Dogecoin Gains 8 Percent After Elon Musk Shows Support on Twitter

Elon Musk has thrown his weight behind Dogecoin on several occasions and it's no secret now that he wants to take it to the next level. The "Dogefather" regularly tweets about the Shiba Inu face-themed currency, that started as a joke currency but now has a staggering market cap of Rs. 2.1 trillion. On July 9, the Tesla CEO warned that Bitcoin and Ethereum — the world's two biggest cryptocurrencies — were pursuing a multi-layer transaction system, but their transaction rate was "slow" and cost "high."

Musk's comment came as a response to a tweet by Dogecoin investor and YouTuber Matt Wallace. "Reminder: The Dogecoin update is coming soon. It will position Doge perfectly to become one of the most used currencies in the world," tweeted Wallace on Friday.

Reminder: The Dogecoin update is coming soon! It will position Doge perfectly to become one of the most used currencies in the world.

— Matt Wallace ⚠️ (@MattWallace888) July 9, 2021

Replying to the tweet, Musk wrote, "BTC [Bitcoin] and ETH [Ethereum] are pursuing a multilayer transaction system, but base layer transaction rate is slow and transaction cost is high."

"There is merit imo to Doge maximizing base layer transaction rate and minimizing transaction cost with exchanges acting as the de facto secondary layer," he added.

— Elon Musk (@elonmusk) July 9, 2021

That's not it. Musk engaged with a couple of other users as well. Twitter user @PPathole, for instance, underlined that Dogecoin was already 15 times faster than Bitcoin.

"Fee drop is easy to achieve. Block size increase is easy to achieve. Block time speed up by 10x is the hardest part," he wrote.

— Pranay Pathole (@PPathole) July 9, 2021

Musk responded, "Block size and frequency should steadily increase to match broadly available bandwidth."

Block size & frequency should steadily increase to match broadly available bandwidth

— Elon Musk (@elonmusk) July 9, 2021

Another user, @TeslaGong, then asked, "What would be a sweet spot for the number of transactions per second - should it reach the speed of Visa to be really useful?"

What would be a sweet spot for number Transaction per second - should it reach the speed of Visa to be really useful ?

— Tesla in the Gong ???????????????????? (@TeslaGong) July 9, 2021

The Dogecoin enthusiast was once again quick to respond and explain that it didn't need to reach the Visa speed since regulated exchanges will act as de facto second layer. 

"But the perfect should not be the enemy of the good – it is still good to increase base layer transaction speed & lower base layer transaction cost," Musk added.

— Elon Musk (@elonmusk) July 10, 2021

In May, Musk, replied to a tweet by a Dogecoin fan, said that to win "hands down", the meme-based currency needed to speed up block time, increase block size by 10 times and drop the fee 100 times. "Then it wins hands down," he tweeted.

Ideally, Doge speeds up block time 10X, increases block size 10X & drops fee 100X. Then it wins hands down.

— Elon Musk (@elonmusk) May 16, 2021

"For those bad at math, 100X higher transaction volume with 100X lower fees means total fees earned stay the same. Low fees and high volume are needed to become the currency of Earth," he wrote in another tweet. 

For those bad at math ????, 100X higher transaction volume with 100X lower fees means total fees earned stay same. Low fees & high volume are needed to become currency of Earth.

— Elon Musk (@elonmusk) May 16, 2021

Following an active presence and explanation of various aspects of Dogecoin by Musk, the crypto token — after having dipped nearly 10 percent on Thursday — gained 8 percent on Friday. On July 10, as of 1:35pm IST, Dogecoin was trading at Rs 16.17, up 94 paise from Rs 15.16 when it closed last.

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