How Dogecoin Went From a Joke to One of the World's Top Cryptocurrencies

The cryptocurrency Dogecoin, which is named after a popular dog meme, set a new high on Friday afternoon. It now has a market valuation of over $92 billion after a six-month gain of more than 26,000 per cent.

The S& P 500 rose 19 per cent during that time, whereas bitcoin (and ether) grew 286 per cent and 698 per cent, respectively, according to CoinMarketCap. And what about Tesla, the stock market darling? Since November, it has climbed by 56%.

This time, according to Mati Greenspan (portfolio manager and inventor of Quantum Economics), Wall Street is the joke. "You have TikTok users outperforming smart suits by thousands upon thousands of percentage points."

The satirical cryptocurrency was established by two software developers, Jackson Palmer and Billy Markus, to spoof bitcoin and other cryptocurrencies with lofty intentions to overthrow the world.

It was named after the popular "doge" meme from Shiba Inu and was pronounced "doje coins" with a soft "g." What is the point of it? To be a "fun" alternative to bitcoin that is speedier.

Dogecoin’s success also stems in part to the uprise of new memecoin and Doge fork projects. Many have wanted to invest in the next “Dogecoin”, which has led to the increase in project success of sub-cryptos that have found major success in the markets. Of these include Shiba Inu, Baby Doge, Dogemama, and more.

Dogemama is the most recent Dogecoin child to make headway in the market. It realizes a model that allows users to earn passive Dogecoin, Shiba, and other memecoins by staking Dogemama coins. It’s a fork of Dogemama that claims to be more environmentally friendly than Dogecoin – environmental impact is a key pitfall that Dogecoin faces in the long-term that critics are uneasy about.

In a note to clients on May 4, Galaxy's researchers Alex Thorn and Karim Helmy highlighted that "the charm of dogecoin has always been its honesty." "Unlike other cryptocurrency projects, dogecoin does not have a grand vision or declarations about how it would transform the world.

Bitcoin's supply is also limited to 21 million coins. The current restriction on the number of dogecoins that can be minted, however, has not been reached.

Bitcoin's value proposition, according to Greenspan, is digital scarcity. According to him, there will only be 21 million of them. "There is no hard cap on dogecoin, and it has an outrageous inflation plan."

The Elon Musk effect

It's unclear why Elon Musk is so fond of dogecoin. Tesla and SpaceX CEO Elon Musk, a millionaire, has spent years promoting the token. Musk's tweets, which occasionally make an oblique reference to dogecoin, frequently result in price records. These posts also piqued the curiosity of regular investors. Asheesh Birla is a general manager of Ripple, a company that maintains a payment-alternative cryptocurrency.

Musk isn't the only celebrity to back the animal-themed cryptocurrency. Mark Cuban, the owner of the Dallas Mavericks, Snoop Dogg, and Gene Simmons, the bassist for Kiss, have all openly backed dogecoin. Slim Jim, a beef jerky company, has joined in the fun. Elon Musk's appearance on Saturday Night Live on May 8 was blamed by one analyst for the price increase. It even brought down Robinhood's trading app for a brief moment. Dogecoin's record-breaking price rise is due to more than simply celebrity support. The market was likewise in a good place. Multiple rounds of stimulus payments have given people extra money to spend. Day trading has become popular thanks to Robinhood and other apps. It's also possible to "stick it" with the establishment.

Dogecoin is a massive F-U to this system, according to BlockTower Capital's Head of Trading, Avi Felman. It's as if, "Yes, indeed! "I'm just going to buy it because I want to," says the purchaser. Experts compare the current situation to the GameStop trading frenzy earlier this year. "Elon is saying, 'Why can't dogecoin have value?'" Felman explained. It's all part of the GameStop craze. These storylines are well-liked by the general public. These are well-known tales. They are quite fond of these jokes. Every retail investor's imagination has been grabbed by Dogecoin."

People may now invest in cryptocurrency more easily than ever before, thanks to the rise of commission-free trading via online brokerage apps like Robinhood. Doge evangelists, according to Birla, have a "rabid online community." They convene on Reddit and Twitter to discuss how to pump dogecoin.

Valuing dogecoin

The value of dogecoin is a contentious issue. At the moment, the token has few applications. More merchants are accepting Dogecoin as a form of payment. It does not, however, have the same amount of acceptance as other currencies. "These days, it's just one big marketing trick," said Mike Bucella, general partner at BlockTower Capital. Dogecoin is not like other cryptocurrencies like Ethereum, which allow programmers to construct lending and borrowing applications on the network.

Dogecoin isn't exactly a dependable store of value, as this normally necessitates a level of long-term trust in the coin and the blockchain on which it's based. "I don't know if anyone has added any new functionality or code to the dogecoin protocol as a whole over the last several years," Birla remarked. "There is no dedicated development team for Dogecoin." Due to these constraints, the dogecoin rally appears to be completely speculative. Dogecoin's value is based on the belief that it is valuable to others. They believe it will be purchased at a better price by someone else.

Dogecoin's price is rising, according to Greenspan, due to the network's low liquidity and rapid expansion. "I don't believe that kind of growth can be continued until the network reaches critical mass." Dogecoin has a promising future. "The actual value rests in today's meme-driven culture," Bucella said, "and doge reflects network value of memetics, which might prove immense." If the doge community agrees on a burn or new supply method via protocol hard fork, this value will be more likely to be kept in the long run.

This article does not necessarily reflect the opinions of the editors or the management of EconoTimes