Elon Musk is back to tweeting about Dogecoin.
He hasn’t done so for quite some time, so much so that the price of DOGE has never again approached the highs of early May.
The collapse of Dogecoin and Musk’s few statements
The market price of Dogecoin seems to be very much influenced by the statements made by the CEO of Tesla and SpaceX, to the extent that it has lost 70% of its value compared to the highs, probably due to the fact that Musk has not spoken about it regularly, as he did in the weeks preceding the highs.
After entering the top five cryptocurrencies with the highest market capitalization, it has now fallen to tenth place, ahead of the growing Avalanche (AVAX) and Terra (LUNA), and just behind USDC.
This time, however, Elon Musk’s tweet is about a financial-technical issue
Super important for Doge fees to drop to make things like buying movie tix viable
— Elon Musk (@elonmusk) September 22, 2021
That is, Musk believes that it would be very important for DOGE’s fees to fall in order to make things like buying cinema tickets feasible.
He is probably referring to the poll held yesterday on the official profile of the CEO of the global cinema chain AMC asking whether they would accept DOGE as payment in addition to BTC, ETH, LTC and BCH.
Given the clear victory of those in favour, Adam Aron then stated that they will try to integrate it, but according to Elon Musk, the fees could be a problem.
It must be said that usually, with traditional fiat currency payments, the cost of the transaction is borne by the receiver, i.e. the seller, while with cryptocurrencies it is always and only borne by the sender, i.e. the customer who makes the purchase.
Protocol changes to Dogecoin
The cost of fees on Dogecoin’s blockchain is currently not high, averaging less than $0.5, but during the peak months, it reached over $2.5.
It is clear that if the cost per transaction reaches such high levels during peak transactions, it is not worth paying for movie tickets with Dogecoin.
This is also due to the fact that Bitcoin, with its second-layer Lightning Network, allows almost immediate transactions and negligible costs, sometimes even less than a cent, which means that if Dogecoin wanted to compete it would have to reduce its fees considerably.
There are also other cryptocurrencies that allow payments with very low fees, so it is correct what Elon Musk says, that if things are as they are now, DOGE can never become a widespread method of payment.
With a volatility higher even than that of bitcoin, in this 2021 Dogecoin cannot compete at all with the most emblazoned cryptocurrencies on the payments market, primarily against BTC itself.
The future of Bitcoin and the perspective of DOGE
In the past, Musk had already hypothesized changes to the Dogecoin protocol to make it a better transactional currency, but the development of the project has in fact been abandoned, so he will probably have to come up with something to ensure that the technical developments are reactivated.
Bitcoin remains a very strong competitor for projects like Dogecoin, especially now that it has been adopted as an official currency in at least one country (El Salvador), with the prospect of spreading as such to other parts of the world.
As far as DOGE is concerned, however, this prospect still seems to be extremely remote.