Grandbrothers
Thesis Summary
After a 180-degree turn, it looks like Elon Musk is going to fulfil his initial promise of buying Twitter, Inc (TWTR) for $44 billion.
Since he announced this change of heart last week, the pending trial has been postponed, Twitter has rallied, and the future of Musk, Twitter and Tesla (TSLA) has been the subject of speculation.
However, not many have turned around to consider how this will affect Musk’s favourite dog-themed cryptocurrency, Dogecoin (DOGE-USD). Musk has expressed his desire to make DOGE an intricate part of the Twitter experience before, and this may now become reality.
Although DOGE was started as a joke, we have seen just how much a devoted community can do for a cryptocurrency, and this one has perhaps the most arduous followers.
All money is ultimately a social construct, and since Twitter is now society’s “town square”, this seems like the ideal place for it to flourish.
In Case You Didn’t Know
Here’s a quick recap for those that haven’t been following these developments. In April, Musk signed an agreement to buy Twitter for $44 billion. In July, however, he backtracked, citing concerns over bots which obscured the company’s true value.
Twitter, who would have been happy to take the offer at around $54/share, decided to sue the billionaire, after which Musk counter-sued Twitter. The court case was supposed to begin on October 17th.
Last week, however, Musk said he would go ahead with the acquisition and asked for the trial to be postponed while he obtained the financing. This might involve selling some shares of Tesla, which may have acted as a catalyst for some of the latest price movements.
Tesla, Twitter Doge Price (TradingView)
As we can see in the chart above, Twitter shares quickly rose following the acquisition announcement in early October, while Tesla’s shares have been falling, although weak deliveries are also a factor here.
I’d also like to point out the spike that we saw in the price of DOGE, which Elon Musk has always been a fan of. Is this a short-lived meme-inspired rally? Or could there be more to this connection?
Elon May Have Plans For Dogecoin
Elon Musk has tweeted about Dogecoin many times before and was even sued for “manipulating” the Dogecoin price with his tweets. Now that it looks very likely that he will own Twitter, there’s a very strong possibility that he might integrate crypto/blockchain into the equation, and he has specifically mentioned DOGE.
Leading up to the Twitter vs. Musk trial, numerous communications were released between Musk and other prominent figures. In an exchange with the president of The Boring Company, Musk said the following:
My Plan B is a blockchain-based version of Twitter, where the ‘tweets’ are embedded in the transaction of comments. So you’d have to pay maybe 0.1 DOGE per comment or repost of that comment.
Source: Capital.com
The idea of making Twitter a blockchain isn’t that far-fetched and could indeed solve many of the issues the company is facing today. For example, the company has been criticized for silencing certain voices and opinions, but this would not be an issue if the platform worked like a decentralized organization. Users could even band together to vote/validate information. Instead of transactions containing money, these would be tweets. Or, in the future, they could also include money transactions.
In a recent video, Elon Musk is seen comparing Twitter to WeChat. He points out how people can essentially “live” on WeChat, and that’s where Twitter should be going.
This comparison does seem somewhat ironic. WeChat is an incredibly centralized application. However, this doesn’t mean that a similar app with opposing fundamentals can’t be built. Twitter could eventually be a social media app, payment platform, marketplace etc., while still maintaining complete decentralization by using blockchain technology. And based on Musk’s previous tweets, it looks like DOGE might be the native currency of this “SuperApp”.
With that said, I must note that Musk himself has also said that a model using DOGE transactions like the one described above is not feasible at this point in time.
Dogecoin: Not a Joke Anymore
A lot of people might scoff at the idea that DOGE could be an actual currency one day, but I don’t think this is such a crazy idea. For starters, although DOGE was started as a joke, it has a solid foundation behind it. DOGE is a fork of LuckyCoin, which is a fork of Litecoin (LTC-USD), which is a fork of Bitcoin (BTC-USD).
DOGE is mined in the same way Bitcoin is, although there is no supply cap on the amount of DOGE that can be mined. The currency is inflationary, but this will become less of an issue as the circulating supply becomes larger.
DOGE Supply Forecast (Investor Palace)
That said, transactions are fast and cheap, and over 4.4 million registered DOGE addresses are already available. As a means of exchange, it possesses the right qualities. It’s divisible and can be transferred in a quick and efficient manner. Clearly, it’s not an optimal store of value, but that doesn’t mean it can’t be used in daily transactions.
Thousands of different things have been used in the past as money, from seashells to cattle to cigarettes. Ultimately, there is no perfect money (although Gold and Bitcoin almost are) there is only the best form of money available in a given place and time.
And what is money? It’s ultimately a social construct. It’s something we use to measure value, and a lot of things can be used to measure value. Perhaps even more important than the qualities mentioned above, durability, divisibility etc, is social acceptance. It almost doesn’t matter what we decide is money, as long as we all agree that it is.
Can DOGE become an accepted form of payment on the internet? With the support of arguably the most influential person on the planet and the technological capabilities of Bitcoin, I believe it can.
Final Thoughts
We live in unprecedented times, both from a monetary standpoint and also technologically. We have seen unprecedented monetary stimulus, billion-dollar companies emerge in a matter of years, and crypto millionaires minted in even less than that. While I don’t think that DOGE is there yet, I definitely don’t believe we’ve seen the last of this meme-inspired coin.