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Dogecoin soars after Elon Musk says Tesla will accept it as payment for merch

The world of cryptocurrencies has been living, for several years now, in a hype that no other sector can claim to have in our age. Although a biased perception of reality often generates manias, this industry deserves everyone’s attention. 

Even in the early 2000s, the invention of the internet created enormous euphoria in the financial markets. However, the bursting of the famous dot-com speculative bubble did not stop the web sector from growing and revolutionizing our economy.

Excluding the current hype in the sector, we recognize that there are stories of the crypto universe that are fun to read. So today, we will talk about the so-called meme coins and, in particular, about the most famous of its representatives: Dogecoin (DOGE).

These days, the eclectic Elon Musk, CEO and founder of Tesla Inc., announced that his company would begin accepting Dogecoin as payment. This announcement was enough to blow up the price of DOGE.

In this article, we will start, first of all, with a general overview of the Dogecoin project. We will then analyze the market reaction to Musk’s announcement and reflect on the more prominent topic of cryptocurrency payments.

Doge and the meme coins

What is a meme coin? The chances are that if you do not use the internet only to trade cryptos, you are also familiar with online memes. From the funny image of a Shiba Inu, two developers created a new cryptocurrency.

Ironically, a product manager employed at Adobe in Australia, Jackson Palmer, had, in fact, an incredible idea. Palmer created the concept of ​​a virtual coin in 2013 to make fun of the crypto-mania in the financial sector.

Before 2013, Palmer’s social media posts on the subject of cryptocurrencies were heavily ironic. This hinted at a lack of confidence in the entire market, which in his eyes appeared inflated.

After jokingly buying the web domain dogecoin.com, the online community started talking about this cryptocurrency. It is essential to say that DOGE did not yet exist at the time of the facts.

These rumours reached the ears of a developer employed at IBM, Billy Markus. Markus had for years a project in his head: launching his cryptocurrency. The only obstacle in the developer’s plan was the difficulty in successfully advertising a rival of the Bitcoin giant.

Upon hearing about this crypto, Markus contacted Palmer asking for permission to create a system to support the project. The code developed by Markus is what allows Dogecoin to exist today.

With a structure very similar to Litecoin, Dogecoin landed in the financial world. In addition, his iconic Shibu Inu (a Japanese dog breed) is often part of online memes. This feature has led many crypto pundits to talk about meme coins for the first time.

Elon Musk’s troubled crypto relationship

Perhaps not everyone remembers that, not long ago, Tesla Inc. had decided to accept Bitcoin as payment. Then, a tweet from Elon Musk announced this incredible breakthrough in the crypto universe, with a tremendous explosion in the Bitcoin market share. 

On the wave of excitement, Tesla Inc. announced that it had purchased Bitcoin worth approximately $ 1.5 billion. Everything seemed to proceed at a good pace when, suddenly, Musk himself decided to retrace his steps.

A new tweet from Tesla CEO highlighted that Bitcoin’s environmental impact was too high for the company to continue in this direction. Within minutes of the announcement, the price of Bitcoin lost more than 10% of its value, interrupting a bullish phase that lasted several months.

History seems to repeat itself today with Dogecoin. A few days ago, Elon Musk tweeted: “Tesla will make some merch buyable with Doge & see how it goes“. Once again, DOGE’s price exploded in minutes, growing by over 20%.

Musk has often spoken enthusiastically about Dogecoin, but the market now risks getting confused. Seeing the sensational change of course on Bitcoin, it seems impossible today to predict how the liaison between Tesla and DOGE will go forward.

Why you should not laugh at DOGE

Despite its founder’s initial thoughts, DOGE is not precisely a laughing stock. The meme coin entered the market with a price of a fraction of a penny and reached an all-time high of $ 0.52. 

DOGE’s current market cap is around $ 23 billion. However, if Dogecoin was born a joke, this crypto does not seem to make the market laugh anymore. Other meme coins have flooded the market since then; the case that has attracted the most interest in recent months is Shiba Inu (SHIB). Calling itself “the anti-doge”, SHIB has a market cap close to $ 20 billion and promises to be popular in the future as well.

How far are we from using cryptos as payment methods?

At the moment, there are two main obstacles to the official adoption of cryptos as payment methods:

  • As of today, we do not have a regulated way to use our crypto wallet instead of cash or a credit card in a physical shop
  • The typical price volatility (as evident by looking at crypto live prices) in the sector would scare any business.

The market, however, is working on solutions to overcome these problems. A company such as Visa has recently decided to put aside its reluctance towards cryptocurrencies, giving the first essential signs of opening towards Bitcoin.

A similar argument also applies to Mastercard, which has decided to start strategic partnerships to allow payment in cryptocurrencies through its systems.

However, regarding the market’s high volatility, the crypto industry is working on the stablecoin concept. There are several tokens that, following a specific algorithm, aim to maintain a stable value over time.

These tools, less interesting for market speculators, can offer a valid alternative for those who want to accept payments in cryptocurrencies.

Our conclusions

Tesla Inc.’s past obliges us to evaluate Elon Musk’s announcement on DOGE carefully. However, the trend of crypto acceptance as a form payment method is easy to see. News like this only feed the valuable debate in the crypto universe. 

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Companies like Visa and Mastercard have understood the convenience of supporting the market on this change. And, the rest of the world will soon follow this trend. Crypto payments are becoming a reality. And, step by step, the industry is overcoming its past limits.

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