Everyone’s heard of crypto by now. Some people have gone as far as to invest in cryptocurrency, whereas the knowledge some of us possess extends only as far as knowing it’s kinda like money. It’s online money you can’t touch but it seems to be worth quite a lot.
If you fall into the latter category, there’s absolutely nothing wrong with that. We can’t know all the things. And, if you have a touch of technophobia, you’ve probably deliberately avoided anything to do with crypto. Any conversations or articles about crypto and you switch off or just remove yourself from the situation. But now this thing called Dogecoin seems to be everywhere and you wanna understand what on earth is going on. We got you.
Dogecoin is a cryptocurrency taking the market by storm and people from all walks of life are getting in on the frenzy. The cryptocurrency that started as a joke back in 2013 has now seen a meteoric rise to become the fourth-largest cryptocurrency in the world (at the time of writing).
The Dogecoin frenzy has seen the likes of Snoop Dogg and Elon Musk show public support for the intangible currency fronted by a cute, furry pup. It has also made a lot of people rich and turned many people’s next-door neighbors into 'investment gurus.' But how can money you can’t touch, that started as a joke, be worth so much? And why are so many people going crazy over it?
What Even is Dogecoin?
Dogecoin is a cryptocurrency that was created back in 2013. It’s actually based on a meme, hence the name. We all know how some memes can go viral and achieve cult fame. Back in 2013, one such meme was the Doge meme. It was a picture of a Shiba Inu, a Japanese hunting dog, throwing a slightly worrying glance at the camera. The meme was usually accompanied by text that seemingly narrated what the dog was thinking.
Another hot topic back in 2013 was cryptocurrencies. One of Dogecoin’s creators, an Australian named Jackson Palmer, decided to poke fun at the world of crypto by creating a joke cryptocurrency. So he combined two of the top trends of 2013, the Doge meme and crypto, to create Dogecoin.
He even purchased a domain name. But it was all just a bit of fun. Half a world away, American Billy Markus stumbled upon the site and reached out to Palmer. The two software engineers joined forces and Dogecoin was born.
How Did the Joke Become Serious?
Now that Dogecoin was a thing, it somehow got picked up by Reddit and it was all uphill from there. Reddit users would tip each other with Dogecoin and this is how it initially gained traction. But this tipping meant more and more people had Dogecoin, and more users meant greater value. Despite being shared between users on Reddit, Dogecoin wasn’t really mainstream.
Now remember, this was back in 2013-2014. Dogecoin’s value rose steadily over the next few years helped, in part, by the crypto bubble of 2018 and a Tik Tok challenge in 2020.
Things really got interesting this year, though. You may remember the GameStop saga.
The big boys (deep-pocketed hedge funds and just Wall Street in general) got played at their own game by the people (just regular Joes or Janes like you and me). Similar to what happened to GameStop, some investors then decided Dogecoin was their next stop in terms of increasing its value. Then, enter Elon Musk. This is when things really started heating up. Musk’s public support of Dogecoin sent its value skyrocketing.
What’s Really Driving the Price Up?
There are a few factors that account for the parody currency’s stratospheric rise this year.
1. It was a joke
Dogecoin really was just a joke to start with. It was never meant to be taken as seriously as the likes of Bitcoin. Between it just being a joke and having such a cute canine as its mascot, people just piled on.
2. Accessible trading platforms
Trading apps like Robinhood have made investing so much easier and so much more accessible to the average individual. Investing no longer has to be something that just the big boys on Wall Street do. We can now buy and sell stocks, EFTs and crypto right from the magical little device in the palm of our hands.
3. FOMO
Fear of missing out. With the likes of Snoop Dogg and Elon Musk tweeting about Dogecoin, it has pretty much swept through social media like wildfire. The buzz generated then has a lot of people wanting to jump on the bandwagon for fear of missing out.
Dogecoin has risen 26,000% in six months. That’s not a typo. All those zeros are supposed to be there. Compare that percentage increase with a general increase in the stock market of 19%. If you want to compare like for like, Bitcoin ‘only’ saw a rise of just under 300% in the same six months. Now you can see why people piled on.
What Can You Use Dogecoin For?
Well, here’s the rub. Despite all the hype and the insane increase in value, not that many merchants are actually accepting Dogecoin as payment for goods or services. There are a handful of organizations accepting the cryptocurrency as payment but, for now, it can’t be used to pay for your groceries or to cover the cost of what’s in your Amazon basket.
It might seem strange that something that seems to be worth so much can’t actually be used as payment in most places. Cryptocurrencies themselves are still fairly unknown to the masses in terms of usability, and Dogecoin is just one of many in the cryptosphere. It just happens to be the flavour of the month and there are those who expect this doge-bubble to go ‘pop’ quite soon.
What’s Next for Dogecoin?
The 2020 Tik Tok challenge mentioned earlier was trying to get Dogecoin up to $1.00. One coin is currently worth $0.54. There has also been mention on social media recently of getting it to $1.00. It’s likely that people will try and push it to that level but what also seems highly likely is self-correction of an over-extended currency.
What this self-correction will look like is difficult to determine as this is uncharted territory for all of us. Bitcoin crashed in 2018 but eventually rebounded. It’s unlikely Dogecoin will maintain its current momentum and trajectory much longer. Recently, over a span of 48 hours, it lost 30% then started to recoup some of that loss.
Bitcoin has put a limit on how many coins will be mined (or created). There will be no more than 21 million. However, Dogecoin has no such cap. Can something with no scarcity continue to command an increase in value? Probably not. But this whole doge-mania sure has been interesting to watch.
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