The price of dogecoin jumped more than 15% on Friday before paring gains after Tesla began accepting the cryptocurrency as payment for some merchandise.
Tesla Chief Executive Elon Musk made the announcement in a tweet on Thursday. "Dogecoin accepted here," he wrote.
According to CoinMarketCap, dogecoin was trading at $0.0069 late Friday afternoon, up 16% from Thursday's close of $0.005975. The move higher helped to push the total value of dogecoin to $673.0 million, up from $582.0 million on Thursday.
The move higher for dogecoin comes as the broader cryptocurrency market has come under pressure in recent weeks. Bitcoin, the world's largest digital currency by market cap, was down more than 60% from its all-time high hit in December. Ether, the second-largest digital currency, was down more than 70% from its peak in January.
Dogecoin is a decentralized digital currency that uses a meme-based logo and ticker symbol. It was created in 2013 and has a current circulating supply of 118 billion coins.
While Tesla is now accepting dogecoin as payment, it doesn't appear that the company is actually holding the cryptocurrency. A Tesla representative told CoinDesk that it is using a third-party payments processor to accept dogecoin, and as such, will not be holding any of the digital currency.
It's unclear if other companies will begin accepting dogecoin as payment. However, given the recent rally in the price of dogecoin, it's possible that more could start doing so in the near future.
Dogecoin rose to a high of $0.20 before paring some of those gains around 01:19 ET, It was up more than 9% at $0.18 at 07:06 ET, according to Coindesk data.
Only a few items were tradeable with Dodgecoin, which was initially conceived as a joke currency.
The Tesla Cybertruck whistle, which is shaped like the real deal and costs 300 doge, is worth around $59 as I write this. A commemorative belt buckle representing Tesla's Gigafactory in Texas sold for 835 doge, or about $164.
Payment with Dodgecoin has been considered for a while. In December, Musk tweeted, "Tesla will make some merchandise available with Doge and see how it goes."
There are a number of obligations and restrictions associated with buying products from Tesla using dogecoin.
Users must have a dogecoin wallet in order to move the money to Tesla. Furthermore, if "a payment is overpaid in Dogecoin, the excess amount will not be reimbursed," as stated on the company's website.
After that, your dogecoin will be credited to the account linked with your Bitcoin wallet address. The payment may take up to six hours for the dogecoin network to verify.
The terms of the contract, as stated by Dogecoin Investments in a statement to CNBC.com, state: "Dogecoin Payments Inc. is not responsible for any damages caused by or resulting from use of this product." The company also adds that dogecoins paid for through the service can't be canceled or refunded. Tesla items bought via the official store using traditional payments methods may be returned within 30 days after receiving them if they are faulty or unacceptable.
Tesla has previously accepted bitcoin as payment. Tesla acquired $1.5 billion in bitcoin last year, and it planned to allow consumers to pay for their vehicles using the cryptocurrency. Musk subsequently halted bitcoin acceptance because of environmental concerns. Bitcoin mining, which is done through a process known as mining, consumes a significant amount of electricity.
According to a study by TRG Datacenters, Dogecoin uses significantly less electricity. Last year, Musk said he would work with dogecoin developers to improve transaction efficiency.
What are your thoughts on Tesla accepting Dodgecoin as payment for their products and perhaps vehicles in the future?