With Elon Musk taking a seat on Twitter’s board, the joke might be over for crypto favorite memecoin.
Dogecoin, which uses the picture of a Shiba Inu dog popular with meme generators, owes its existence as anything other than a niche cryptocurrency to Musk, who started tweeting pro-dogecoin jokes last year to his vast Twitter fan base.
But with the Tesla and SpaceX founder’s purchase of 9.2% of Twitter and ascendance to the social media giant’s board of directors, there’s the real possibility that it could pick up an actual utility as a payments token to support its nearly $20 billion market capitalization.
Just as possible is that its champion, who has run afoul of the Securities and Exchange Commission (SEC) for joke stock price tweets, could be silenced.
The problem is simple: Musk owns dogecoin, which goes by DOGE on exchanges, and his tweets tend to cause huge price bumps (and the occasional crash). They do the same for bitcoin, which move by billions of dollars in value in response to his social media updates.
With the Twitter board seat bringing renewed — and likely unfriendly — attention from the SEC, dogecoin might have to stand on its own four legs, which are mighty shaky.
Aside from the 10% price bump from the Twitter announcement, the longer-term potential boost depends on how much he really likes dogecoin. Under now-departed CEO Jack Dorsey, an intense bitcoin supporter, Twitter last year allowed users to tip with BTC. Recently, the social media giant announced plans to allow owners of NFT collectables like CryptoPunks and Bored Ape Yacht Club tokens to use them as their profile pictures, complete with a special border verifying ownership.
But Dorsey was a bitcoin maximalist, meaning he would only allow BTC into Twitter’s tent. If Musk sways the board into allowing dogecoin tipping — and potentially payments down the road — it could give the widely derided memecoin some bite to add to its outsize bark.
Who’s Laughing Now?
Dogecoin began as a Twitter joke — literally. Its Australian co-creator, Jackson Palmer, has said it was built in a couple of hours after an American software engineer named Billy Palmer replied that they should make it happen.
“So basically what happened was that I kind of came up with a name and idea and then we brainstormed over the next few days,” Palmer said. “We were, like, how do we make this as ridiculous as possible? So how do we make it as undesirable as a cryptocurrency so that it doesn’t become serious?”
For example, miners receive a random block reward of zero to 1 million DOGE for verifying a block of transactions and writing them onto the blockchain.
Currently the 12th-largest cryptocurrency with a market cap of $20 billion, dogecoin raised a chuckle and a small but intense following in 2013, with a price of a few thousandths of a cent until January 2021.
Then Musk joined in, with tweets like this “Lion King”-themed meme of the scene when Rafiki presents baby Simba to the crowd — with Musk’s own face superimposed on Rafiki and a dogecoin over Simba’s.
ur welcome pic.twitter.com/e2KF57KLxb
— Elon Musk (@elonmusk) February 4, 2021
The dogecoin price chart looks like a vast plain with the sudden eruption of mountains in January 2021.
Since then, DOGE has gotten more credibility as a payments coin, used by crypto payments processor BitPay, accepted at AMC theaters, and, of course, usable for buying Tesla merchandise (but not cars).
The joke was also on both Palmers (no relation), neither of whom kept their initial dogecoin holdings.
No Laughing Matter
Musk, normally a prolific tweeter, posted only twice on Monday (April 4), when his stake was disclosed, saying “Oh hi lol” and posting a poll asking if Twitter should add an edit button. On Tuesday (April 5), he reposted a SpaceX tweet — and nothing since.
That suggests the boards of SpaceX and Twitter have clamped down hard — especially after he again ran afoul of the SEC by failing to disclose his months-long Twitter purchase within the required 10 days, CNBC noted.
After all, Musk’s feud with the SEC has run for years, ever since a September 2018 joke on Twitter that he had secured funding to take Tesla private at a marijuana-themed $420 a share. Regulators fined Musk and the electric car maker $20 million each, forced him to step down temporarily as chairman and mandated company oversight of any business-related tweets.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
The SEC has since accused him of violating that last provision several times.
As for dogecoin, the problem is that Musk owns an unspecified amount of DOGE himself and famously tweeted in February 2021 that he had bought some for his infant son, so that he can be a “toddler hodler” — playing on the crypto industry meme phrase “hodl,” meaning refusing to sell bitcoins (and other tokens) in the belief that the price will skyrocket.
Bought some Dogecoin for lil X, so he can be a toddler hodler
— Elon Musk (@elonmusk) February 10, 2021
That Feb. 10, 2021 toddler hodler tweet caused dogecoin’s price to spike 13%.
As for the legality of his crypto tweets, the well-known crypto detractor and economist Nouriel Roubini told CoinDesk that Musk had engaged in market manipulation with personal tweets that jacked up the price of BTC before announcing in February 2021 that Tesla had bought $1.5 billion worth of bitcoin — which caused another price spike.
“The SEC should be looking to people that have a market impact that manipulate the price of assets,” Roubini opined on CoinDesk TV in February last year. “That’s also criminal behavior.”