Elon Musk is a strong supporter of the Dogecoin cryptocurrency. He has promoted the coin meme several times, which has increased the value of the coin. The tech billionaire is also a self-proclaimed “Father Doge.” However, on Thursday, a Dogecoin investor sued Musk for $258 billion accusing him of run a pyramid scheme to support cryptocurrency.
Keith Johnson has accused Musk, the CEO of electric car company Tesla Inc and space tourism company SpaceX, of racketeering for touting Dogecoin and jacking up its price, solely to manipulate the price of the coin. We take a look at the problem under investigation and all the times that Musk has promoted the meme-coin and caused a movement in the price of the coin.
Dogecoin started as a satire
Dogecoin was created in 2013 by software engineers Billy Markus and Jackson Palmer as a faster but “fun” alternative to Bitcoin. It began as a satire on the many fraudulent crypto coins that had cropped up at the time and took its name and logo from a Shiba Inu meme that went viral several years ago. Unlike Bitcoins, whose maximum possible number is set at 21 million (a figure estimated to be reached by 2040), Dogecoin numbers have no upper limit, and there are already more than 100 billion of them.
Musk’s Dogecoin Love Affair
It all started in April 2021, when Musk in a cryptic tweet said, “Doge barking at the moon.” The value of Dogecoin soared to $0.45 (about Rs 34). After a few days, he teased his followers about the possibility of Dogecoin appearing in his “Saturday Night Live” hosting debut.
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Dogecoin’s value jumped 20% after Musk called himself the “Dogefather” in the tweet. He even changed his Twitter bio to “Former CEO of Dogecoin”.
“Can make Defi accessible”
Musk approved Dogecoin on Ethereum saying DOGE can be used to make decentralized finance (DeFi) more accessible to everyone. The DeFi system is a blockchain-based form of finance that does not rely on financial intermediaries such as brokerages, exchanges, or banks to offer services. These platforms allow users to retain custody of their Ethereum-based crypto assets.
Musk was responding to a CoinDesk story on Twitter, about how Ethereum-based DeFi protocols are becoming inaccessible to small investors due to high transaction fees. Musk tweeted a one-word response under this story, “Dooooge,” referring to his favorite cryptocurrency, Dogecoin. This caused the price of the crypto asset to skyrocket once again.
Tesla accepts Dogecoin
Musk announced in January that Tesla will accept Dogecoin, a meme-based cryptocurrency in payment for its merchandise such as the “Giga Texas” belt buckle and mini electric vehicle models.
The move sent Dogecoin prices up 14%. Tesla’s merchandise includes the recently launched “Cyberwhistle” and “Cyberquad for Kids,” which are a hit with its fans and typically sell out within hours of listing. “Some have noted that goods for doge are selling even faster than for dollars.
“Better than Bitcoin”
Billionaire and Tesla CEO Musk thinks Dogecoin is better for transactions compared to bitcoin. In an interview with Time magazine, the Tesla and SpaceX chief said that when it comes to transactions per day, Dogecoin is a much better cryptocurrency.
“Bitcoin’s transaction value is low and the cost per transaction is high. At least in terms of space, it is suitable as a store of value. But fundamentally Bitcoin is not a good substitute for transactional currency,” adding that even though Dogecoin was created as a silly joke, it is better suited for transactions. “The total flow of transactions you make with Dogecoin is transactions per day have a much higher potential than Bitcoin.”
Elon Musk nudges McDonald’s
Dogecoin witnessed a peak in value after Musk said he would only eat McDonald’s Happy Meal on TV if the US fast food chain accepts meme-based cryptocurrency. Happy Meal is a children’s meal sold by McDonald’s in a red cardboard box with a yellow smiley face. The meal is accompanied by a toy. Responding to Musk’s tweet, McDonald’s responded by saying they would but “only if Tesla accepts Grimacecoin.”
Dogecoin as payment at the boost station
The tech billionaire announced on Twitter that its supercharging station in Santa Monica will soon accept the Dogecoin cryptocurrency as a form of payment. Following the announcement, the price of Dogecoin saw an upward movement.
In a tweet, Tesla Console founder Ryan Zohoury said that just ten minutes after the new Santa Monica Superchargers opened, they were already full. In response to this, Musk said he had planned a futuristic diner or drive-in theater at the supercharger station, “and of course you can pay in Ðoge.”
Twitter should accept Doge
Musk after his Twitter acquisition shared ideas for how Twitter should charge for his subscription, saying fees “should be commensurate with affordability and in local currency”, and adding, “Maybe even a payment option in Doge?” referring to the Dogecoin cryptocurrency.