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.
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.
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.
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(Edited by : Thomas Abraham)