The price of cryptocurrency Dogecoin (DOGE) shot up by more than 43% after Tesla, Inc. (TSLA) CEO Elon Musk tweeted that the car company was adding support for the coin to make purchases of some merchandise on its website. Tesla sells an assortment of products on its website. Examples of the merchandise are cyberwhistles, replicas of its Cybertruck, and hats.
- The price of meme crypto Dogecoin shot up by more than 40% after Tesla CEO Elon Musk said it could be used for purchases of merchandise on the car company's website.
- According to Musk, Dogecoin is better suited as a payment mechanism as compared to Bitcoin.
- Dogecoin is up by roughly 5,900% this year.
At Coinbase, North America's biggest trading exchange by volume, the price of Dogecoin surged by roughly 44% to $0.23 in an hour this morning after Musk's tweet. It fell afterwards but is still currently changing hands at $0.20. The cryptocurrency has a market capitalization of $25.5 billion, as of this writing, and it is the ninth most valuable coin in crypto markets, according to Coinmarketcap.
Dogecoin supporters have been clamoring to make it a payment option at retail websites. The #dogearmy hashtag on Twitter lobbies CEOs and prominent spokespersons at companies to offer the coin as an option to retailers. Theater chain AMC Entertainment Holdings, Inc. (AMC) bowed to the pressure earlier this month and enabled purchases of digital gift cards for the chain using BitPay, a cryptocurrency wallet.
Musk, who was named TIME magazine's Person of the Year yesterday, said that Dogecoin was "better suited" for transactions as compared to Bitcoin because it had a lower transaction volume and cost per transaction. According to Musk, Dogecoin "encourages people to spend rather than sort of hoard as a store of value." Bitcoin inventor Satoshi Nakamoto had originally designed the cryptocurrency as a medium of transaction. However, slow transaction processing times, price volatility, and network capacity limits have prevented its adoption among merchants.
It is not clear whether Dogecoin can step into its place. The cryptocurrency, which was started as a joke, was used in a charity endeavor earlier and has no recorded transaction use cases. Updates to its code base, which is cloned from Bitcoin, are infrequent. During the pandemic, Dogecoin has benefitted from investor enthusiasm for meme stocks. Its price has skyrocketed by roughly 5,900% this year, hitting almost $0.70 at one point. Even Musk, who frequently tweets about the cryptocurrency, called it a "hustle" during his appearance on comedy sketch show Saturday Night Live.