Dogecoin — how this cryptocurrency became an unlikely beneficiary of the meme stock revolution
Dogecoin became one of the fortunate beneficiaries from last week’s meme stocks rally — rising as high as 10x over the past week to reach an all-time high.
But instead of /r/WallStreetBets fueling the rise, it would be /r/SatoshiStreetBets, hyping up the asset.
To understand Dogecoin, we have to take a look at Bitcoin, the father of all cryptocurrencies — which was launched as the first cryptocurrency in 2009 by Satoshi Nakamoto.
Cryptocurrencies are freely traded on the market and used as a form of digital payment. In 2020, over 5,000 cryptocurrencies were trading on the market.
Amongst them is Dogecoin…
- Founded in 2013 by Billy Markus and Jackson Palmer as a “joke currency”, which was not supposed to serve any purpose.
- Found a purpose for online tipping — i.e. instead of a like, a user could show appreciation using dogecoin.
Last week, Dogecoin was up over 1,200% and “going to the moon” as the Dogecoin community would put it — making it the 10th most valuable cryptocurrency at one point.
Dogecoin’s path to the moon…
Was anything but smooth. For the majority of its existence, Bitcoin was trading at less than $0.0003.
Dogecoin saw several spikes over the years as retail traders jumped into the crypto boom. During the 2018 crypto bubble — Dogecoin surged over 17x to as high as $0.017 before losing 90% of its value over the next year.
Now Dogecoin is once again back in the moonlight.
What makes Dogecoin different from Bitcoin?
Various technical factors make Dogecoin different but most importantly — how it’s set up. Unlike cash, which can be “infinitely” printed, there’s a limit to how many Bitcoins can be created through the process of mining — capped at 21m bitcoins in total.
But Dogecoin is set up without a limit. This plays importance in what applications each digital currency can be used for.
Bitcoin has also become a widely accepted method of payment with businesses including AT&T, PayPal and hundreds more. While dogecoin has struggled to find a commercial use case.
For investors… Can you take Dogecoin seriously?
Would you ever take a joke seriously?
Beyond online tipping and market speculation, dogecoins have little purpose. Its recent price is likely held up by the surge in retail interest amongst social media and online communities.
It’s still uncertain how cryptocurrency will be regulated and what role these coins will play in the world. Expect extreme swings in cryptocurrencies — especially Dogecoin, which is known to be more volatile than many other digital currencies.