Dogecoin is sinking again after the news that Tesla now accepts the cryptocurrency as payment gave it a boost.
On January 14, Tesla CEO and billionaire Elon Musk announced that Tesla merch is now available to buy using Dogecoin.
He first shared the news on December 14. 2021, saying that Tesla would “see how it goes”.
Now, Dogecoin can be used to buy select merch, such as the Cyberquad for Kids which costs 12,020 Doge, or around £1499.80, the Giga Texas Belt Buckle (835 Doge, about £104.19) and the Cyberwhistle (300 Doge, about £37.43).
Following Elon's Tweet, Dogecoin surged almost 15% in value.
But on Monday (January 17), it lost over 6 percent of its gain. This is likely because of investors selling off their shares for a profit as they saw the coin gain.
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What is Dogecoin and how much is it worth?
Dogecoin is a meme coin based off another meme coin. It followed on from Shiba Inu coin, which was launched in honour of the infamous 'doge' meme of the Japanese breed.
The open-source currency was created by Billy Markus and Jackson Palmer in December 2013 as a lighthearted alternative to Bitcoin.
Unlike Bitcoin, Doge has no cap on how many coins can be mined. Therefore, there's no limit to how many can be bought, sold and exchanged.
Currently, the coin is mostly used to tip creators on Reddit or Twitter to reward them for quality social media content.
It can be bought through all the main crypto exchanges, such as Robinhood, Binance and Kraken.
At the time of writing, the value of Dogecoin was £0.12, up from £0.10 on January 10, but trailing behind its £0.16 spike following Musk's tweet about Tesla accepting it for some products.
Trading is down from its all-time high of £.053 in May 2021, but the coin has still enjoyed a massive 1,768.33% gain over the past year.
Given this recent endorsement from Musk - whose support (or lack thereof) has been known to influence prices, even if just in the short term - Dogecoin could be on its way to reaching the coveted $1 mark.
Why is Tesla accepting Dogecoin?
Elon Musk has long been a vocal supporter of Dogecoin. He has previously said Dogecoin may be his favourite cryptocurrency, as it's “pretty cool.”
The tech billionaire hinted at his plans in May last year, when the coins were experiencing a surge. He tweeted a poll asking users if they would like to see Tesla accept Dogecoin.
Shortly after this, another of Musk's companies, SpaceX, started accepting payments in Dogecoin.
Tesla has already tried accepting cryptocurrency as payment.
A few months ago, the company move to allow cars to be bought with Bitcoin.
This was stopped just 49 days later, citing concerns around Bitcoin mining.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Elon Musk said in a statement.
Dogecoin still requires energy to mine, but because it is nowhere near as valuable as Bitcoin, it consumes much less. Still, Musk has previously said that he is working with Dogecoin developers to “improve system transaction efficiency.”
He has also made public that his support is based on community support.
“Lots of people I talked to on the production lines at Tesla or building rockets at SpaceX own Doge,” he told CNBC in October.
“They aren’t financial experts or Silicon Valley technologists. That’s why I decided to support Doge, it felt like the people’s crypto.”
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