Dogecoin (DOGE) jumped 20% as Elon Musk said on Dec.14 that Tesla will start accepting the meme cryptocurrency as payment for vehicle purchases.
“Tesla will make some merchandise buyable with doge and see how it goes,” said Musk, the Tesla CEO, in a tweet.
The announcement comes as the billionaire entrepreneur praised dogecoin as “better suited for transactions” in an interview published by Time Magazine on Dec.13.
“Even though it was created as a silly joke, dogecoin is better suited for transactions,” argued Musk, named Time Magazine’s “Person of the Year” for 2021.
“The total transactions that you do with dogecoin are substantially more than bitcoin, like transactions per day. It [doge] is slightly inflationary, but that inflationary number is a fixed number as opposed to a percentage,” he said.
Musk, who as the world’s richest person boasts a net worth of $300 billion, added: “This means over time, its percentage of inflation actually decreases. That’s actually good because it encourages people to spend rather than hoard it as a store of value.”
‘Bitcoin not suitable for transactions’
In March, the electric carmaker revealed it would start taking bitcoin (BTC) for payment, but it rescinded the decision two months later citing environmental concerns.
Tesla essentially bowed to pressure from climate activists and investors who consider bitcoin mining – the energy-intensive process by which new bitcoins are created – as an environmental nuisance.
However, Musk said in July that Tesla, which owns more than 42,000 BTC, was “most likely [to] resume accepting bitcoin.”
In his interview with Time Magazine, Musk stated that compared to doge, bitcoin fails as a transactional currency.
“I could wax on about the nature of money for hours because I played a significant role in creating PayPal. There are very few people that understand [the money system] better than me,” he boasted, adding:
At its base level, bitcoin is suitable as a store of value. Fundamentally, bitcoin is not a good substitute for a transactional currency.
Musk also spoke about how he is “not a huge hater of fiat currency”. To the contrary, the Tesla CEO is drawn to crypto because of advantages he sees in the space.
For example, he says, “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 dilution of the money supply.”
Following his comments, dogecoin rose by as much 20% to $0.1912, according to data from Coinmarketcap. Bitcoin and ethereum, the two largest digital assets, remained in the red, down 1.70% and 3.01% over the past 24 hours.
Elon Musk is a huge proponent of the meme crypto dogecoin. He has defined the asset as the “people’s crypto.”
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