Elon Musk is the devil or a hero, depending on who you ask.

Some days I like his electric cars and the rockets he builds and sends to space. Let’s face it, NASA probably isn’t going to reinvent the rocketship. Elon has. It’s amazing what the capitalist fire in your belly can do.

Then there’s Elon and financial markets. This part I hate. He’s taking the piss.

There are thousands of cryptocurrencies. Most will become worthless over time — such is the nature of technological innovation. I ain’t mad at it.

Ethereum and Bitcoin have strong network effects. Bitcoin is digital gold and acts like a well-behaved savings account with interest you can earn through apps like BlockFi. Ethereum is a network or software platform that enables smart contracts, and is the decentralized foundation future apps will be built on. The number of users coming to the network daily is already exponential.

Many people don’t get this: the huge rise in price of Bitcoin and Ethereum isn’t an accident or a bet. The price has gone parabolic because network effects that helped the rise of companies like Google and Facebook are at play.

Dogecoin is different. It was co-created by Jason Palmer who is a fellow aussie from the beautiful Australia outback, mate (too soon?).

In his words, “[Doge] It was a piss take. My whole point of Dogecoin was taking a jab at all these alt-coins that were coming on the scene … and, you know, basically making a cash grab. So I made the joke and it was me taking the piss out of really scammy cryptocurrency back then. But then it quickly turned into a legitimate thing … and at that point, I was like, ‘Oh my god, now I feel responsible for this joke.’ I feel responsible for this economy.”

Elon has a long relationship with Dogecoin and tweets about it frequently. Initially, it looked like Elon had no real connection to the cryptocurrency other than as a hobby. It’s been revealed recently that Elon has been working with Dogecoin since 2019. Elon is up and down with his thoughts on Dogecoin. Dogecoin is Elon Musk’s sex toy.

The problem a lot of people are missing with Dogecoin

Doge has no real-world use case. It’s supposed to be a joke. It’s a coin with a dog’s face on it designed to take the piss. Now comedy has huge value, obviously, but buying something that only exists as a joke and has an expiry date probably won’t end well.

“What problem are you solving?” is the sort of Y-Combinator startup advice that needs to be applied to Doge. The Dogecoin rap (watch here) sums up the joke Elon Musk is promoting, perfectly.

People are exchanging their dollars for dog money. Dog money? Dog money.

My 401(k) is now a 401(K9).

Elon canceled Bitcoin. You can no longer buy one of his brand spanking new Tesla’s using Bitcoin, due to environmental concerns around the mining feature of Bitcoin which keeps the integrity of the network safe. Interestingly the Tesla decision didn’t lead Elon to sell any more of his Bitcoin. He held onto his Bitcoin — because he knows it’s valuable.

Billionaire Mark Cuban squashed Elon’s comments like a bug when he tweeted at Elon, “We will continue to accept BTC/Eth/Doge because we know that replacing gold as a store of value will help the environment and shrinking big bank and coin usage will benefit society and the environment.”

Gold is worse for the environment than digital gold (Bitcoin). Blockchain technology enables trust without middlemen. When global business is more efficient because of blockchain, there will be less toll on the environment. Driving to a bank to get cash out harms the environment way more than the energy Bitcoin uses or the mining damage gold leaves behind.

Bitcoin mining tends to migrate to places where energy is cheap. Because cheaper energy equals higher profits from Bitcoin mining. Energy that normally goes to waste is often utilized by Bitcoin and this trend will accelerate. Popular finance website “MoneyWeek” says this:

Bitcoin mining consumes a lot of energy — but much of it is renewable.

Further research makes Elon’s argument look like a pump and dump form of Saturday night entertainment, enjoyed with his barcode baby and a pizza.

Research conducted by Coinshares found that approximately 75% of Bitcoin mining energy is from renewable sources. “Many renewable energy generators are poorly located and underutilized, and thus, Bitcoin mining has become the only viable use for this electricity,” says one of their researchers.

Bitcoin creates efficiency. Efficiency is cleaner than inefficiency in the long term, which requires a lot more energy to maintain the status quo.

It would not surprise me if he has a social media team telling him to do dumb stuff to “build his brand.”

I don’t take a lot of what he says seriously anymore. He’s a smart guy that can do a lot for humanity by building better electric cars and getting us to Mars. But all this daily stuff he says on Twitter is distracting him from the real mission. It’s a shame. I think he will get tired of it all, although it’s clear Elon loves the attention. His Saturday Night Live performance is further evidence he is falling more and more in love with himself.

Time to get to the crux of the point. Elon’s relationship with Dogecoin is a problem but not for the reasons you might think.

Elon has discovered he can move financial and crypto markets with Twitter.

This is the real danger. He can buy Bitcoin and then pump it or dump it based on what’s best for his financial interests. If it’s time to buy Bitcoin then he can say “Bitcoin is bad, m’kay?” Or if he wants to get richer he can say “Bitcoin is amazing!” If you don’t believe me, read this tweet from Elon in 2020: “Tesla stock price is too high imo [in my opinion].”

All you have to do to understand Elon’s relationship to Dogecoin is read this quote from famous investor Charlie Munger, slowly: “Show me the incentive and I will show you the outcome.”

Moving markets with your tweets and influence, and telling people to buy a dog coin, is no joke. That’s the problem with Elon’s relationship to Dogecoin. He’s taking the piss and people think he’s serious. Tread with caution.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://timdenning.medium.com/elon-musks-relationship-with-dogecoin-is-extremely-confusing-226ff1006f2e?source=rss——-8—————–cryptocurrency