- Tesla CEO Elon Musk has explained why he thinks Dogecoin is superior to Bitcoin in terms of transactional purposes.
- As much as cryptocurrencies hold many advantages over fiat, Musk says he is not “a huge hater of fiat” like many crypto enthusiasts.
Elon Musk, Tesla and SpaceX CEO, and also the world’s richest man, has yet again affirmed his preference in meme-inspired cryptocurrency Dogecoin (DOGE) to Bitcoin (BTC).
On Monday, the tycoon was named Time’s 2021 Person of the Year. Speaking in a Times Magazine interview thereafter, Musk said he prefers Dogecoin to Bitcoin in making transactions.
Fundamentally, bitcoin is not a good substitute for transactional currency. Even though it was created as a silly joke, dogecoin is better suited for transactions. [T]he transaction volume of bitcoin is low, and the cost per transaction is high.
But even then, Musk has explained his version of how the two digital assets cater to each other’s deficiencies. Bitcoin is more suited as a store of value – the reason investors prefer to hodl it rather than selling or using it for transactional purposes, he says. Dogecoin, on the other hand, “encourages people to spend, rather than sort of hoard as a store of value”.
Dogecoin vs Bitcoin
Bitcoin being a store of value is something that its supporters highly agree on. However, they also see the asset as a sound peer-to-peer financial system capable of handling transactions. Here, they would cite El Salvador’s use of Bitcoin as legal tender.
Nonetheless, it is important to note that Dogecoin has faster transaction confirmation times than Bitcoin. While Bitcoin has a block every ten minutes, Dogecoin has a block every minute. Transacting DOGE is also relatively cheaper than transacting BTC.
Tesla will make some merch buyable with Doge & see how it goes
— Elon Musk (@elonmusk) December 14, 2021
Meanwhile, BTC has a 21 million supply cap while DOGE’s supply is infinite, making hoarding the latter quite difficult. Hoarders prefer assets that can have a shortage in the market for value increment.
As much as Musk is one vocal cryptocurrency cheerleader, he has asserted that he is not a fiat critic like many crypto enthusiasts have grown to be.
I’m not a huge hater of fiat currency like many in the crypto world are.
And while he remains a crypto bull, he still doubts the potential of digital assets in replacing fiat currency.
There are advantages with crypto relative to fiat, in that fiat currency tends to get diluted by whatever government it is. It ends up being a pernicious tax on people, especially those who have cash savings with the dilution of the money supply.
In February, Musk revealed that he purchased Dogecoin for his son, X. Later in July, he noted that he has added DOGE to his portfolio, on top of BTC and Ether. In November, he spoke of plans to open a university where fees would be paid in DOGE and those with a dog would receive discounts.