Thinking through the impact of Elon Musk’s acquisition of Twitter on Dogecoin
- Twitter accepted the terms of the deal with Musk, who has ideas how to better monetize the popular service.
- Some think Musk would likely integrate crypto payments on Twitter in some way.
Elon Musk successfully inked the deal to acquire one of the popular social media platforms by fighting off multiple legal challenges – and agreed to pay $44 billion for Twitter, which comes out to $54.20 a share.
Twitter accepted the terms of the deal, but it was unclear how the financing scheme or go-private deal would be structured – some experts speculate the company will soon be privately held under Musk’s control.
A day after the news that Musk will purchase Twitter broke, the value of all cryptocurrencies combined surged by 4%. DOGE benefited from the news the most and returned to the top 10 coins by market capitalization immediately after.
Dogecoin, the cryptocurrency that features an image of a Shiba Inu dog from the viral “Doge” meme as its logo and namesake, was started as a joke in 2013 to poke fun at the hype around Bitcoin.
Although Musk is publicly seen as a DOGE supporter, his support for Dogecoin isn’t new – he started to tweet about Dogecoin back in 2019 and has spoken many times in favor of the dog-themed coin – often on Twitter. He has called DOGE the “people’s crypto”, and once referring to himself as “The Dogefather”. He still makes tweets that boost the value of the cryptocurrency every now and then.
In March 2022, Musk claimed that DOGE was one of the only three digital assets he owns – in addition to BTC and ETH. According to him, Dogecoin is better than Bitcoin, as it's more suited for financial transactions. With Bitcoin, there is a larger transaction value but very low transaction volume, compared to Dogecoin which has very large transaction volumes per day.
Last year, he tweeted “SpaceX is going to put a literal Dogecoin on the literal moon,” alluding that SpaceX would accept Dogecoin as a payment method. Moreover, his electric car company, Tesla, announced earlier this year that it would begin accepting Dogecoin in sales of merchandise and other products.
Elon’s consistent support for the cryptocurrency, and his implementation of Dogecoin into Space X’s and Tesla’s payment mechanisms, bolsters the potential for Dogecoin to be given more utility on the social media network giant.
Some think that Musk would likely integrate crypto payments on Twitter in some way – at the time of becoming Twitter's biggest shareholder after taking a 9.2% stake, he proposed a number of changes to the Twitter Blue premium service which offers access to premium features – one of which was to have the option to pay the monthly fee using Dogecoin.
Although Elon has worked with the Dogecoin developers in 2021, claiming to improve their system transaction efficiency, the recent Twitter acquisition has many people wondering about the future of Dogecoin, as no official word has come out since the acquisition.
According to Alex Wang, co-founder and CEO of Ember Fund, a crypto investment management app, Dogecoin may be the crypto most associated with Musk, who has played a key role in its rise, but he is unlikely to make any technical changes to the Twitter platform that would favor one coin over another.
“Much of Dogecoin’s recent success has been due to the support of Elon Musk – but don’t expect his recent purchasing of Twitter to produce any structural, algorithm changes which will help support the crypto. One of Elon Musk’s major reasons for purchasing the micro-blogging site is to make the algorithm that promotes certain tweets over others to be made public,” he said.
“Since an algorithm that disproportionately supports Dogecoin wouldn’t go down well with the public, you can expect that any support Elon gives to Dogecoin will come the way it always has – through his personal Twitter account.”