Time to get the hell out of Doge?
What’s the main benefit of spending $44 billion on a past-its-prime social media network?
Pumping the price of the shitcoins.
Elon Musk has had a strange relationship with Dogecoin. The coin was created in late 2013 as a joke based on an internet meme featuring a Shiba Inu dog. It was the crypto industry’s first "meme coin." More fittingly, it is now referred to as a shitcoin, a term that encapsulates the useless cryptocurrencies in the market. Yet, despite its uselessness, Musk became one of its cheerleaders, reveling in the meme culture surrounding the coin. He regularly tweeted these memes or bold statements like “SpaceX is going to put a literal Dogecoin on the literal moon.” Musk even made certain products Dogecoin-eligible on the Tesla website (though he never followed through on the promise of allowing Dogecoin as a payment for an actual Tesla).
Every time he posted or announced anything Doge-related, the price would spike. Often it would rocket, sometimes with gains of over 1,000% in only a couple of days. Before appearing on SNL, he proclaimed himself “The Dogefather”, and the coin reached an $85 billion market cap. It registered a staggering $45 billion in transaction volume in 24 hours. It’s important to note that he’s also had the opposite effect on the market. During the SNL show, he agreed that Dogecoin was “a hustle.” The price plunged over 30% in the aftermath.
It’s almost like what we’ve been witnessing is Musk indulging in blatant marketing manipulation, using his massive social media presence and pedestal as the world's richest man to inflate the price of the coin. And the world lapped it up.
Doge out of this one
Eventually — finally — people took notice. The repercussions arrived at his door last June in the form of a $258 billion lawsuit. It claims he peddled a pyramid scheme (Dogecoin), accuses him of wire fraud and gambling, and argues that he drove the price up more than 36,000% over two years before letting it crash “while knowing all along that the currency lacked intrinsic value and that its value depended solely on marketing.” The massive $258 billion figure is three times the estimated decline in Dogecoin's market value since May 2021.
Earlier this week, Musk and his lawyers moved to dismiss the lawsuit, describing it as a “fanciful work of fiction that fails to state any actionable claim against Defendants Elon Musk and Tesla and must be dismissed in its entirety with prejudice.” Of course, the word hustle was nowhere to be seen; instead, Dogecoin was now being referred to as a legitimate cryptocurrency. As his lawyers stated, "there is nothing unlawful about tweeting words of support for, or funny pictures about, a legitimate cryptocurrency that continues to hold a market cap of nearly $10 billion.”
Faced with the possibility of serious penalty, it was an attempt to downplay the joke.
So, one can only imagine the look on his lawyer’s face when the world woke up on Monday to see the Twitter logo replaced with — yup, you guessed it — the Shiba Inu Dogecoin brand.
The change came without warning and without explanation. Aside from some cryptic tweets and replies by Musk — including this meme which I’ll admit did make me laugh —there has still been no reasoning given. An April Fool’s Day joke that was late because he fired the only person who knew how to change the logo? More price pumping for the fun of it? (Sorry, I mean tweeting funny pictures of a legitimate cryptocurrency?) Or, something more devious, like a big fuck you to the plaintiffs behind the lawsuit?
Whatever the reason, the outcome of The Dogefather’s actions was a totally-predictable surge in the price — over 30% in a single day.
You have to hand it to the guy. It’s an incredible response — incredibly reckless and incredibly dumb. But then, I’m not one of the wealthiest men in the world who can just about do anything he wants. So what do I know?
I started writing this with the aim of dissecting what we could learn from this latest saga, or at the very least, what we could learn about the future of Twitter. But, unfortunately, I’m not sure how to answer that. Despite the reservations of many, I hoped the platform would do well under Musk’s leadership. After all, he’s no idiot, and his other entrepreneurial successes prove that. So I assumed he would storm into Twitter HQ armed with a plan to turn the ship around, improve the overall user experience and lower its reliance on ad revenue. Instead, he strode in, armed with a sink.
While the ship may still find steadier waters in the months ahead, stunts like the Dogecoin logo shed some light on the current situation of the platform:
We’re now playing in a billionaire’s sandpit, and he will do whatever he wants.
The options are to pay up or log off.