In a recent podcast interview with Lex Fridman, Elon Musk listed out a couple of reasons as to why he prefers Dogecoin(Doge) to Bitcoin(BTC). While Fridman did not catechize Musk’s answers, the famous author of ‘The Bullish Case for Bitcoin’, Vijay Boyapati listed out a few errors in the answers.
Vijay Boyapatti, who claims to be a fan of Fridman’s podcast episodes, showcased his counters to the answers given by the Tesla CEO, through a series of tweets.
When Musk was asked why he prefers Dogecoin to Bitcoin, he said that the meme-coin has a much higher transaction volume capability than Bitcoin, to which the author explained that Bitcoin has orders of magnitude that is more transactional throughout, using the second layer lightning network. He even pointed out that scaling at the blockchain layer is fundamentally flawed as it crucially undermines decentralization and protocol immutability.
Elon went on to say that the cost of making a Dogecoin transaction is very low. Boyapatti, with his difference of opinion, exhibited that the altcoin’s network has almost zero transactional usage which is why the cost of transaction is low, it’s not because the network has a superior design and even that Bitcoin had low fees back in the day when no one used it. He points out that Bitcoin’s inflation schedule has credibility precisely because it is truly decentralized and that no entity has the power to change it at its own discretion.
Elon Musk says that a smaller block size doesn’t make sense now
“When Bitcoin was started in 2008 bandwidth was lower, so a smaller block size made more sense but it doesn’t now.”
Vijay Boyapati, counters the above-given answer of Musk, by saying that a larger block size is more feasible now, but ‘changing’ it undermines protocol immutability and credibility of monetary policy. He annotates that even if a larger block size was chosen, it could not be scaled to handle global transactions at the base layer and that scaling must happen on the second layer systems.
To the statement where Musk says that there is some benefit to having a currency increase in supply as people won’t spend it if it’s too deflationary, Boyapati says,
“Elon is correct that market participants will tend to hold (rather than trade) an appreciating asset when the opportunity cost of relinquishing it in trade is very high, as is the case with any inelastic monetary good in the process of monetization.”
He continues to add,
“That cost is so high because Bitcoin is so early in its monetization. Eventually, the opportunity cost will diminish significantly once Bitcoin reaches widespread adoption and it will “only” appreciate at the rate of global productivity increases.”
The author, Vijay Boyapati concludes by asserting that Dogecoin‘s inflation schedule does not alter the necessary evolution, but it merely undermines the first stage of it of becoming a store value. He also remarks that in the long term few people will trust the inflation schedule of a coin that can easily be altered or whose supply is unlimited.