Elon Musk is an avid supporter of the cryptocurrency Dogecoin. He has promoted the meme-coin multiple times, causing the coin to rise in value. The tech billionaire is also a self-proclaimed ‘Doge father’. However, on Thursday, a Dogecoin investor sued Musk for $258 billion accusing him of running a pyramid scheme to support the cryptocurrency.
Keith Johnson accused Musk, the CEO of electric car company Tesla Inc and space tourism company SpaceX of racketeering for touting Dogecoin and driving up its price, only to manipulate the price of the coin. We take a look at the issue at hand and all the times Musk promoted the meme-coin and caused a movement in the price of the coin.
Dogecoin started as satire
Dogecoin was created in 2013 by software engineers Billy Markus and Jackson Palmer as a faster but “fun” alternative to Bitcoin. It was started as a satire on the numerous fraud crypto coins that had sprung up at the time and takes its name and logo from a Shiba Inu meme that was viral several years ago. Unlike Bitcoins, whose maximum possible number is fixed at 21 million (a figure that is estimated to be reached by 2040), Dogecoin numbers do not have an upper limit, and there are already more than 100 billion in existence.
Musk’s Dogecoin love-affair
It all started in April 2021, when Musk in a cryptic tweet said, “Doge barking at the moon.” The value of Dogecoin soared to $0.45 (approximately Rs 34). After a couple of days, he teased his followers about the possibility of Dogecoin featuring in his ‘Saturday Night Live’ hosting debut.
The value of Dogecoin surged by as much as 20 per cent after Musk called himself the “Dogefather” in the tweet. He even changed his Twitter bio to “Former CEO of Dogecoin.”
‘Can make Defi accessible’
Musk endorsed Dogecoin over Ethereum saying that DOGE can be used to make Decentralised Finance (DeFi) more accessible to everyone. DeFi system is a blockchain-based form of finance that does not rely on financial intermediaries such as brokerages, exchanges, or any banks to offer services. Such platforms allow users to keep custody of their Ethereum-based crypto assets.
Musk was responding to a CoinDesk story on Twitter, about how Ethereum-based DeFi protocols are becoming inaccessible to small investors due to high transaction fees. Musk tweeted a one-word reply under this story, “Dooooge”, referring to his favourite cryptocurrency, the Dogecoin. This again boomed the price of the crypto asset.
Tesla to accept Dogecoin
Musk announced in January that Tesla will accept meme-based cryptocurrency Dogecoin as payment for its merchandise such as the “Giga Texas” belt buckle and mini models of electric vehicles.
The move sent Dogecoin prices 14 per cent higher. Tesla’s merchandise includes the recently launched “Cyberwhistle” and “Cyberquad for Kids”, which are a hit with its fans, and usually sell out within a few hours of listing. “Some have noted that goods for doge are selling out even faster than for dollars.
‘Better than Bitcoin ‘
Billionaire and Tesla CEO Musk believe that Dogecoin is better for transactions as compared to Bitcoin. In an interview with Time magazine, the Tesla and SpaceX chief said when it comes to transactions per day, Dogecoin is a way better crypto coin.
“The transaction value of Bitcoin is low and the cost per transaction is high. At least at a space level, it is suitable as a store of value. But fundamentally, Bitcoin is not a good substitute for transactional currency,” adding that even though Dogecoin was created as a silly joke, it is better suited for transactions. “The total transaction flow that you do with Dogecoin is transactions per day has a much higher potential than Bitcoin.”
Elon Musk nudges McDonald’s
Dogecoin witnessed a spike in value after Musk said that he will eat McDonald’s Happy Meal on television only if the American fast-food chain accepts meme-based cryptocurrency. Happy Meal is a kid’s meal sold by McDonald’s in a red cardboard box with a yellow smiley face. The meal comes with a toy. Responding to Musk’s tweet, McDonald’s responded by saying that they would but “only if Tesla accepts Grimacecoin.”
Dogecoin as payment at Supercharging station
The tech billionaire announced on Twitter that its supercharging station at Santa Monica will soon accept cryptocurrency Dogecoin as a mode of payment. Following the announcement, Dogecoin’s price witnessed upward movement.
In a tweet, Ryan Zohoury, founder of Tesla Console, said that only ten minutes after the new Santa Monica Superchargers were opened they were already full. Responding to this, Musk said that he has planned a futuristic diner or drive-in theatre at the Supercharging station, “and of course, you can pay in Ðoge.”
Twitter should accept Doge
Musk after its Twitter acquisition shared ideas for how Twitter should charge for its subscription membership, saying the fee “should be proportionate to affordability and in local currency,” and adding: “Maybe even an option to pay in Doge?” referring to the Dogecoin cryptocurrency.