With its popularity surge, including a mention from Elon Musk on the Saturday Night Live, a popular American T.V. show, Dogecoin has erupted into the culture. The cryptocurrency based on meme started in 2013 as a joke. But, it has now established itself as a popular cryptocurrency, surging to an all-time high last week (1). On May 7, it was up over 26,000% in the past six months, outpacing percent gains of other cryptocurrencies, including Ethereum and Bitcoin.
In 2013, software engineers Jackson Palmer and Billy Markus launched the satirical cryptocurrency to make fun of Bitcoin and several other cryptocurrencies boasting grand plans to take over the globe (2). They named it Dogecoin, pronounced as ‘doje coin’ with a soft ‘g’ sound, after the popular ‘doge’ Shiba Inu meme.
As per researchers at Galaxy, Alex Thorn, and Karim Helmy, the Dogecoin appeal is in its honesty. In a note to clients dated May 4, researchers explained that ‘the dogecoin appeal has always been its honesty, unlike other cryptocurrency projects. There is no grand vision and no pronouncements about how it will change the world.’
Moreover, while bitcoin has a capped supply of 21 million coins, Dogecoin has no limit on numbers when it comes to its creation. According to Mati Greenspan (3), bitcoin’s value propositions are digital security, that there will be only 21 million. Still, there is no such hard cap with Dogecoin, gaining a crazy inflation schedule.
It has recorded a new all-time high last week with a market capitalization of more than 92 billion USD following the surge. Analysts have started comparing it to Amazon, which took more than a decade to deliver a 10,000% return to investors, while it only took five months for Dogecoin to do the same.
What is Dogecoin?
Dogecoin is a cryptocurrency with a friendly and fun brand image that aims to be a supportive introduction to cryptocurrencies. Billy Marks believed that a more lighthearted coin, rather than Bitcoin, would have a better chance of getting mainstream acceptance when he conceptualized a ‘joke’ cryptocurrency.
Often dubbed as ‘meme cryptocurrency,’ Dogecoin is an open-source cryptocurrency based on a Litecoin code fork. As the name indicates, it is based on the Doge meme that swept the internet back in 2013.
Interesting Facts About Dogecoin
- It is an open-source, peer-to-peer cryptocurrency popular among Shiba Inus globally. ‘Doge’ is its friendly and amusing mascot!
- The Shiba Inu is a Japan-based breed dog that has been popular as a meme.
- It is among the most active and largest communities in the digital currency world. The group has come together to support several charitable endeavors and other ventures. They could also fund a NASCAR race.
- Unlike Bitcoin, there is no cap for Dogecoin.
Dogecoin’s Celebrity Endorsements
The massive surge comes after support from more those in the crypto trading industry and Elon Musk, who sent the price of his favored cryptocurrency rising after making several tweets about it.
He has been talking about meme-based cryptocurrency since at least 2019. He described (4) Dogecoin as his ‘fav cryptocurrency’ and even called it ‘pretty cool.’ But he is not the only celebrity who has pushed the animal-branded coin. Billionaire and owner of NBA team Dallas Mavericks, Mark Cuban has also supported Dogecoin. On April 26, he announced that his basketball team was on track to complete over 6k Dogecoin transactions by the end of April (5).
When a user asked Cuban about his Dogecoin backing, he answered that ‘Dogecoin is the one digital currency that people use for transactions; they spend their Doge, meaning more businesses will start accepting it.’
Celebrities such as Snoop Dogg and Gene Simmons, a musician, have also publicly backed Dogecoin. After eToro added support for Dogecoin, Gemini, a popular exchange, also added it last week.
According to Greenspan, the joke is on Wall Street. ‘What we have is a scenario where teens on TikTok are outperforming even the most intellectual suits by thousands of percentage points.’
Avi Felman, BlockTower Capital’s trading head (6), described the Dogecoin hype as ‘a big F-U to the system, like this thing can also have value and I will purchase it because I am going to purchase it.’ He added that Elon Musk is pushing the message, ‘why Dogecoin can not have value?’ Felman added that it is a part of the GameStop boom. People like these stories and narratives. Dogecoin has captured the mind and imagination of retail investors.
