Musk-driven Dogecoin surge is a warning for Twitter

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The bursting of the social media ad-supported bubble is creating big waves in the market. Meta Platforms Inc. is worth less than Home Depot Inc., Snap Inc. is worth less than Deutsche Bank AG (which underwritten its IPO) and Twitter is now owned by Elon Musk after nearly a decade of underperformance stock market aggregate.

The depressing sight of Dogecoin jumping 100% in a week in hopes of a more cryptocurrency-oriented direction for Twitter, however, suggests we’re a long way from a new model that could help humanity or that is truly “decentralized,” the ambitions Musk has expressed for his newly acquired platform. The token received another boost on Tuesday after Musk tweeted a photo of a Shiba Inu wearing a Twitter t-shirt.

While Dogecoin’s current price pales in comparison to last year’s all-time high, when the peak of pandemic irrationality saw the desperate crypto seduced by Musk’s support for the token, its theoretical market capitalization of $15 billion. dollars shows that speculative habits die hard in the billionaire – adoring faithful.

The narrative told in crypto circles is that Musk’s past vocal support of Dogecoin will lead to the token’s integration into Twitter as a payment method. Further impetus comes as crypto exchange Binance — which helped fund Musk’s takeover — is forming a team to look at “ways blockchain and crypto could benefit Twitter,” according to a statement.

Never mind that this is all currently theoretical, or that Dogecoin has glaring flaws that would only be further exposed if it gained traction. The rules of “mimetic” herd tracking investing are to dance until the music stops, which, judging by Dogecoin’s past jumps and drops, is just a matter of of time. You don’t have to be a rocket scientist to understand that the rush to buy now is all about getting in and out at the right time, rather than having to build up a stash of tokens to spend at the moment. coming. Other memecoins rallied in sympathy.

There’s a general case to be made that injecting payment models into social media could be a good thing for battered tech stocks as advertisers pull back and inflation bites. If part of the problem with today’s ad-supported tech empires is that users and their data are the product, some form of paid model could provide an alternative. If rewarding users, sending payments to friends, or paying for verification — as one report suggests — supports more content moderation, more data privacy, and a healthier user experience on Twitter, it’s worth it. to try.

But Dogecoins are not dollars. They need artificial speculative excitement to gain value. And, true to form, Twitter was a very useful place to spread the word. A crypto-famous “Dogecoin Millionaire” — who is no longer a millionaire, judging by his entry point when he started building his token stash — is among those touting predictions of great wealth coming thanks to Musk’s redesign.

Despite all of Musk’s promises to improve humanity, he has yet to say how or if he can drain the network swamp of crypto marketing, hype and scams – which, alongside NSFW content , have been a big source of activity, according to Reuters. And despite the gospel of decentralization, there wouldn’t be much disruptive to sticking a digital crypto wallet on Twitter.

Much like Meta’s increasingly painful attempts to jam crypto-fueled Web3 patterns into old social media pots, this suggests that even billionaires are struggling to abandon established business models. Twitter co-founder Jack Dorsey’s decentralized project, BlueSky, has been in development for years; Social media rival Mastodon is more established but has yet to topple the incumbents, although its supporters include Dogecoin co-creator Jackson Palmer.

Judging by the damage the crypto pumps are leaving in their wake, what’s happening with Dogecoin is a disheartening sign of things to come as Musk’s online personality cult goes supernova. Without prejudging the future with Twitter, helping humanity seems a long way off.

More from Bloomberg Opinion:

• The terrible and terrible week of technology told in 10 graphics: Tim Culpan

• Wile E. Coyote Moment as Technology Runs Off the Cliff: John Authers

• Meta’s Facebook algos are losing ground to European lunatics: Lionel Laurent

(Adds news about Musk’s Tuesday tweet to second paragraph.)

This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering digital currencies, the European Union and France. Previously, he was a reporter for Reuters and Forbes.

More stories like this are available at bloomberg.com/opinion

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