By now, Elon Musk’s attitude towards Bitcoin and Dogecoin is a real case, a sort of “Elongate” as the people of Twitter are calling it.
It all stems from a tweet a few days ago in which he accused Bitcoin of consuming too much energy, particularly from non-renewable sources such as coal.
But yesterday Tesla’s CEO went even further, suggesting that his focus is shifting completely from Bitcoin to Dogecoin.
First, he argued that Bitcoin is highly centralized, with the majority of the hashrate controlled by a few Chinese companies.
Bitcoin is actually highly centralized, with supermajority controlled by handful of big mining (aka hashing) companies.
A single coal mine in Xinjiang flooded, almost killing miners, and Bitcoin hash rate dropped 35%. Sound “decentralized” to you?https://t.co/Oom8yzGRNQ
— Elon Musk (@elonmusk) May 16, 2021
In reality, nobody has been able to change the Bitcoin protocol for years, precisely because it is truly decentralized, and in China, the state has even tried to ban exchanges between bitcoin and fiat currency without succeeding.
At this point, a real clash was triggered against several Bitcoin experts, to whom Musk reminded that he was one of the founders of PayPal, claiming that they do not know how currency works.
Hey cryptocurrency “experts”, ever heard of PayPal? It’s possible … maybe … that I know than you realize about how money works.
— Elon Musk (@elonmusk) May 16, 2021
By now it is clear that bitcoin is not so much a transactional currency, but more a store of value, much more like gold than PayPal.
It is possible that Musk is not very well informed about bitcoin and that his knowledge of this new financial asset is still too superficial to allow him to understand it fully.
He did, however, put his best foot forward when he shared a post speculating that, as a result of this clash, Tesla might sell all the BTC it bought in February and kept in its portfolio.
— Elon Musk (@elonmusk) May 16, 2021
This morning, i.e. before the US stock exchange reopened, he had to deny this speculation, stating instead explicitly that Tesla had not sold any of its bitcoin.
To clarify speculation, Tesla has not sold any Bitcoin
— Elon Musk (@elonmusk) May 17, 2021
The consequences of “Elongate” on the prices of Bitcoin and Dogecoin
In other words, yesterday, the CEO of Tesla was able with a few tweets to make his company lose a significant amount of money, triggering a sharp drop in the price of the very BTC that his company actually holds in its portfolio (around 30,000 or so). It is possible that this move will not be appreciated at all by the company’s shareholders.
Musk had also speculated that he might go all-in on Dogecoin, but the curious thing is that yesterday, the price of DOGE also fell. In other words, yesterday’s events caused both bitcoin and Dogecoin, and perhaps even Tesla stock, to fall in value. Hence probably the reversal this morning.
The price of bitcoin yesterday fell from $49,000 to $44,000, and then dropped again to $42,000. After Musk’s backtrack, it recovered to $44,000.
It also seems that Musk has been in contact with developers for some time to try to improve the Dogecoin protocol, the development of which has been at a standstill for years. However, the idea he seems to have in mind is not that of a currency with a deflationary nature and fixed monetary policy, like Bitcoin, because he considers it too volatile to be used as a medium of exchange. It has to be said, however, that there are already many cryptocurrencies with a stable value, first and foremost stablecoins, so it is difficult to imagine what novelty yet another cryptocurrency with a stable value could introduce into the crypto landscape to be used as a means of payment.
