Dogecoin ($DOGE) is the meme crypto coin that began as a joke and has defied the odds to climb over 10,000% in value since April 2020. A principal reason for this is its celebrity supporters in Mark Cuban, Elon Musk and Snoop Dogg, who have helped heighten its profile with added hype.
Caught up in the short squeeze rally in January, Dogecoin became the cryptocurrency version of the stock market’s GameStop (NYSE:GME). Message board Reddit helped fuel the fire, with subreddit group WallStreetBets fervently boosting its worthy cause disguised as a light-hearted way to break down the staid financial system run by suits.
This didn’t last long, as all cryptocurrency discussion soon came to be banned within the subreddit group. Nevertheless, its weight carried, as Elon Musk et al, continue to advocate for the coin.
The rise of Dogecoin
Year-to-date the price of Doge has risen nearly 7,000% after hitting $0.4 earlier this month but has now pared back to $0.26, which is still close to a 5,000% rise.
This means it now has a phenomenal market cap of over $34 billion. While there appears to be a constant drive to send the coin soaring above $1, this is highly unlikely.
Unfortunately, a whopping 10,000 new Dogecoins are automatically issued every minute so the value is being artificially maintained on the back of a Reddit fuelled rally and crypto bull hype.
In 2014 Reddit introduced a ‘tipping bot’ that let users tip each other with Dogecoin for a great forum post or friendly support. It really helped propel the popularity of the coin and drum up further excitement. Unfortunately, this feel-good fun didn’t end well. The operator of the dogetipbot later confessed to stealing all the deposited dogecoins in 2015.
In fact, numerous scams have been associated with Dogecoin’s crazy journey.
As an aside, legendary Anglo-American computer programmer John McAfee and founder of the McAfee antivirus software is currently being held in a Spanish prison. He’s been charged with tax evasion related to hyping cryptocurrencies for personal gain. And McAfee’s been a long-time fan of Dogecoin.
Widespread knowledge of this detention hasn’t deterred Elon Musk from pumping this meme cryptocurrency. He’s even pledged his intention to plant a physical Dogecoin on the moon.
In 2019, Musk tweeted:
“Dogecoin might be my fav cryptocurrency. It’s pretty cool.”
Can Dogecoin be used in the real world?
Newegg is an online electronics business that has just recently announced it will accept Dogecoin as payment through Bitpay. It was also one of the first e-tailers to accept Bitcoin in 2014.
Meanwhile, Puerto Rican company BOTS, Inc. (OTC: BTZI) has also started accepting Dogecoins. It’s a tech company involved in repairing crypto mining rigs, along with developing and servicing blockchain, cybersecurity and robotics solutions.
These appear to be the first instances of Dogecoin being accepted as payment for goods and services, but not the first time it’s been used as a real-world currency. Back in 2014, it was used as a way to fundraise to get the Jamaican bobsleigh team into the winter Olympics. And since that successful drive, several other fundraisers have benefited from the allure of Dogecoin.
How did Dogecoin’s popularity gather momentum?
When altcoins started emerging in 2013, many communities sprung up around the individual coins. The chance to be a part of something, that cost very little, but had the potential to make life-changing amounts of money, was irresistibly tempting. And online spaces such as Telegram or Discord today create a strong sense of belonging, coupled with excitement and hope.
For this reason, it’s easy to see what caused the rally. While the sense of camaraderie and a YOLO (you only live once) attitude, has kept it alive.
For being a joke, Dogecoin has had a spectacular run. But the worry is jokes get old and once the celebs have enough of it or attentions turn to something new, then the price of Dogecoin could easily plummet.
And, there are also those that believe the Dogecoin speculation makes a mockery of the entire cryptocurrency ecosystem. If pure speculation can make millionaires, without any real functionality or substance, then liquidity is really all that matters, rather than fundamentals or a future financial use case.