Dogecoin and Musk’s new tweet
In a post on Twitter earlier this morning, the founder of Tesla and SpaceX shared his thoughts on the two leading cryptocurrencies, with special reference to scalability. Writing to influential Dogecoin agent Matt Vallace, Musk said that Bitcoin and Ethereum “follow a multi-layered system of transactions, but the transaction rate of the underlying layer is slow, and the costs of those transactions are high.” He added that he believes that there is merit in using Dogecoin as a method of “maximizing the transaction rate of the base layer and minimizing transaction costs,” with cryptocurrency exchanges taking on the role of “de facto secondary layer.”
Numerous crypto enthusiasts responded to Musk to criticize his views. Some asked about how exchanges could act as a layer 2 for Dogecoin, while others persuaded Musk to explore scalability solutions for Bitcoin and Ethereum. Although using the Bitcoin blockchain can be relatively slow and expensive, Lightning Network has brought great improvements in transaction time and costs. Similarly, several layers of 2 solutions are currently being developed to help the Ethereum scale. Many of Ethereum’s leading DeFi protocols have unveiled their plans to launch at Arbitrum and Optimism, two long-awaited Optimistic Rollup solutions to appear this year.
Both Bitcoin and Ethereum are known for a high degree of decentralization, making scalability problematic. Nevertheless, for Musk, his focus seems to be primarily on Dogecoin. Musk has been a leading proponent of meme currency in recent months, making it harder to establish his views on other cryptocurrencies. In May, he shocked the crypto community by revealing that Tesla would stop paying with Bitcoin due to environmental concerns. Since then, he has criticized the leading blockchain on several occasions. Despite Musk’s recent stance, Tesla still holds Bitcoin on its balance sheet after investing $ 1.5 billion earlier this year.