and most experts agree that the currency will continue to show healthy growth.
Bitexfin analysts believe Dogecoin has good potential, but is unlikely to replace fiat money, or overtake bitcoin in market capitalization. Musk’s statements on the Internet are not so much helping Dogecoin’s reputation as they are hurting Tesla’s; the company’s shares fell in value by almost 15%. Still, most of the news about the crypto industry right now is about Dogecoin. Media support strongly strengthens the cryptocurrency’s position in the market.
Musk’s speculation is likely to leave quite a few crypto-enthusiasts without money, but that is the competitive spirit of capitalism that America loves so much. Whatever direction the cryptocurrency market takes, whether it is in the direction of strengthening Doge, bitcoin or some third option, one thing is certain – any attention from big investors to the crypto industry is good for its development.
