On Dec. 13, TIME magazine named CEO of Tesla/SpaceX — Elon Musk — as its 2021 Person of the Year. During a recorded interview with Musk that TIME posted to its Twitter channel as part of its Person of the Year announcement, the world’s richest person explained why he believes Dogecoin is better than Bitcoin in some regards.
Before we examine the self-proclaimed “DogeFather’s” fixation with meme tokens, we should first examine what money does. For fiat money and cryptocurrencies to be useful to us, there are three primary functions that cold hard cash or hot digital funds need to be able to address. It’s generally accepted that currencies address the following three functions:
- Unit of account: a comparative measuring stick for different goods or services.
- Medium of exchange: an accepted method of payment for settling debts or acquiring goods.
- Store of value: inherent ability of a given asset to maintain its payment power in the short- and long-term.
With that as context, Elon Musk — who also co-founded PayPal — believes that Dogecoin is better than Bitcoin in at least one of those baseline currency criteria as shared in these transcribed quotes from the Person of the Year interview.
“My understanding of the money system, at a fundamental level of how it actually works — the detailed mechanics of it — I think there are very few people who understand it better than me. Bitcoin is an interesting example and the prime mover on this [the crypto space], but the transaction volume of Bitcoin is low and the cost per transaction is high. It is at its base level suitable as a store of value. But fundamentally Bitcoin is not a good substitute for transactional currency.”
However, Musk believes that Dogecoin is ideally suited to be a widely used method of exchange.
“Even though it was created as a silly joke, Dogecoin is better suited for transactions. The total transaction flow — transactions per day — that you can do with Dogecoin has much higher potential than Bitcoin. It [Dogecoin] is slightly inflationary, but that inflationary number is a fixed number as opposed to a percentage. Which means that over time, its percentage of inflation decreases. That’s actually good because it encourages people to spend it rather than hoard [Dogecoin] as a store of value.”
The Tesla organization holds the second largest number of Bitcoin by a corporation, which is reportedly 38,300 coins. Earlier this year Musk also flip flopped back and forth as to whether Tesla would accept Bitcoin as payment for Tesla e-vehicles.
His initial rejection of Bitcoin payments sparked a 50% decline in that crypto. Ironically, his own mercurial social media actions have both hurt and helped Tesla’s Bitcoin holdings this year. Perhaps someone should tell the combo-world’s richest person and Person of the Year that silence is golden.