Dogecoin is without hyperbole, a very overrated cryptocurrency which lacks a distinguishing feature to separate it from the other cryptocurrencies. It really is a dumb, dirty, continually debasing token which was created as a joke, and is based on a meme. However, the attention it garners and has won among the various social media platforms is making all the difference. But as we all know attention can be fleeting and easily focused elsewhere.
So the purpose of this article is to gain a better understanding of what makes Dogecoin so plain, vanilla and uninspiring from a crypto point of view, and then contrast this against the speculative opportunity that lies in front of us. Perhaps we want a piece of this action? Or perhaps we just kick it to the curb and watch from the peanut gallery.
Scratching the Underbelly of Dogecoin
Dogecoin is currently the 5th most valuable cryptocurrency, by market capitalization, as listed by coinmarketcap.com (May 17th, 2021). Before Elon Musk hosted SNL, it got as high as number 4, but has since fallen. (PS: it has since fallen to 7th after the crypto crash on May 19th)
This is important because it shows which coins it is beating out by pure market value, and the terrific platforms it is keeping company with. The problem is that Dogecoin has no redeeming qualities as a platform when compared against these crypto peers.
Dogecoin Crypto Profile
Origin:
Dogecoin was created by software engineers Billy Markus and Jackson Palmer and the genesis block mined on December 6, 2013. They started with the Litecoin open-source code, modified it, and started Dogecoin. It took 3 hours to complete.
| |
Consensus Mechanism | Proof of work mechanism with ASIC mining equipment. It uses the same skrypt algorithm that is used to mine Litecoin. |
Supply Cap | None, there is no limit on how many can be mined. |
Daily Supply Rate | 14,400,000 / day are mined and put into circulation. |
Transactions / Sec | 40-70 transactions per second |
Transaction Speed | 1-6 mins. depending on how many confirmations the recipient wants to see before acknowledging receipt of payment |
Transaction fees | $1.50 / transaction (current price but it can fluctuate) |
Smart Contracts | None – Dogecoin has no smart contract or native DeFi capabilities. |
Merchant Support | 1300 – With more than 1300 merchants accepting Dogecoin it is definitely a strong point for the currency, and it looks to be growing quickly. |
Developer Support | 4 core developers continue to work on the project with no major release or update since 2019. This article has lots of great information on top if you want learn more. |
Profile Summary
So it has unlimited supply, uses proof of work mining, has no ability for smart contracts, but it is faster than Bitcoin, can handle more transactions per second and is accepted by lots of merchants.
So it would seem it is perfect for making payments online. But herein lies the catch: if you’re after a fast, high throughput payment platform, there are other alternatives which will perform and scale much better. If you’re after a green solution with low energy use, you would consider Cardana, Polkadot, or Solana which use proof of stake, avoid energy intensive mining and offer faster payment solutions.
The point is Dogecoin is not the best in class for anything, average at best, inflates daily with no end in sight, and is barely supported by four core developers who have a lot of technical debt to address so the network can scale. To call it a dirty, dumb, and debasing coin is not an exaggeration.
So What Separates Dogecoin from the Pack?
So what then, makes Doge so attractive? What makes it separate itself from the proverbial dog pound of cryptocurrencies?
In short, its a marketing dream!
Culture
Dogecoin has an online culture that has grown and prospered to levels never before seen. Just look at all the memes, tweets, reddit posts and social media attention it garners.
Celebrities
People love celebrity endorsements. Here is the list of celebrities that have publicly endorsed Dogecoin:
- Elon Musk
- Snoop Dogg
- Mark Cuban
- Kevin Jonas
- Gene Simmons
- Lil’ Yachty
- Vicky-Lee Valentino
- Angela White
- Mia Khalifa
- Jake Paul
Audience
With even more of the world forced online now for shopping, working from home, smartphones and so forth, the audience has grown exponentially. COVID-19 has been a major driver by indirectly growing the audience for Dogecoin to bark at.
Many are learning about Bitcoin for the first time. Then they learn of Ethereum and then next its the loud barking dog of Dogecoin through celebrity tweets, news headlines, and surging prices. Through all this, the audience for Dogecoin is growing daily.
Irony
Personal finance is often a serious topic because it requires long term planning, sacrifice, and continual learning. On top of this it can be stressful and is often touted as the number one cause for divorce, even ahead of infidelity. I take it very seriously myself, and I’ve been dutifully working, budgeting, saving and investing since 2003 when I graduated from the University of Alberta with a Bachelor of Commerce degree.
Now, along comes Dogecoin which was never meant to be more than some simple online payment currency which was created in an afternoon, and based on an already existing cryptocurrency. On top of this, it has become a joke, endorsed by B, C, and X class celebrities, and feeds people’s hunger for getting rich quick. On some levels it has already done this and delivered on some of these hopes.
The irony is this token has exceeded its expectations and become more than it was intended to be. However, it can evolve into something much more than we see in it today, it could become the preferred form of online payment.
“Arguably the most entertaining outcome, the most ironic outcome, would be that Dogecoin becomes the currency of Earth of the future,”
~Elon Muskt
Final Words
Dogecoin is a dumb, dirty, debasing cryptocurrency that has a powerful decentralized marketing engine that can catapult it to new heights. The odds are stacked against it as it has gotten itself into a dog fight against faster, smarter, cleaner cryptos but none other has quite the same marketing engine as Doge.
We should never underestimate the power of a strong marketing program, especially one decentralized such as as this, which will be perceived as more powerful and trustworthy.
Full Disclosure (May 22, 2021): I have a very small position in Dogecoin, but I do not recommend anyone buy it. How ironic is that. Which in the end, I suppose, is my point – sometimes fate is ironic and has a sense of humor. #dogetothemoon.
Update (June 21, 2021): As of June 11, 2021 I have sold my entire position of DOGE.
Post Script
After the sharp market correction on May 19th, I’m sure many would be Doge investors are shying away and watching in earnest as the crypto market dives deep into the red. This type of broad base market correction (crash?) was needed for many reasons.
Market dives are all part of a healthy market as it de-leverages the longs, rewards the shorts, and tries to discover a stronger lower bid and floor from which to start over. One positive is that this takes a lot of the steam and froth away from the market and takes it out of the spotlight. There was a ton of speculative long bets in the crypto market so this was a healthy reset and test. Here is a great article that summarizes what has been happening this week with the sharp dives in crypto prices
Cypto assets, in my opinion, are used as an alternative to the normal mainstay investments like stocks, bonds and cash. As such, they are my “Hail Mary” pass and speculative. Tread carefully and stay educated on what these assets are.
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