Billionaire CEO Elon Musk is throwing his Twitter heft behind Dogecoin again, Tweeting on Tuesday that the electric vehicle maker will accept the meme-inspired cryptocurrency as payment for merchandise on a trial basis.
“Tesla will make some merch buyable with Doge & see how it goes,” Musk tweeted to his 66.3 million followers.
Tesla briefly accepted Bitcoin as payment for goods on its website earlier this year. Subsequently, the company discontinued payments in bitcoin, and Musk explained this with concerns about the impact of cryptocurrency on the environment.
Read also: Elon Musk Loses World's Richest Title as Tesla Stocks and Bitcoin Plunge
Why is Tesla planning to accept Dogecoin payment?
On Monday, Musk, named Time "Man of the Year", in conversation with the publication he said that Bitcoin is inferior to Dogecoin as a means of payment.
“Bitcoin is not a very good substitute for traditional currency. Although Dogecoin was created as a silly joke, it is much better suited for transactions. Dogecoin has much higher potential in terms of aggregate transaction flow, such as the number of transactions per day,” Musk said.
He also noted that Bitcoin is more consistent with a store of value, and therefore investors prefer to hold BTC rather than spend on payments:
"Bitcoin has low transaction volume and high transaction costs."
Dogecoin, according to Musk, is not as good as a store of value, as it is "slightly inflationary," but this feature encourages people to spend rather than hoard it.
At the same time, Musk noted that being the co-founder of PayPal, he can spend hours talking about the nature of money, since he has a deep understanding of the fundamental principles of the system. The billionaire said that he does not hate fiat currencies, unlike many members of the cryptocurrency community. However, cryptocurrencies, he said, have an important advantage, as their release cannot be accelerated by the authorities.
“Diluting the money supply is a ruinous tax for people, especially those who keep their savings in cash,” he added.
Against the background of Musk's announcement today, the DOGE price has climbed almost 30% from $0.16 to over $0.22. At the time of writing, however, Dogecoin price is down 5.73% while trading at $0.18.
Bitcoin is still popular than Dogecoin
Meanwhile, a Grayscale poll found that more people heard about Dogecoin than Bitcoin itself. Furthermore, most of the hodlers of this coin entered the crypto market in 2021.
The report surveyed 1,000 US consumers between August 12-20, 2021, ages 25-64, to explore the outlook for Bitcoin and assess how perceptions have changed since 2019. Despite the launch of new cryptocurrencies, Bitcoin continues to dominate discussions among investors, consultants, banks, the media, service providers, regulators, and legislators.
Among the survey findings is the increased perception of Bitcoin as a store of value during unstable economic times and high inflation. Investors have shown a growing inclination to buy Bitcoin as a long-term profitable investment rather than a digital currency.
In addition, according to Grayscale, Bitcoin has reached several generations of investors, from the very young to the most experienced, including retirees who want to consider Bitcoin investment products as a component of their portfolios.
Bitcoin is still the most popular cryptocurrency, but there is significant awareness of other crypto assets as "the crypto market has been flooded with new tokens, driven in large part by the rise of decentralized finance (DeFi)."
Even so, Bitcoin is still the most popular, with 99% of investors stating that they know the cryptocurrency, while 68% of investors said they had sufficient knowledge about the most valuable crypto assets. However, it doesn't mean that investors haven't heard of other cryptocurrencies. They are well aware of other digital assets whose profiles are on the rise, including Dogecoin, which started out as a joke but has since gained fame.
More than half of the investors were aware of Dogecoin and Ethereum. Almost three-quarters (74%) of investors have heard of Dogecoin, surpassing the level of awareness around Ethereum (56%). Most of those who own Bitcoin and 87% also own at least one or more altcoins. The most popular include Ethereum, the benchmark platform for DeFi and NFT projects, and Dogecoin.
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