Who could have imagined that one simple joke on social media would compete right against crypto-giants like Bitcoin? Well, that’s the story behind an internet sensation, Dogecoin!
Just about when cryptocurrencies like Bitcoin and Ethereum have surged over this past pandemic year, so had Dogecoin. Even if you are an occasional reader of Coinpedia, an introduction to Dogecoin won’t be necessary, I guess. Although its hype-level broke Twitter ceilings, especially in 2020 and 2021 – Thank you, Elon – the genesis of Dogecoin dates back to 2013.
Statistics from CoinMarketCap say that Dogecoin is proudly sitting on #4 rank in the crypto world, following Bitcoin, Ethereum, and Binance Coin (BNB), and is worth over $50B as of writing. This meme-inspired cryptocurrency hit an all-time highest value of $0.69 last month, after fleets of tweets from Tesla CEO Elon Musk, and currently sitting at $0.38.
The statistics get even more unbelievable once we evaluate its growth since the beginning of this financial year. To date, Dogecoin has witness staggering 14,000 percent gains in terms of value. The evaluation and market cap sky-rocketed again following Musk’s tweet on launching Doge to “literal moon” on April 1st, not sure whether as an April fool joke!
While such meteoric growth seems beneficial for Dogecoin and its investors, the “Elon Musk Effect” is raising concerns for financial analysts as well. So today, we will be having an exploration of the story behind Dogecoin, how it came into existence, where it is heading towards, and most importantly, could it really compete against big bears & bulls like Bitcoin.
Years Before DOGE Went Viral
“Dogecoin” or “Doje Coin” – however, you pronounce it – also operates on the same principles as Bitcoin and Ethereum; The Blockchain, which is decentralized in nature and acts as an efficient, secure public ledger for the majority of cryptos and blockchain-based services as well. Be sure to check out the last article where we discussed blockchain and its applications.
Coming back to Dogecoin, the cryptocurrency was originally developed as an alternative “joke” to Bitcoin in 2013, named after Shiba Inu, an adorable Japanese dog whose pictures went viral on social media a few years back. The initial developers of Dogecoin, Billy Markus from IBM Technologies and Jackson Palmer from Adobe, created Dogecoin as an efficient yet “fun” alternative to Bitcoin.
The popularity of Dogecoin spiked in less than three weeks and jumped to 300% in just 72 hours. The programmer duo didn’t really shoot for the “literal moon” but Redditors to the rescue! Another group, on the internet chatroom Reddit, constantly posted with #SaveDogemas hashtag following its first market crash three days later.
Following this event, Dogecoin was started being used as an entertaining tipping system on Reddit and Twitter, rewarding quality content. The cryptocurrency was finally launched “to the moon” in 2014, when the Redditors community gathered public attention by supporting nerdy causes, such as sponsoring Jamaica’s bobsled team at the 2014 Winter Olympics.
Twitter, Meme & Daddy Elon
The recent meteoric rise behind Dogecoin is precisely the same that helped Bitcoin and Ethereum broke the charts – this week’s listing of Coinbase, currently the largest and most popular cryptocurrency exchange. The market capitalization of Coinbase peaked at $100B immediately after it was declared public last month, and it also stretched the value of Bitcoin and Ethereum to $64,000 and $2,500, respectively.
But the “astronomical” growth that Dogecoin experienced this year came from none other than Tesla and SpaceX CEO Elon Musk, unarguably the most prominent supporter of Dogecoin. 140 characters and his 56 million followers on Twitter is enough if Dogecoin wants to send its token to the literal moon.
But why even Elon Musk suddenly found Dogecoin interesting and profitable isn’t clear yet. His social media comments on Dogecoin have occasionally launched it to record-high prices, and his posts also helped drive retail investor interests. Daddy Elon, however, isn’t the only celebrity endorsing this currency! Mark Cuban, Snoop Dog, and Gene Simmons have also publicly promoted Dogecoin, and even Slim Jim is joining the rally.
The most recent surge occurred after Elon Musk’s “Saturday Night Live” appearance on May 8. In his latest tweets, Musk has also expressed his wishes to declare Dogecoin “The Currency of Internet” and called it his favorite crypto. He even went as far as referring to himself as ”Dogefather!”
However, the Reddit rally didn’t stop either; the platform that initially brought Doge to its present glory. Fueled by the subreddit SatoshiStreetBets, the internet community is trying to leverage the evaluation of Dogecoin and send it “to the moon” – or at least to achieve their goal of $1 per coin. Similar trends on other platforms such as TikTok surfaced as well.
Can Dogecoin Practically Compete Against Crypto Giants?
Unlike Bitcoin, whose maximum token limit is just 21 million, Dogecoin was initially targeted at 100 million, which was later stretched upto an infinite. This means Dogecoin does not have any upper limit of how many tokens can be produced, and it’s already hovering near the territory of whopping $100B. Being so volatile in the market, being surged just with one tweet, it’s an argument between investors and market analysts whether Dogecoin can hold its value in the long run.
Standing today, there are very limited use-cases for this token, and just mere fractions of merchants have started accepting Dogecoin. And if you look deeper, Twitter feeds might be flooded, but no real investors are showing interest in it either.
The hype is indeed real, with both its value and market cap occasionally breaking the charts, but even after being matured for almost 8 years in the market, Dogecoin still holds no adoption in decentralized finance. And whether investing in Doge will be profitable for investors still remains an unanswered question.
And most importantly, unlike rival cryptos like Ethereum, which has allowed programmers to develop services and technologies surrounding blockchain, there is no such probability or possibility with Dogecoin. What I would suggest, first it should come out of Reddit and Twitter posts and compete against crypto-giants, including Bitcoin, Ethereum, and Ripple, in an actual decentralized finance battlefield.