Digital currencies have began to dominate the monetary information cycle in recent times. Nonetheless, whereas the overwhelming majority of traders and media reviews speak about Bitcoin, different cryptocurrencies have additionally gained traction and recognition.
Dogecoin is one such cryptocurrency that has delivered staggering returns however has additionally discovered itself amidst controversy of late. So what’s Dogecoin, and why is the web so divided on it?
What Even Is Dogecoin?
Dogecoin began its life in late 2013 as a satirical and enjoyable equal to current cryptocurrencies corresponding to Bitcoin. It was named after the then-popular ‘Doge’ meme involving photos of a perplexed Japanese canine.
Dogecoin’s founding aim was to promote digital currencies’ virtues, which it sought to realize by showcasing itself as approachable and uncontroversial. For these causes, the canine’s face from the meme was immortalized as Dogecoin’s official emblem. The venture additionally featured the playful Comedian Sans typeface all through its web site.
Although it was meant to be a joke, Dogecoin’s creators made certain that it was at the very least usable as some other cryptocurrency. To that finish, they based mostly the token’s foundations on the Litecoin blockchain—which is itself a barely modified version of Bitcoin.
Every week after its launch in December 2013, Dogecoin noticed its worth soar by almost 300 p.c. The cryptocurrency additionally recorded over a billion {dollars} value of buying and selling quantity in the identical timeframe. Throughout the first month of its launch, Dogecoin’s official web site had been visited over 1,000,000 occasions.
In its early days, Dogecoin efficiently branded itself as a enjoyable and community-focused cryptocurrency. From sponsoring a NASCAR driver in 2014 to constructing wells in Africa, the group boasts a wealthy historical past of philanthropy.
For a number of years, Dogecoin was predominantly used to tip different customers on social media web sites corresponding to Reddit and Twitter. One other set of customers additionally used the token in change for tangible items and companies.
In 2014, a 27-year-old entrepreneur offered his Wisconsin vacation home in change for Dogecoin after receiving no compelling gives for a number of months. He listed the property for 100 million Dogecoins, valued at roughly $135,000 on the time. That very same 12 months, a gaggle of Dogecoin customers banded collectively to donate 27 million Dogecoins to sponsor the Jamaican bobsled crew’s journey to the Winter Olympics in Sochi, Russia.
Sadly, the Dogecoin group’s early appeal has principally wilted away today—with many holders taking a look at it as a get-rich-quick scheme. It doesn’t assist that Dogecoin’s rise in reputation coincided with the GameStop short squeeze—an occasion that rewarded inexperienced merchants with atypical and unrealistic returns.
Dogecoin: Can Infinite Provide Maintain It Again?
In contrast to mainstream cryptocurrencies corresponding to Bitcoin, Dogecoin was by no means meant to realize important mass. For proof of this, look no additional than the inflationary nature of Dogecoin’s token provide.
Annually, roughly 5 billion new DOGE tokens enter circulation. Much like the US greenback and most different fiat currencies, a rise in provide reduces the buying energy of current tokens.
Dogecoin’s rising provide places the token at odds with most different digital currencies. Bitcoin, for example, has a set provide of 21 billion cash. Shortage over time has pushed Bitcoin’s worth up, due to the results of provide and demand.
Proponents of the broader cryptocurrency motion argue that Dogecoin’s fundamentals don’t warrant steady will increase in its valuation. The smaller Dogecoin group, in the meantime, claims that the inflation charge is low and equal to fiat currencies. Finally, they steadfastly consider that Dogecoin may develop into the “forex of the web.”
Because of this infighting inside the Dogecoin group, one of many cryptocurrency’s creators stepped down from the venture in 2015.
Like many different digital currencies, Dogecoin discovered appreciable worth momentum throughout the 2017 market rally. By January 7, 2018, the cryptocurrency had reached a market cap of $2 billion.
For a couple of years following that milestone, Dogecoin’s valuation stayed comparatively stagnant. Then, in 2020, its worth started hovering as soon as once more. Up to now, Dogecoin’s rallies have been fueled nearly solely by on-line memes and jokes. Nonetheless, this time, Elon Musk and a handful of different noteworthy personalities took a newfound curiosity within the token.
At the beginning of 2020, every token traded at roughly $0.002. By January 29, 2021, the token had reached an all-time excessive of $0.08—representing a 4,000% achieve over 13 months. The shopping for frenzy even introduced the token to the listing of prime 10 cryptocurrencies by market capitalization.
Dogecoin and the Elon Musk Impact
In July 2020, Musk took to Twitter to say that ‘the Dogecoin normal’ would inevitably take over the worldwide monetary system. This single assertion was sufficient to ship Dogecoin’s worth up by 14%. With over 47 million followers on Twitter, Musk possible launched tens of millions of people to the cryptocurrency marketplace for the very first time.
It took a number of months for Musk to reference Dogecoin once more. By the point he did, although, the cryptocurrency market had discovered itself within the midst of yet one more bull run. On December 20, 2020, Musk tweeted, “One phrase: DOGE”. Just a few hours later, the token noticed its valuation spike by at the very least 20%. Across the similar time, Bitcoin surpassed its 2017 all-time excessive worth of $20,000.
All through January 2021, Elon Musk relentlessly evangelized Dogecoin on Twitter. Whereas he later backpedaled by saying that almost all of his remarks have been made in jest, Dogecoin’s valuation continued to rise. In that exact same interview, Musk additionally mentioned,
“Probably the most ironic consequence can be that dogecoin turns into the forex of Earth sooner or later.”
By February 6, Elon Musk started posting full-blown cryptocurrency tutorial movies on Twitter. At one level, Musk even garnered the assist of celebrities and billionaire traders. Mark Cuban, for example, chimed in to say that he can be keen to select Dogecoin over a lottery ticket.
For sure, although, memes and jokes should not sufficient to ensure the long-term success of a monetary asset. On condition that Dogecoin is just not a listed inventory and largely unregulated, its worth could be simply manipulated by these holding a major stake.
Elon Musk maybe acknowledges this risk to some extent. On February 15, he tweeted that he would personally repay ‘main Dogecoin holders’ in the event that they bought most of their cash. Musk additionally floated the concept of them voluntarily voiding their wallets—stating that the focus of token possession was ‘the actual subject.’
If main Dogecoin holders promote most of their cash, it should get my full assist. An excessive amount of focus is the one actual subject imo.
— Elon Musk (@elonmusk) February 14, 2021
What’s Subsequent for Dogecoin?
On the time of writing this text, Dogecoin’s worth continues to swing in wildly reverse instructions on daily basis—even within the absence of statements from Musk. Speculative buying and selling is probably going the explanation for this volatility, in addition to a cultural shift inside the Dogecoin group. For the cryptocurrency’s creator, Billy Markus, it is a worrying pattern.
In an open letter revealed February 9, 2021, Markus mentioned,
“Persons are speaking about Dogecoin going to $1 – that may make the ‘market cap’ bigger than precise firms that present companies to tens of millions, corresponding to Boeing, Starbucks, American Specific, IBM. Does Dogecoin deserve that? That’s not one thing I can comprehend, not to mention reply.”
Billy Markus somberly concluded his letter by stating that he needs for the cryptocurrency to be a drive for good, or on the very least, a supply of positivity and amusement.
Whereas Markus’ letter was upvoted over 27,600 occasions on Reddit, it did not garner almost as a lot reputation as Elon Musk’s tweets on Dogecoin. Finally, it appears as if the Dogecoin group has modified significantly since its early days. Solely time will inform if Dogecoin’s present $5 to $10 billion market cap is sustainable or not.
Tony Lee/Pixabay
About The Writer
