On May 11, Elon Musk launched a poll on social media platforms: “Do you want Tesla to accept dogcoin payments?” As of press time, a total of 3.92 million netizens voted, of which 78.2% chose “yes”.
Back on February 1, Elon Musk mentioned in a ClubHouse discussion that “the most ironic and interesting outcome could be that dogcoin ends up being the world’s currency. Now it seems to be gradually becoming a reality. Several overseas companies have already announced that they are accepting dogcoin as a means of payment since the price of dogcoin rose significantly in 2021.
Currently the NBA Dallas Mavericks, NBA Houston Rockets, MLB Oakland, online retailer Newegg, wine auction house Acker, Latvian Airlines, American Cancer Society, and many other companies or organizations have announced that they accept dogcoin payments.
However, our investigation revealed that these so-called acceptance of dogcoin payments are more just marketing opportunities in this cryptocurrency frenzy.
Dogcoin payments are a marketing strategy
Famous companies such as NBA Dallas, Rockets and Newegg have publicly stated that they accept dogcoin payments this year.
The investigation by Chain New found that the claimed acceptance of dogcoin payments by these companies does not mean that merchants accept dogcoin payments directly, but that their partner payment platform BitPay started accepting dogcoin for settlement on March 4 this year.
Specifically, merchants can choose to accept crypto assets or U.S. dollars at the time of settlement. If they choose to settle in USD, BitPay will sell the crypto assets received by the merchant for USD; if they choose crypto assets such as dogcoin and bitcoin, the merchant will have to bear the volatility risk associated with the crypto assets themselves.
BitPay users can choose to pay with Bitcoin, Ether, and other crypto digital assets, and according to BitPay CCO Singh, even with the rising popularity of dogcoin, its share of BitPay’s payments is still only 10% of the total.
Interestingly, many of the companies that have recently claimed to accept dogcoin payments, including Newegg, were already BitPay partner merchants several years ago.
It’s not just the merchants involved that are making the hype about dogcoin payments, but also the cryptocurrency holders. According to change.org, more than 225,000 people have signed a petition calling on Amazon to adopt dogcoin as a payment method.
In fact, Amazon was one of BitPay’s partners back in 2019, and Dogcoin’s official Twitter account has stated that users have long been able to use Dogcoin to make payments on Amazon. But avid dogcoin enthusiasts don’t seem to care about this result, and the number of people signing the petition continues to grow daily.
This oops phenomenon means that most of the internet users participating in the petition are not clear about Amazon’s payment process and are not familiar with the development of payments for crypto-digital assets. It is only through this collective act that the marketing is leveraging the momentum to bring more attention to dogcoin and thus pull up the price.
With the collusive hype of merchants and coin holders, there is not much actual use of dogcoin in the payment space.
Mike Bucera, Partner at BlockTower Capital, said, “At this point, the announcement that merchants will start accepting dogcoin is just a big marketing ploy.”
The “double standard” Musk
On May 13, Tesla Motors CEO Elon Musk said on social media that Tesla no longer accepts bitcoin payments because the process of bitcoin mining consumes a lot of electricity, causing environmental pollution and energy waste, but then threw out a vote on whether Tesla should accept dogcoin payments.
And dogcoin, which Elon Musk has been so bullish about, in fact uses the same mining method as bitcoin and does not perform any better on an environmental level.
So it seems that Musk doesn’t really care about environmental issues.
On April 3, 2019, Musk said on social media platforms that “the value of dogcoin may be different” and changed his signature to “former CEO of dogcoin”, and dogcoin rose sharply that day, with an amplitude of 33%.
Every time Musk mentions dogcoin in social media, it causes a violent market shock. From February 6, 2021 to date, Musk has posted about dogcoin on social platforms more than 20 times in total. Meanwhile, the price of dogcoin has risen more than 15 times at its highest. And since March 2020, Dogcoin has risen by a maximum of 400 times.
Along with the skyrocketing, the price of dogcoin has fluctuated tremendously, with many instances of price cuts in just a few days, making it easy to lose money if not held for a long time.
After Elon Musk claimed that dogcoin was a “scam” on Saturday Night Live on May 8, the price of dogcoin plummeted 39%, and then fell in the following days, causing the price to “cut” compared to its peak.
As the originator of Dogcoin’s high volatility, does Musk really think Dogcoin is a good buy for Tesla? Can he convince the board of directors?
The Death of High Volatility
In recent years, although crypto-digital assets, mainly Bitcoin, have been included in the allocation tables of more and more mainstream financial institutions, the excessive volatility has led to crypto-digital assets always being considered as high-risk assets. Without solving the volatility problem, it is difficult to provide sufficient stability for payments such as shopping. Also the lack of sovereign credit backing, the lack of realistic value carrying, and relying solely on community consensus amplify their high risk as a means of payment.
Another NBA team, the Boston Celtics, has yet to accept payments from crypto-digital assets, with the team’s shareholder Steve Pagliuca saying in an interview, “It’s hard to see bitcoin as a viable currency at this point.”
In addition to excessive volatility, crypto-digital assets have huge drawbacks in terms of transaction costs, reflected in both the cost of currency and the cost of time which are currently unsatisfactory. In Bitcoin, for example, the single transaction miner fee for Bitcoin is about $4.49 as of press time, while the transaction fee for ethereum is about $10.93 per transaction. And bitcoin transfers normally take about 30 minutes to arrive. The high transaction costs are an unbearable burden for frequent business transactions.
The high volatility and inefficiency hinder the adoption of cryptocurrencies like Bitcoin for payments. Therefore, more often than not, investors only allocate to mainstream cryptocurrencies like Bitcoin as an asset rather than as a “payment currency”, and cryptocurrencies with weaker consensus and higher volatility like dogcoin are less likely to take on the payment function.
Li Bo, deputy governor of the Central Bank of China, said at the Boao Forum that Bitcoin is a crypto asset and an investment option, not a currency per se, but an alternative investment. Therefore, the main role crypto assets should play in the future is as an investment tool or an alternative investment.
Overall, even if dogcoin has a high market buzz, when it comes to payments, it is still nothing more than a marketing campaign conspired by merchants and coin holders.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/behind-the-dog-coin-frenzy-its-just-a-collusive-marketing/
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