Musk explains why Dogecoin is a better payment method than Bitcoin in TIME interview

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On December 13, TIME magazine named Tesla / SpaceX CEO Elon Musk as the 2021 Personality of the Year. In a recorded interview with Musk that TIME posted on his Twitter channel as part of its announcement of the Person of the Year Richest Person in the World explained why he thinks Dogecoin is better than Bitcoin in some ways.

Three functions of money – whether digital or fiat

Before we look at the self-proclaimed “DogeFather” fixation with memes tokens, we need to first take a look at what the money does. For fiat money and crypto-currencies To be useful to us, there are three main functions that hard cash or hot digital backgrounds need to be able to perform. It is generally accepted that currencies perform the following three functions:

  1. Unit of account: a stick of comparative measurement for different goods or services.
  2. Medium of exchange: method of payment accepted to settle debts or acquire goods.
  3. Store of value: The inherent ability of a given asset to maintain its payment power in the short and long term.

Against this background, Elon Musk – who also co-founded PayPal – believes that Dogecoin is better than Bitcoin in at least one of these base currency criteria, as shown in these transcribed quotes from the Person of the Year interview.

Musk’s differentiator for Dogecoin on Bitcoin

“My understanding of the monetary system, at a fundamental level of how it actually works – its detailed mechanics – I think there are very few people who understand it better than I do. Bitcoin is an interesting example and the main driver of this. [the crypto space], but Bitcoin’s transaction volume is low and the cost per transaction is high. It is at its appropriate base level as a store of value. But fundamentally, Bitcoin is not a good substitute for transactional currency. “

However, Musk believes 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 flow of transactions – transactions per day – that you can do with Dogecoin has much higher potential than Bitcoin. [Dogecoin] is slightly inflationary, but this inflationary number is a fixed number as opposed to a percentage. This means that over time, its percentage of inflation decreases. It’s actually good because it encourages people to spend it rather than hoard it. [Dogecoin] as a store of value. “

Musk’s love-hate relationship with Bitcoin in 2021

The Tesla organization owns the second highest number of Bitcoin by a company, which is would have 38 300 coins. Earlier this year, Musk also did an about-face on whether Tesla would accept Bitcoin as a payment method for Tesla electric vehicles. His initial rejection Bitcoin payments triggered a 50% drop in this crypto. Ironically, his own mercurial actions on social media have both hurt and helped Tesla’s Bitcoin holdings this year. Maybe someone should tell the richest person in the world combined and the Person of the Year that silence is golden sometimes.

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Tor Constantino owns Bitcoin.

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Elaine R. Knight