At the outset of this article, let’s start with the fact that Tesla’s purchase of bitcoin was in the best interest of the company. It is the most effective way CEO Elon Musk and company could — in the short term — fortify their balance sheet and position Tesla to execute its long-term vision.
We’re both Tesla shareholders. And one of us — ProgrammableTX — also drives a Tesla, has his house powered by Tesla solar panels and owns a Tesla Powerwall, which has gotten him through more than a few blackouts. Get the drift? We’re pro Tesla. But this week has made one thing clear: While Musk has not done anything illegal or technically fraudulent by tweeting about dogecoin, it was a total dick move.
There’s a saying in the comedy community: All comedians want to be rock stars and all rock stars want to be comedians. In the post-Steve Jobs era, all CEOs want to be both.
Who let the Doge out
— Elon Musk (@elonmusk) February 7, 2021
Looking back at Musk’s behavior this past week, this above tweet is perhaps the most revealing. To be blunt: Perhaps he thought this was clever, and if being clever was all he was trying to do, he failed. Making reference to the 1998 song, “Who Let The Dogs Out” by The Baha Men, is the hallmark of a comedy naif. When you boot up the comedy brain for the first time, it’s the very first thing that comes out. If your comedy brain is a printer, then “Who Let The Dogs Out” jokes are a test page.
But then, after it was revealed that Tesla had purchased $1.5 billion of bitcoin, it seems he was also trying to create a smokescreen. One cannot purchase that much BTC all at once. It must be done with extreme stealth, spread out over thousands of transactions, probably through different exchanges. Here’s a glimpse into what MicroStrategy had to do to execute its initial $250 million foray into bitcoin, one-sixth the size of Tesla’s purchase:
For context, when Elon changed his Twitter bio to one word, “#bitcoin,” on January 29, the BTC price jumped 20 percent within a few hours. It subsequently fell and, on February 4, Musk removed the word from his bio. We know this because… people wrote articles… about Musk’s Twitter bio.
So, it makes sense strategically that he would try and distract us, lest he move the price while trying to buy bitcoin. To that point, news of Tesla’s move sent BTC to fresh all-time highs of $46,666, as of this writing.
This kind of gamesmanship, in the abstract, is not a problem. But the manner in which this game was played caused us to reevaluate Musk, his ability to feel empathy for his followers and the type of misinformation he is willing to spread for his own benefit. We’d like to stress here that it’s not the “for his own benefit” part which was dickish, but the misinformation and head games parts.
Tweeting about dogecoin is not merely a diversionary tactic. There is something of a tradition in cryptocurrency, more common in bull markets than bear, in which influence peddlers use their massive followings to promote vanity projects or outright scams. In fact, dogecoin was birthed specifically as a riff on this sad state of affairs.
Perhaps in the context of all this, Musk perceived his doge campaign as a meta-shill, the ultimate wink to insiders. But his following is not made of Bitcoin insiders, and we were really left scratching our heads as to his level of seriousness.
You can see in the replies above that the first response is genuine confusion, followed by an earnest Bitcoiner jumping in to clarify.
Fueled by Musk’s tweets, the price of dogecoin skyrocketed. This means humans all over the internet aped in, taking abnormally large risks with a high probability of losing a lot of money.
Musk’s behavior looks much worse if you consider that he’s new to Bitcoin and likely trying to confuse people, many of whom are also new. He purposely fomented confusion in a marketplace already full of disinformation. Not illegal, just dickish.
To break down the problem or DYOR, as we are commanded to do, one actually has to dig into the technical differences between Dogecoin and Bitcoin, but to even attempt this as a rational comparison is a schizophrenic exercise. Doge is a joke, and to gauge it on technical merits negates the very thing that gives doge value in the first place, which is that it isn’t supposed to be taken seriously.
Or is it?
After an exhaustive weekend of exploring doge’s viability — as every market participant must do for themselves — it’s clear that Dogecoin cannot actually be a new financial system. Not even if Musk threw the full weight of his reputation and balance sheet behind it. Not if Tesla set aside resources to build out node and mining infrastructure. Not if its monetary policy was rationalized to promote saving. Not if “transaction throughput” were increased. None of these things would be enough.
Investment in doge would still be expensive and wasteful and Bitcoin would still be there, churning out blocks and executing its monetary policy. Like countless opportunists before him, such as Justin Sun, Roger Ver, Dan Larimer, Richard Heart and Bitconnect, to name a few, Musk seems to have commanded the pockets and attention of multitudes, and used this as a cover to divert us from his true intentions.
If we’re mistaken, and this wasn’t part of a larger play, does that make it better? A little, sure. But it also means that, for a brief period, he was trifling with people who believed in him for the sake of comedy and obfuscation, while in the background he bought bitcoin.
This is a guest post by ProgrammableTX and Kenny Rowe. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
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