Elon Musk: Dogecoin is better for payments than Bitcoin

Tesla CEO Elon Musk believes that Bitcoin is not as good as the meme-based cryptocurrency Dogecoin (DOGE) for everyday payments.

Shortly after being named TIME's Person of the Year for 2021, Musk compared the world's largest cryptocurrency, Bitcoin, to DOGE in an interview with TIME.

“Bitcoin is not a good replacement for transactional money. Even though it was created as a silly joke, Dogecoin is better suited for transactions. The total transaction flow you do with Dogecoin, like transactions every day , well above Bitcoin’s potential,” Musk said.

The Tesla CEO emphasized that Bitcoin is better suited as a store of value, which is why its investors prefer to hold it rather than sell it or use it for payments. Musk said: "Bitcoin has low transaction volume, but the cost per transaction is high."

Musk, on the other hand, hinted that Dogecoin isn't all that great as a store of value, noting that the cryptocurrency is "slightly inflationary." However, he said this "encourages people to consume rather than hoard it as a store of value".

Bitcoin, by far the world's most valuable cryptocurrency, was launched in 2009 as a "peer-to-peer electronic cash system" and has a limited total supply of 21 million coins. In contrast, after reaching a supply cap of 100 billion in mid-2015, DOGE switched to offering an unlimited supply.

Industry insiders, including Ripple CEO Brad Garlinghouse, have slammed Dogecoin for its so-called "inflationary dynamics" and infinite supply.

Despite Musk's criticism of bitcoin as a payment tool, his electric car company Tesla briefly adopted it as a form of payment earlier this year. The official reason for dropping the payment option was that the company was concerned about the "rapid increase in the use of fossil fuels in bitcoin mining and transactions." Tesla continues to hold a large amount of bitcoin on its balance sheet after purchasing $1.5 billion in bitcoin in February.

Many global companies, such as Twitter, have actively adopted BTC as a payment option by implementing the Lightning Network to reduce transaction costs.

On-chain data shows that Dogecoin does not appear to have much higher transaction volume than Bitcoin. According to CoinGecko, as of this writing, Bitcoin has a daily trading volume of $31 billion, or 3.5% of its market capitalization. Dogecoin has a daily trading volume of $970 million, accounting for 4.6% of its market capitalization.

DOGE has become one of the best-performing cryptocurrencies in 2021, and a large part of the reason is obviously related to Musk's active support on social media.

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