Elon Musk criticises Bitcoin and Ethereum for inefficient transactions

Elon Musk criticised the Bitcoin and Ethereum blockchains for slow transaction processing and high transaction costs. He responded to a tweet by YouTuber Matt Wallace about an upcoming update to the cryptocurrency Dogecoin (DOGE).

BTC & ETH are pursuing a multilayer transaction system, but base layer transaction rate is slow & transaction cost is high.

There is merit imo to Doge maximizing base layer transaction rate & minimizing transaction cost with exchanges acting as the de facto secondary layer.

— Elon Musk (@elonmusk) July 9, 2021

Wallace said that with the update Dogecoin would become one of the world’s most widely used cryptocurrencies. The Tesla founder agreed with this view.

«BTC and ETH use a multi-layer transaction system, but base-layer transaction speed is slow and their costs are high. In my view, there is merit in Doge maximising base-layer transaction speed and minimising transaction costs with exchanges acting as the de facto second layer», he wrote.

Machine-learning engineer Pranay Pathole noted that Dogecoin is already 15x faster than Bitcoin, and reducing network fees and increasing block size are easy to achieve. He said the hard part is to increase the rate of new block generation tenfold.

Doge is already 15x faster than Bitcoin.

Fee drop is easy to achieve.

Block size increase is easy to achieve.

Block time speed up by 10x is the hardest part.

— Pranay Pathole (@PPathole) July 9, 2021

The developer Udi Wertheimer proposed implementing in Dogecoin SegWit upgrade solutions for the Bitcoin network, which are a prerequisite for using Lightning Network.

actually reasonable imo, i hope i don’t get cancelled

that said why not migrate segwit from bitcoin which is a prerequisite for lightning. then both options can compete on doge, seems like easy win

— Udi Wertheimer (@udiWertheimer) July 9, 2021

The Block analyst Larry Cermak pointed out Musk’s error, noting that crypto exchanges have never operated as second-layer solutions. Wertheimer said they had been doing this “for a decade”.

exchanges have worked as de facto L2s for a decade lmao

— Udi Wertheimer (@udiWertheimer) July 9, 2021

Cermak stressed that such platforms cannot be considered second-layer networks, because users face the risk of interacting with a third party, and lose privacy. In his view, Bitcoin exchanges are more like ‘narrowly specialised sidechains’.

You could argue they are some sort of a narrow use case sidechain where you make a lot of compromises but an L2? no sir

— Larry Cermak (@lawmaster) July 9, 2021

According to Wertheimer, the overwhelming majority of economic activity is tied to exchanges. He said such platforms have devised an efficient method of settlement, and the privacy and asset custody risks are present in other second-layer solutions as well.

anyways what elon is saying is pretty clear. no need for fancy science experiments if everyone uses custodial services anyway. he’s 100% right

— Udi Wertheimer (@udiWertheimer) July 9, 2021

«This seems to be a terminological issue. People have considered exchanges and banks as ‘second layer’ since the early days of bitcointalk. No one told me the definition has changed. In any case, what Elon is saying is fairly clear. There is no need for fancy experiments if everyone is using custodial services anyway. He is 100% right», Wertheimer concluded.

On his page, Cermak wrote that Musk understands little about the subject, though he sincerely believes in what he says.

What’s sad is that I initially really believed that Elon was informed on these topics (why wouldn’t you be after deploying billions?!). But as time goes and he keeps sharing these nonsensical takes, I’m increasingly convinced he’s just clueless and not even trolling.

— Larry Cermak (@lawmaster) July 9, 2021

«Печально, но поначалу я действительно верил, что Илон осведомлен в этих вопросах (почему бы и нет, после того как он вложил миллиарды?!). Но со временем, по мере того, как он продолжает делиться бессмысленными рассуждениями, я всё больше убеждаюсь, что это не троллинг, а просто невежество», — заявил аналитик.

Over the last 24 hours, Dogecoin’s price rose by 4.4%, according to CoinGecko. At the time of writing, the cryptocurrency was trading at about $0.21.

The price of the Dogecoin-inspired Baby Doge Coin (BABYDOGE) rose even more sharply. According to CoinGecko, the token gained 24% over the past 24 hours.

A post from NASCAR’s Brandonbilt Motorsports team may also have influenced the price rise. On July 10 at the Atlanta track, driver Brandon Brown will race a Chevrolet Camaro in a livery bearing cryptocurrency branding.

NEWS: @BabyDogeCoin set to make @NASCAR_Xfinity Series debut with @brandonbrown_68 at @amsupdates!

Race Advance: https://t.co/N2pgIdgsnt pic.twitter.com/O0XHzZHFyf

— Brandonbilt Motorsports (@BMSRaceTeam) July 6, 2021

Earlier in June, Musk backed the proposal by Dogecoin developer Patrick Lodder to lower the network fees and increase its decentralisation.

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