You're not alone if like many investors, you've had a chuckle or two from time to time at the expense of Dogecoin (DOGE -1.24%), the crypto that was originally launched as a joke. Last month, some investors were stunned when Elon Musk announced that Tesla (TSLA 1.12%) would begin accepting payments in Dogecoin for some of the company's merchandise. In this segment of Backstage Pass, recorded on Jan. 14, Fool contributors Toby Bordelon, Rachel Warren, and Connor Allen share their reactions to this news.
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Toby Bordelon: Today, Elon Musk came out and said that Tesla is accepting payments for some products in Dogecoin. Now, this is for like certain Tesla random merchandise, like the hats and stuff. You can't actually go buy a Model Y with Dogecoin, apparently not yet, so don't try to do that. Now Tesla was accepting Bitcoin. You guys may remember this, they were exchanging Bitcoin not too long ago and they stopped doing that. I think actually you could buy a car with Bitcoin.
Rachel Warren: Wow.
Bordelon: They had a mechanism to do that, but that didn't last very long, I don't even know if it lasted a month. They pulled back on that and now they're back to accepting cryptocurrency. But the one that started as a joke and has been linked [laughs] to Elon Musk, he tweets about Dogecoin, Dogecoin pops 10%. I think it's still a joke to most people, even those in the crypto space.
This is seen as the joke currency, one of many. What are your thoughts on it? I didn't even know where to go with this. This is our bonus question, do whatever you want with it. But is paying for things in random animal cryptocurrencies something we're going to be doing generally and is everyone going to have a different one?
We have hundreds of cryptocurrencies out there so if I want to buy a car from this company, I got to use this one and then someone else I got to use a different one? Or will there be one or two maybe that we get a standardized thing? One or two coins that are widely accepted and the rest just is out there. I don't know, Rachel [laughs] give me something here.
Warren: I'm trying to collect my thoughts on this one. It's so random to me how they wouldn't stop accepting Bitcoin as a form of payment. Was that across the board? That was the case? I didn't follow that.
Warren: Now they are accepting Dogecoin? [laughs]
Warren: How does that work? What's the process there? On the one hand I think to myself, is this going to be something where the contrarian investors that have been like, "Dogecoin is it." Are they going to turn out [laughs] to be right? Is Dogecoin going to be the way of the crypto future? [laughs] Honestly, even like a year ago I wouldn't have thought that we would be talking about some of these types of digital currencies the way we are now.
So who knows? Maybe we will start to be seeing more animal-branded and other strange and curious cryptos entering the space. I think that there's like this excitement around crypto that I understand. I think that in some cases it's difficult to understand, where's the value that backs up some of these currencies?
Like how is this going to actually have staying power long-term? I'll be curious, like are they still going to be accepting it as payment even just for merchandise like six months from now?
Or is this going to be a short-lived thing? I do think we're going to continue to see a lot of really random cryptos entering the space. I think obviously it's always important to tread with caution. As we've seen in recent months, sometimes you'll have these new ones that enter the market.
There has been a few, I can't remember the name of one that went up really high and then crashed and investors were left with nothing. I think that's something to very much be cautious. I wouldn't personally invest in Dogecoin, but now I'm curious and I think I'm going to follow it a little bit more from afar. But yeah, this is just a funny story to me.[laughs]
Bordelon: Yeah. What about you Connor? Yeah, tell me what you think of this.
Connor Allen: Laughing at it honestly, [laughs] it seems crazy. There's this big debate in crypto world whether crypto is a currency or whether it's a store of value. I'm on the store of value side because I don't understand, and you can use stablecoin or something in the purchase. I understand how that would work because it's relatively stable unlike Bitcoin that loses 30% in a month.
I think what confuses me, if you were to go buy a Model Y at Tesla, and you went to the counter and the person on the other side said, "Okay, well, that will be 1.1 Bitcoin." You look at it and you're like, OK, you get your card out of your wallet.
She goes, "Oh no, that will be 1.2, sorry." Then you've got to put it in, "Oh, no, [laughs] that will be 1.3." The prices fluctuate so fast it seems like it would be really difficult to use it for transactions as a currency, but this is crazy, it's [laughs] crazy stuff.
Bordelon: It is little bit weird, here. We got a little time, so here you go. You can get a Giga Texas Belt Buckle, which of course you can, with Doge. There seems to be no option to pay U.S. dollars for this. If you want this, at least right now you're paying Doge.
Warren: You got to use Doge. [laughs]
Bordelon: Same for the Cyberquad, if you got a kid who's birthday is coming up, and I guess if you really love them, go with this or the Cyberwhistle. This is what's some of the things, but some things are still listed in dollars, it's a little weird.
Allen: That belt buckle is expensive. [laughs]
Bordelon: Yeah, what's the rate of Doge to dollars? Do we know that?
Allen: Doge is like $0.19, [laughs] so that's $160.
Warren: For a buckle? That will be no for me, but OK. [laughs]
Bordelon: But if it's a Texas-themed belt buckle, so there you go. Yeah, I don't even know. It's crazy to me. If we do start using crypto to buy things, if that's where we're headed, I hope we get a centralization of some sort. It's actually insane, when you think about it.
There's more than one or two acceptable currencies generally in any given country no matter what they were. That was not the case 20 years ago. In the U.S., you use U.S. dollars. You went through the UK, you were using the euro 20 years ago.
Warren: Instead of the pound? Wow.
Bordelon: No, U.K. was using the pound. You went to France, you'd be using euro. You went to Mexico, you can U.S. dollars or you can use the peso, but there were not like five options. It was just the way it was. Now that there are companies that will accept multiple crypto, it's a little interesting and it's a little weird. I don't know where this ends up, I guess we'll see.