The investors of Dogecoin were in for a wild ride last weekend. Ahead of Elon Musk’s Saturday Night Live appearance, it hit its record height. However, the value of Dogecoin took a steep drop (7) after he called it ‘hustle’ during his appearance on the show.
Notably, it was quoted as low as 0.47 USD on crypto exchange Binance, dropping 28% from around 0.65 USD before the show. But after the show, Musk announced that SpaceX, his rocket company, will now accept Dogecoin as payment.
He tweeted that SpaceX is launching satellite Doge-1 to the moon, paid in Dogecoin, the first crypto and first meme in space.
Tom Ochinero, the Commercial Sales Vice President at SpaceX (8), said in a statement released by Geometric Energy that ‘the mission will demonstrate the application of cryptocurrency beyond the planet orbit and set the pillar for interplanetary commerce.’
It is also worth highlighting that on CoinGecko.com, a crypto data tracker, Dogecoin soared over 800% over the past month, and it is now the fourth-largest digital currency globally with a market capitalization of more than 90 billion USD. A year ago, it was worth only about 315 million USD.
Dogecoin Boom in India
There has been a remarkable surge in demand for Dogecoin in Indian cryptocurrency exchanges recently. Consequently, there has been soaring traffic on these platforms. On Wednesday last week, Doge INR Trading of Binance company, WazirX, had to slow down its system because of the record traffic. It soon became a trend. # WazirXScam started trending on Twitter as users started complaining about the Doge trades completion (9).
There has also been a monthly 200% rise in Dogecoin volumes on CoinSwitch Kuber, backed by Tiger Global and Sequoia Capital. Notably, of these, over 1300% boom has come only in the last two weeks.
The prices and volumes of Dogecoin are at peak levels worldwide, with retail investors vying for investment in this meme-based cryptocurrency. The number of active traders on WazirX jumped 123% last month. Other platforms such as CoinDCX also witnessed a rapid increase in their numbers.
Here are some key highlights from last week:
- The Dogecoin hype left Indian cryptocurrency exchanges gasping for air as users started complaining about delays in transactions, glitches in payment, and their money getting stuck on the platform.
- The Dogecoin was trading at 46.84 INR on Wazir, up 12.5%. Notably, the cryptocurrency has gained more than 14,000% value year to date, making it among the top five most valued digital currencies.
- Dogecoin has now passed Honda Motor Co Ltd in terms of market capitalization amid the surge. Notably, Honda has a market capitalization of over 54.52 billion USD while Dogecoin has over 90 billion USD.
- Dogecoin’s recent boom has also made it more valuable than SpaceX, led by Elon Musk, one of Dogecoin’s biggest supporters.
- Dogecoin is also ahead of companies like Nio, Activision Blizzard, Colgate-Palmolive Moderna, Sherwin-Williams, and Dell Technologies in terms of market capitalization.
Things to Consider Before Investing in Dogecoin
Investors must keep several things in mind before betting on the meme-based crypto coin.
Dogecoin is Unlimited
Firstly, there has been a lot of talk about the 21 million cap on Bitcoin. Many justify the current price of Bitcoin according to the cap, comparing it to the seemingly countless printing of the U.S. dollar.
Dogecoin is no subject to such limits. Notably, there are already over 129 billion Dogecoin in existence. The volume will only get higher.
Selling Dogecoin Could Be Challenging
In theory, investors can purchase and sell crypto with a click or tap. However, in reality, it is always not so easy. Whenever there are spikes in volume, Robinhood seems to fold its platform like a lawn chair. It has happened with Gamestop, and it happened again (10) last week when the price of Dogecoin skyrocketed.
With the all-time high interest in Dogecoin at present and Musk headed to 30 Rockefeller Plaza for SNL, investors need to wonder how quickly they can unload Dogecoin.
The Possibility of Dogecoin Whale
According to a WSJ report in February (11), a Dogecoin whale owned about 28% of the cryptocurrency. At present, that amounts to approximately 25 billion USD. Considering that the market cap is less than four times that value, the whale can effortlessly move the market lower if it decides to sell large blocks of the Dogecoin.
