Tesla CEO Elon Musk was recently invited for an interview at the Lex Fridman podcast. Fridman asked interesting questions about the future of cryptocurrency on Mars and Dogecoin. Talking about Dogecoin, Musk claimed that the token was created as a joke, but it has some good aspects. He explained that Dogecoin has higher transaction volume sustenance in comparison to Bitcoin.
He also claimed that with Bitcoin, the cost per transaction is higher; meanwhile, for Dogecoin, the gas fees are smaller, and it allows the users to make everyday purchases. Talking about the supply mechanics of Dogecoin, Musk claimed that there are a fixed number of hashes generated every year with a fixed percentage. Therefore, in the long run, the meme coin is deflationary.
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People of Mars will Need a New Currency
During the interview, Lex Fridman asked SpaceX CEO about the future of monetary systems on Mars. Musk replied that the people of Mars would need to develop a unique currency due to the difference in speed of light. He explained that due to the four light-minutes difference, any 1-minute blockchain would not be synchronized with the blockchain on earth perfectly.
He also added that due to his association with PayPal, he has an understanding of how money works. He also criticized the COBOL mainframes that are often criticized for being outdated. Musk claimed that many banks are still buying COBOL while in 2021, and institutions like Federal Reserve might have even older digital ledger technology. He added with the blockchain, the error of network communication is reduced significantly.
Talking about Bitcoin, Musk told Fridman that Bitcoin was making waves in 2008, and at the time, the average internet network was slower. Therefore, at the time, having smaller block sizes and long synchronization was a useful feature. However, connectivity technology has evolved today that has made the blockchain comically slower.
He also added that a linear increase in the supply of a currency is an important factor. When a currency is deflationary by nature, people are likely to save it rather than spend. However, if there is some reduction in the currency occurring with time, there will be more incentive for investors to use it as a mode of payment.