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The Fall of the Dogefather

Elon Musk & Doge

A centralized influence over a decentralized platform doesn’t mix that well. Elon learned it the hard way

The crypto bull market is finally here; thank goodness. But let’s talk about 2021. It’s been a weird year in crypto—we’ve seen Bitcoin rise to an all-time high, only to fall to half its value and slowly creep up again. And with Bitcoin’s ups and downs, we’ve seen alternative cryptocurrency prices (commonly called altcoins) follow. This year we also saw people’s interest in crypto skyrocket. Everyone, from your old Facebook friend to your average stock market investor had a bite of the bittersweet crypto pie. But the influx of new investors also made some space for influential figures who manipulate the market according to their will; quite notably, Tesla boss, Elon Musk. 

The “Elon Musk Effect,” as it was dubbed, roiled the crypto world this year, with every tweet from the Tesla CEO sending token prices soaring or plummeting. While it made for great headlines and funny memes, its ramifications were much more serious. The countless replies to his earlier tweets uncovered harsh stories about people who lost a ton of money because of Elon. For someone who sincerely believed in the future of decentralized currencies, Elon did a horrible job of selling it. And honestly, for a short period of time, this was concerning. Because all we had heard about crypto was how decentralized it is and how no one has control over it. And yet, here was a man, a centralized figure, exercising a lot of control over the decentralized financial system. This obviously affects how people view crypto and questions its very foundation. Bitcoin, which can be used to pay for anything from pizza to real estate, was designed to be largely free of centralized control; it entered the globe after the 2008 financial crisis when many people had lost faith in governments and banks. But the volatility we saw this year made people question its legitimacy and its future. 

But things seem to be changing in the second half of 2021 and Musk’s relevance seems to have died down. Tweets about Dogecoin barely surge the price anymore. And this is a good thing. Because crypto doesn’t need a savior, neither does it need a leader; even if it is the occasional richest man on earth. 

However, Musk wasn’t the first, nor will he be the last, to fall into this position. There’s this phenomenon dubbed “The Peter Principle” that appears to be particularly vulnerable to successful tech entrepreneurs or even lucky investors. The principle was first laid out in 1969 as a solution to a corporate management problem, based on the observation that successful employees were frequently promoted above their ability. Over time, the term has taken on a broader meaning, implying that successful people would expand into other domains until they reach the limitations of their abilities, at which point they will fail catastrophically. And that’s basically what’s happened here. 

I’m not doubting Musk’s genius as a tech businessman. I truly believe that SpaceX and Tesla will provide humanity with benefits that we won’t fully comprehend for years. But crypto is a hornet’s nest that needs to be far away from figures such as Mr. Musk. As the mantra goes, “Elon needs bitcoin more than bitcoin needs Elon.” He can allow for Teslas to be purchased by Bitcoin or Dogecoin all he likes, but to casually and knowingly manipulate the market is a big no-no.

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