While bitcoin was going through a massive pullback in December, another cryptocurrency was smashing records. This tiny crypto saw a 357% gain in just one month. Its market cap blew through a billion US dollars, and shows no signs of slowing.
The problem is, it’s a joke.
Dogecoin was named after a popular internet ‘meme’. That’s slang for image-based running jokes online. Anyone can edit the images and apply the meme to the new situations and conversations. In that way, memes constantly evolve and change. New ones rapidly appear. Some last months or years, changing as they go. Others fade much more quickly and are replaced.
Not unlike many cryptos, in fact.
Dogecoin was named after a popular meme that involves Japanese Shiba Inu dogs. It’s captioned with intentionally broken English. ‘Doge’ is simply a misspelling of the word ‘dog’.
Dogecoin was launched in December 2013 as a parody of cryptocurrencies. Everything about it is intended to mock. It laughs at cryptos, the crypto community, and at hardcore crypto investors.
Dogecoin has a ridiculously high number of coins compared to other cryptos. That keeps the individual value extremely low. Unlike bitcoin, there’s no limit on how many dogecoins can be created. And every dogecoin discussion board online is a sea of memes.
Nonetheless, it’s somehow become an accidental success story.
Rather than getting a few laughs and then fading away, dogecoin just refuses to die. Since 2013 it’s been accepted by several major online exchanges. Its use in online purchases and as an internet ‘tipping’ system continues to grow.
The dogecoin community even used the crypto to sponsor the Jamaican bobsled team’s entry into the 2014 Winter Olympics. They were likely inspired by the classic 1993 film Cool Runnings.
Is that kind of ridiculous use a sign that it’s all meaningless? On the one hand, yes, it’s laughable. On the other hand, the Jamaican team did compete. It’s tough to argue with results.
It’s basically impossible to distinguish between serious dogecoin investors online and those who are in it for a laugh. Possibly there’s no difference between the two. But make no mistake. The money involved is very real.
The crypto’s creator, Jackson Palmer, stepped away in 2015. Perhaps it was all getting a bit too surreal for him.
But even that wasn’t enough to stop dogecoin. As mentioned above, the dogecoin market cap passed a billion dollars US in December 2017. At time of writing, it’s still headed steadily up.
Palmer returned briefly from crypto retirement for an interview with Coindesk this week, saying:
‘I have a lot of faith in the Dogecoin Core development team to keep the software stable and secure, but I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap.’
Is the runaway success of this ‘joke’ a red flag for the whole cryptocurrency world?
In a word, yes. In several words, yes, absolutely, obviously.
Cryptocurrencies remain an incredibly volatile, chaotic and constantly changing asset class. New cryptos explode onto the scene, set off tidal waves of change, and cease to exist just as quickly. Exchanges are hacked, taken down or simply disappear with users’ money. Scams, thieves and charlatans abound. It’s a terrifyingly risky market.
None of that changes the incredible potential here. Potential both to change the world, and to bring explosive gains for investors.
Cryptocurrencies are new. They’re innovative. They’re disruptive. And yes, they’re highly volatile and chaotic. No one, ever, should be putting money into cryptos that they couldn’t afford to lose. But even with all of that risk and chaos, you also can’t afford to miss out on these opportunities. Or ignore the many ways crypto tech could revolutionise industries around the world.
Like with ultra-speculative small-cap and microcap stocks, you wouldn’t bet your house on a crypto. Amounts that you wouldn’t hesitate to put into a blue chip stock, would still be far too much to risk on the hottest new digital coin.
Even if that coin does come with the adorably friendly face of a Japanese puppy on it.
Possibly the greatest danger in the world of cryptos is ignorance. So many of the concepts and methods of crypto investing are new, or new versions of old ideas. And in such a rapidly changing, seldom-regulated market, there are unseen dangers everywhere for new investors.
That’s why our resident crypto experts, Sam Volkering and Ryan Dinse, launched their entry level crypto investing newsletter, Secret Crypto Network. To learn everything you need to know to get started with bitcoin, altcoins, wallets, exchanges and ICOs, check out Secret Crypto Network here.
This week in Money Morning
The Port Phillip Publishing office returned from holidays on Tuesday, 2 January. Your first Money Morning article for the year started in a logical place, with a look at where 2018 could be headed, and three sectors that could boom. To read about what could be the biggest opportunities this year, check out Tuesday’s article here.
The Trump administration finally got a big legislative win at the end of 2017, with the passing of its much-hyped tax cut bill. Sure enough, governments around the world are scrambling to follow suit. In Wednesday’s article, Ryan looked at the potential drawbacks of corporate tax cuts, including a problem unique to Australia. And he discussed the kind of tax cut that could make a real difference for Australians. Read the details here.
Thursday brought an outrageous prediction that bitcoin could reach US$100,000 in 2018. Or at least, it seems outrageous at first glance. But perhaps not. The crypto world saw a pullback in late December last year. But even after that, it was up more than 1,200% for the year. Which is far from bitcoin’s biggest yearly gains. It racked up more than 5,500% gains in 2013. And if bitcoin truly does become a fully-fledged alternative currency, ownership will have to become much more widespread than it is today. Meaning that even greater gains could be ahead.
Ryan argued that the recent volatility in bitcoin and other cryptos is to be expected in any asset this young. Obituaries in the mainstream press for bitcoin are shockingly premature. Especially considering how many times the ‘death of bitcoin’ has wrongly been declared already.
To read the details, you can find Thursday’s article here.
Just as volatility remains a risk in the crypto world, there are plenty of other risks too. As Money Morning’s crypto experts Sam Volkering and Ryan Dinse often say, it’s still the ‘Wild West’. The incredible potential gains come with equally large risks.
On Friday Sam looked at one of the biggest risks in the crypto world right now, and how you can minimise or avoid it. You can read the details here.
Editor, Money Weekend