“Bitcoin is not a good substitute for transactional currency. Even though it was created as a silly joke, Dogecoin is better suited for transactions. The total transaction flow that you do with Dogecoin, like transactions per day, has much higher potential than Bitcoin,” Musk said.
The Tesla CEO emphasized that Bitcoin is more suitable as a store of value, which is why its investors prefer to hold it rather than sell it or use it for payments. “The transaction volume of Bitcoin is low, and the cost per transaction is high,” Musk noted.
On the other hand, Dogecoin is not that good as a store of value, Musk hinted, noting that the cryptocurrency is “slightly inflationary.” However, this “encourages people to spend, rather than sort of hoard as a store of value,” he stated.
Bitcoin, the world’s most-valued cryptocurrency so far, was launched back in 2009 as a “peer-to-peer electronic cash system” with a limited total supply of 21 million BTC. In contrast, DOGE has an infinite supply after the coin switched to provide an uncapped supply after hitting a supply limit of 100 billion coins in mid-2015.
Some industry figures such as Ripple CEO Brad Garlinghouse have blasted Dogecoin for its alleged “inflationary dynamics” and unlimited supply.
Despite Musk criticizing Bitcoin as a payment tool, his electric vehicle firm, Tesla, briefly adopted BTC as a payment method earlier this year. The official reason for dropping the payment option was the company’s concerns regarding the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” Tesla still continues to hold a significant amount of Bitcoin on its balance sheet after purchasing $1.5 billion in BTC in February.
A number of global companies like Twitter have been actively adopting BTC as a payment option by implementing the Lightning Network to decrease transaction costs.
Dogecoin doesn’t appear to have a much bigger transactional volume than Bitcoin, according to on-chain data. At the time of writing, Bitcoin’s daily transaction volume amounts to $31 billion, or 3.5% of its market capitalization, according to data from CoinGecko. Dogecoin’s daily transactions are worth $970 million, or 4.6% of its market cap.