There are arguments to be made about how useful crypto is or isn’t, but they tend to fall flat when it comes to Dogecoin, the $8.3 billion memecoin created as a joke that has attracted investors based largely on the siren song of one fan, Elon Musk.
Dogecoin did something not at all unusual when it jumped 13% on June 21 after Musk told attendees of the Qatar Economic Forum, “I intend to personally support Dogecoin, because I just know a lot of people who are not that wealthy who have encouraged me to buy and support Dogecoin — so I’m responding to those people.”
Those people, he added, include some of his employees, who, he added, also “asked me to support Dogecoin, so I’m doing so.”
If that sounds like a Roman emperor tossing coins to the plebes, well, yeah.
ur welcome pic.twitter.com/e2KF57KLxb
— Elon Musk (@elonmusk) February 4, 2021
Musk, who is not known for his retiring personality, has been stoking the fires of Doge since early 2021.
Dogecoin was virtually unknown and next to worthless at the time, but the SpaceX and Tesla CEO’s irregular tweeting of memes about the cryptocurrency have blasted it from what was essentially an inside joke — its logo is an Internet-famous photo of a Shiba Inu dog used on meme-generator sites for years — into a top 10 cryptocurrency with an $8.3 billion market capitalization.
And its current price, a bit above 6 cents, is a long way from the roughly 25 cents it commanded in November when the current bear-market-turned-crypto-winter started sending all cryptocurrencies tumbling.
Nor is his influence purely positive. When Musk called Dogecoin “a hustle” while hosting Saturday Night Live last May, it dropped 30% immediately — at the time it was worth more than $0.73 — has never been the same since. And while that also coincided with 2021’s first big crypto bear market, Dogecoin is currently down more than 90%, only jumping — generally very briefly — when he calls it out.
There have been more than a few complaints that the mercurial Musk’s ability to move crypto markets via Twitter should drive regulators to make him stop — although that came up most strongly when he drove the price of bitcoin up 20% in January of 2021 by adding “#bitcoin” top his Twitter bio.
Certainly, the Securities and Exchange Commission (SEC) tried — with some success — to keep him in check after he tweeted out a fake, marijuana-themed announcement that he was taking Tesla private at a big markup over its stock price. That moved the market and cost Musk and Tesla $10 million each to resolve an SEC complaint — and required the company to vet any tweets related to it.
How well that will work now that Musk is on the verge of owning his favorite bully pulpit — where he already has more than 99 million followers —remains to be seen.
While it’s a very long shot at best, a $258 billion lawsuit was filed by a disgruntled Dogecoin investor who, according to Reuters, accused Musk “of racketeering for touting Dogecoin and driving up its price, only to then let the price tumble.”
The lawsuit, revealed on June 16, said Musk was “aware since 2019 that Dogecoin had no value yet promoted Dogecoin to profit from its trading … Musk used his pedestal as World’s Richest man to operate and manipulate the Dogecoin Pyramid Scheme for profit, exposure and amusement.”
There are a couple of bigger points to make about both Musk’s ability to move Dogecoin’s price at will and his ability to turn it into — as of June 22 — the 10th-largest cryptocurrency.
First, if crypto is so decentralized, how is one man — even the world’s richest man — able to move it so fast and so far? That’s a question being asked a lot in the cryptocurrency business lately, particularly in regard to decentralized finance (DeFi), which is supposedly so decentralized that no one’s in charge, yet when problems or controversies arise, there’s often a human able to take charge.
However, the flip side of Musk’s toying with crypto fans is that he’s brought a lot of attention — and largely positive attention, for all his hijinks — to the broader industry. Dogecoin aside, he’s essentially the first real titan of industry (so to speak) to take bitcoin very seriously as a payments tool as well as an investment.
And for a few brief days, he made bitcoin a currency accepted by a major corporation for a high-ticket piece of merchandise when he announced plans to accept it in payment for Tesla automobiles. While that crashed headfirst into bitcoin’s environmental problems, forcing him to reverse course, it was a far more concrete sign of support than tweeting out a meme. While that may not have been good for bitcoin’s rep as a payments coin, it showed crypto payments could be used for something beyond movie tickets and crypto-spend debit cards that pay merchants cash.
Second, Dogecoin’s $8.3 billion market cap puts its value well above some of the most useful cryptocurrencies like Polkadot (No. 11), Polygon (No. 19) and Algorand (No. 26) — all considered “Ethereum Killers” that are vying with the No. 2 crypto, Ethereum, for market share. They are doing this with features that include genuine utility like better scalability, faster finalization and cheaper transaction fees.
To say nothing of well-established payments coins designed to be bitcoin alternatives like Litecoin (No. 20) and Bitcoin Cash (No. 27) — as well as Stellar (No. 24), which has expanded beyond its cross-border payments roots.
As for Dogecoin, the biggest sign of its inherent uselessness is probably the fact that its foundation — every self-respecting cryptocurrency has one — was revived last August after a long dormancy with the express goal of rewriting its code to make it realistically usable as a payments currency and giving it smart contract capabilities to create a blockchain that could actually be used as a base for actual projects like DeFi projects. That was necessary because it was designed, intentionally, to be unusable.
If the crypto investing bar is set so low, and so uninformed or unconcerned, about a coin’s actual value as a business tool — which is, in theory why they have value — what does that say about the other parts of an alt-coin universe, numbered at more than 10,000 by some estimates, that may or may not have much utility?
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