But to Musk, dogecoin has an advantage over bitcoin and other cryptocurrencies: He sees dogecoin as the best cryptocurrency to transact with.
"Fundamentally, bitcoin is not a good substitute for transactional currency," Musk told Time Magazine after being named Time's 2021 Person of the Year. "Even though it was created as a silly joke, dogecoin is better suited for transactions."
"[T]he transaction volume of bitcoin is low, and the cost per transaction is high," he said. Musk added that bitcoin is more suitable as a store of value, which is why its investors want to hold onto it and not sell it or use it for transactions.
Dogecoin, on the other hand, is a currency that "encourages people to spend, rather than sort of hoard as a store of value," he said.
However, while bitcoin supporters would agree that the asset is a store of value, they'd also argue that it's designed to be a sound peer-to-peer financial system and could be used for transactions, citing situations like El Salvador making bitcoin legal tender.
But, according to Musk, "there are advantages with crypto relative to fiat, in that fiat currency tends to get diluted by whatever government it is. It ends up being a pernicious tax on people, especially those who have cash savings with dilution of the money supply."
Nonetheless, financial experts view cryptocurrency as a volatile, risky and speculative investment. In turn, it's recommended to only invest what you can afford to lose.