There are arguments that the stake is held on Robinhood’s platform, and if that is true, it is worth re-reading the above point.
One Can’t Invest in Dogecoin
Lastly, investors need to keep in mind that purchasing Dogecoin is not the same as investing in Dogecoin. One can’t invest in Dogecoin any more than one can ‘invest’ in a lottery ticket.
One can certainly purchase Dogecoin and pray and hope that the price goes up. Several have done that, and some will make a profit. However, it is not an investment. There is no reasonable ground to consider that buying Dogecoin will give more capital after counting inflation and fees.
Dogecoin is the People’s Hustle
When Musk, as host of Saturday Night Live, brought down Dogecoin’s value and cemented it firmly in the minds of millions of retail investors. He forced all of us to wait and see whether such pessimism will be the final verdict (12).
That was because Doge was not any financial asset and Elon Musk was not any host. He is now the biggest booster of the world’s fourth most valuable cryptocurrency, having talked about it several times in the past, including Saturday’s announcement that SpaceX will use it to pay for a new moon mission next year. As of writing this article, Musk is also polling on Twitter whether he should start accepting Dogecoin for Tesla (13).
When asked in February whether Elon Musk thought Dogecoin could be the next global currency, he responded, ‘I believe that it should be people’s will. What would be the most ironic result? That a currency invented as a joke, in fact, becomes the real currency.’
The hype further culminated in SNL’s Weekend Update Segment, where Elon Musk played Lloyd Ostertah, a bow-tied financial expert, claiming himself ‘the Doge father.’ He was asked six times to explain Dogecoin, and every time he gave the vague cliches and answers we expect from crypto boosters such as it is a digital currency, it is unstoppable, it is the future of money. The skit ended when Michael Che posted, ‘Oh, so it is a hustle?’, and Musk admits it while shrugging his shoulders.
While Elon Musk has sounded caution in the past about Dogecoin investment, noting that it is highly speculative. However, within less than ten seconds of dialogue on the show, the people will make themselves felt in a significant way. And that is why there is as much the chance that Dogecoin will rebound as it may keep on falling. In short, its future is in the hand of people who will decide its direction.
We can also parallel the same with the GameStop frenzy of only a few months ago when incensed Redditors decided to gang up against short-sellers to big up the stock of the U.S. computer games retailers. The saga, which drove the company up by 20 times in a matter of months, was not the product of online brokerages or the advent of day trading, which have both been around for several decades.
Rather, it was the rising feeling of a burgeoning number of people that real financial power should and can reside in their hands rather than stay confined to the elites of Wall Street who dared to drive down the stock of their beloved franchise.
It doesn’t matter that GameStop faces shrinking revenue and fading profits, which made the short play entirely logical. Similarly, it is also mostly irrelevant that only a few people crow loudly about cryptocurrencies and their future understand their technologies and mechanics.
What is powerful is that after years of mostly being passive bit-players where the rich become richer, any person with an internet connection and a smartphone can control their financial future and shape and direct it. It comes after decades of watching subprime mortgage products leading to the financial crisis, invite-only parties for the IPOs, and connected insiders getting the lion’s share of wealth from pandemic cash.
Now Dogecoin is having its moment. While most buyers don’t understand blockchain technology and its mechanics, they understand that it is a caricature and like being in on the joke. It may be enough, a chance of knowing an insider for once. In the engineer’s tongue, this ironic trait is not a bug in Dogecoin. It is a feature. Elon Musk gets the joke, and his fans like the way he tells it. He might be right that Dogecoin is a hustle. However, for those who are craving democratization of the financial market, it is their hustle.
Despite the hype, there is not much anyone can do with Dogecoin. It is not a reliable store of wealth.
It is a volatile cryptocurrency, and investing in it has several risks. Hence we advise investor discretion.
There are also high chances of scams, especially for novice crypto investors in lieu of a promise to double or triple their investment within a short period. We advise our readers to practice caution and invest wisely.
Nonetheless, Elon Musk believes that Dogecoin could be the future of currency.