DogeCoin: Fascinating History; Uncertain Future
Once a meme, now a traded cryptocurrency — the journey of the dogecoin is nothing less than surreal. Originally created as a parody cryptocurrency by Jackson Palmer of Adobe Systems and programmer Billy Markus in 2013, the dogecoin has garnered considerable popularity in the domain of digital currency. Often touted as Tesla CEO Elon Musk’s favourite social phenomenon, the market cap of the dogecoin as of May 7, 2021 stands at a whopping $93.38 billion. In order to understand the phenomenon of the meme-turned-money, it is imperative to understand the concept of cryptocurrency better.
Any digital asset that is designed to work as a medium of exchange may be termed a cryptocurrency. Individual coin ownership records are stored in a digitized ledger that uses strong cryptography to secure transaction records and to control the creation of additional coins. In the world of cryptocurrencies, all transactions are verified and records are maintained by a decentralized system using cryptography, rather than by a centralized authority like a bank. Although cryptocurrencies have often been termed Ponzi Schemes, pyramid schemes and economic bubbles, their popularity continues to soar especially among the risk-loving youth. Some popular cryptocurrencies include Etherium, Bitcoin, PolkaDot and ChainLink.
The currency in question – the infamous Dogecoin- is an interesting case study in itself. The creators of the DogeCoin intended it to remain a joke that simply drew positive attention to cryptocurrencies especially from younger investors who were probably aware of the Doge Meme. Additionally, it was to serve as a payment system free from traditional banking fees. The Doge Meme (made popular in early 2013) features a Shiba Inu dog with multi-coloured text surrounding it in the Comic Sans Font (remember “Such humour, much funnies?”) Doge has also been referenced by members of the United States Congress, a safety video for Delta Air Lines, a Google Easter egg, and the video for the song “Word Crimes” by “Weird Al” Yankovic. Towards the end of the decade, the meme regained popularity after DogeCoin found support among several popular American celebrities and public figures including Musk, Snoop Dogg and Gene Simmons. In fact, the Tesla CEO has tweeted about the DogeCoin several times in the past two years, often rallying up the value. This has led several sceptics to question what has been expressed as noble intent and take a deeper look into what Musk attempts to achieve by popularising the cryptocurrency. Interestingly, the original creators of the DogeCoin seem to have taken a backseat. Largely inactive for several years, Palmer announced that he would take an “extended leave of absence” from the cryptocurrency community, calling the community toxic and criticizing it for being marred by “buzzword-filled business ideas.”
The DogeCoin’s rise to popularity is often credited to various social media platforms such as Reddit where threads regarding the currency quickly went viral. A Reddit group called the SatoshiStreetBets, that aims to pump up the prices of cryptocurrencies has been pushing for the popularity of the DogeCoin as early as 2017. Social Media sites such as Twitter and Facebook often witness pre-planned trends regarding the DogeCoin to spread awareness about the crypto and more often than not, aim to push prices higher. In July 2020, a video urging people to invest $25 in dogecoin went viral on TikTok, pushing its then-price of approximately $0.0028 to $1 temporarily. As the #TikTokDogecoinChallenge began to trend, interest in buying dogecoin soared, and its trading volume increased 1,900% within two days. The most fascinating part about the collective social phenomenon is probably the social unity that it brings, especially among the online community. Today the DogeCoin is actively being popularised by two intersected communities of the virtual world: the memers and serious advocates of a digital financial future.
However, questions do arise on the safety of investing in cryptocurrency in general and the DogeCoin in particular. Soon after the TikTok spike, for instance, dogecoin developers warned people on Twitter to avoid buying into financial “guarantees” to keep the market safe. The price went back to normal levels soon after. In May of 2021, the price of the DogeCoin dipped further after Elon Musk (who terms himself ‘The Dogefather’) appeared on the popular American parody show Saturday Night Live. The currency has also attracted scammers and hackers who take advantage of the hyped and inexperienced market that has recently come into being. Operations include the hacking of wallets and making fraudulent claims about fake products. At its current immature phase, the cryptocurrency market is prone to wild swings in its valuation caused by various external factors. Secondary is the introduction or discovery of some Blockchain breaking technology, or destructive code placed into one of the various updates of a protocol. If something simultaneously causes the entire market to sell one commodity en masse, its price will, of course, fall rapidly.
How low it goes is solely dependent on investor confidence: a factor that only the passage of time can evaluate.