Written by: Alvis, Mars Finance
In the world of Dogecoin, Elon Musk has always been an uncompromising "believer". The world's richest man, CEO of Tesla and founder of SpaceX, and now the U.S. government's Minister of Efficiency, recently stood up for Dogecoin's inflation model on Twitter (now renamed X), saying that its "seemingly weird" token economics has become a major advantage.
The topic was sparked by a tweet from Dogecoin co-founder Billy Markus, who explained to the community how to adjust the token economics of Dogecoin and even proposed that developers could directly initiate a vote to modify all of this. As Markus said: "You can change it on the spot, send a request, and convince the community and miners to use the new version. Now don't bother me anymore."
Musk came out to support it directly, saying that the "stability" of this type of inflation model is a major feature of Dogecoin, not a defect. In response to Markus' proposal, he also responded humorously: "I think this is the charm of Dogecoin."
Unlimited inflation: What’s so special about Dogecoin?
Many people may frown when they hear the word "inflation" - yes, the supply of mainstream cryptocurrencies such as Bitcoin and Ethereum is limited, which is also an important reason why they attract investors. However, Dogecoin is different, its supply is unlimited - 10,000 new coins are minted every minute, and it is estimated that the annual supply of Dogecoin is as high as 5.2 billion.
But Musk and Markus have different views on this "seemingly uncontrolled" inflation model. Musk believes that this unlimited supply actually guarantees the "liquidity" of Dogecoin, and this "stable" inflation is its unique selling point that distinguishes it from mainstream currencies such as Bitcoin and Ethereum. "This is not a defect, but a feature." Musk said.
Markus also said that Dogecoin's economic model makes it an "ideal currency" that can adapt to a wider range of application scenarios, especially in consumer payments, and can avoid making consumers hesitant due to large price fluctuations like Bitcoin.
Weird token economics, but becomes an advantage?
The "unlimited supply" of Dogecoin is not just a theoretical academic discussion, it has a history of practical application. Billionaire and crypto tycoon Mark Cuban pointed out as early as 2021 that this peculiar economic design is precisely a major advantage of Dogecoin as a means of payment.
Cuban said: "Dogecoin is easy to accept because it is not as expensive as Bitcoin and not as complicated as Ethereum. If you have $100 in your hand and buy a Bitcoin or Ethereum, you may only get a little bit. Dogecoin is different. It is cheap and easy to buy goods after appreciation. This intuitive feeling makes Dogecoin an ideal payment method."
Cuban also revealed that during his tenure as owner of the Dallas Mavericks, the Mavericks began accepting Dogecoin as a means of payment for tickets and merchandise as early as 2021. Behind all this is the advantage of Dogecoin being "easy to use."
Elon Musk and Dogecoin: From Hobby to Strategy
It has to be said that the relationship between Elon Musk and Dogecoin has long gone beyond the simple category of "investment". Since 2018, Musk has become a loyal fan of Dogecoin. Almost every time he speaks on social platforms, he mentions Dogecoin and continues to magnify the potential of Dogecoin. What's more interesting is that Musk once said that he is not actively involved in the encryption field, but just "kind of" likes Dogecoin for a simple reason: "It has dogs and emojis, and I like all these things."
This may sound a bit light-hearted, but in fact, Musk's enthusiasm for Dogecoin has never diminished, and sometimes even drives the price fluctuations of Dogecoin, becoming a "barometer" of the market. In 2019, the developers of Dogecoin exclusively revealed that they had cooperated with Musk to make Dogecoin a practical payment cryptocurrency.
The future of Dogecoin: "inflation advantage" or "bubble risk"?
Obviously, the "weird" economic model of Dogecoin can be an advantage or a disadvantage for different people. For some investors, the inflation of Dogecoin brings a "long tail effect", and its liquidity in retail payments makes it a "tool coin" that is easy to consume; while for others, such inflation also means that its value may be under pressure for a long time and lacks the scarcity like Bitcoin.
However, with Musk and other crypto giants continuing to pay attention to Dogecoin, its market position will undoubtedly continue to maintain its popularity. In the future, whether Dogecoin will become mainstream as a "payment tool" or just a "meme coin" is still a hot topic in the crypto field.
The price is far from reaching its historical peak, and the holding volume has reached a record high
Currently, the price of Dogecoin is $0.39, and the increase in the past three months has reached an astonishing 350%. Dogecoin once hit a historical high of $0.74, which is nearly 89% away from the current price. However, considering the continuous increase in the issuance of Dogecoin in recent years, if calculated based on market value, Dogecoin still needs about 54% increase to return to its historical peak.
It is worth mentioning that the contract holdings of Dogecoin on the exchange have hit a record high. The contract holdings of Dogecoin at its peak in 2021 were only 900 million US dollars, while the current contract holdings of Dogecoin are nearly 3 billion US dollars. This means that the future direction of Dogecoin may be more affected by the futures market.
In general, the future of Dogecoin has become more confusing. Although its market performance is strong, the issuance mechanism also makes it more challenging to return to its historical high in the future. In the highly volatile environment of the crypto market, whether Dogecoin can break through the bottleneck and reach its historical high again still needs time to verify.
