Elon Musk, the controversial CEO of the electric car company Tesla, is the world’s richest man, boasting a net worth of $230 billion. So when he supports a particular asset, it can pay to find out why. But while Dogecoin (DOGE 0.09%) has been spectacularly rewarding for its early backers, investors should think twice before blindly following Musk’s lead. Let’s discuss why.
![Dogecoin [DOGE] to rise beyond 40%? Whale activity may spur rally](https://crypto.newswireservice.net/wp-content/uploads/2023/02/doge-wale-1000x600-120x86.jpg)
Why does Elon Musk support Dogecoin?
Elon Musk first tweeted about Dogecoin in April 2019: “Dogecoin might be my fav cryptocurrency.” And his timing was perfect. If you bought $100 worth of DOGE at the time of Musk’s first tweet (when it traded for $0.002552), you would have 39,185 coins worth roughly $2,500 at the current price of $0.0639. But while that’s a pretty epic return, past performance is no guarantee of future performance.
Image source: Getty Images.
One problem is that Musk hasn’t highlighted any fundamental reason for his Dogecoin support. Instead, the controversial CEO claims that he (presumably on a whim) started buying the asset after hearing employees discussing it on the production lines of Tesla and SpaceX.
Newer rivals like Solana or Cardano introduce innovations to blockchain technology such as a higher transaction speed (these assets can handle 50,000 and 250 transactions per second, respectively, compared to Dogecoin’s 33). By comparison, Dogecoin retains a relatively simple use case as a way to store and transmit value. The Dogecoin blockchain also isn’t programmable, which means it can’t handle complex decentralized applications (dApps), which use self-executing smart contracts to offer services on the network.
Dogecoin has low real-world utility
Elon Musk seems aware of Dogecoin’s lack of real-world utility and has used his considerable influence to try and rectify the situation. In January, he joked that he would eat a McDonald’s happy meal on T.V. if the fast food giant accepted DOGE as payment (they declined). Later, he suggested Twitter’s
![Dogecoin [DOGE] to rise beyond 40%? Whale activity may spur rally](https://crypto.newswireservice.net/wp-content/uploads/2023/02/doge-wale-1000x600-350x250.jpg)
