If you are on the internet and use any of the social media platforms, there is a chance that you might have come across the word Dogecoin. Even if you aren’t, at least one of your friends would have come to you and asked you to invest in it, saying that it will give you great returns. At the beginning of this year, one Dogecoin was valued at less than a cent and now it is worth more than half a dollar. In the first week of this month, it went on such a high that every Indian trading platform crashed. Robinhood also crashed.
Everyone is now talking about the Dogecoin. Everyone wants to take it to the moon, and it also has its own song. So, what is going on with Dogecoin, is it safe to invest in and should you? Well, let’s talk about it.
How the joke started
To understand, what is happening with the Dogecoin and why everyone is talking about it, we have to go back in history. About a decade ago, a meme was ruling the internet. It was basically nothing but, the image of a dog Shiba Inu. This meme became popular between 2010 and 2013. Around the same time cryptocurrencies also came into existence and not too many people took them very seriously.
In 2013, Dogecoin was formed by two software developers as a joke on other cryptocurrencies like Bitcoin. And they put Shiba Inu’s face on this coin to merge two popular trends of the time. Back then, no one took Dogecoin seriously. Not even its creators Billy Markus and Jackson Palmer.
In fact, Billy revealed that he sold all his Dogecoins in 2015 to buy a Honda Civic car. Doge is now bigger than Honda. It is bigger than SpaceX. Dogecoin was first exchanged in 2014 and since then has grown by more than 32,000 per cent.
Steps in the Dogefather
So, what happened between 2014 and 2021? Well, Doge got a father. Shri Shri Elon Musk, who now refers himself as the Dogefather.
Dogecoin was always loved by the internet. Largely because nobody took it seriously or cared about it. It had the face of cute Shiba Inu dog which people have always loved. Holders used to exchange Dogecoin on platforms like Reddit to tip other users. So, if someone didn’t like your post, they would tip you in dogecoin because it was of no value but showed their respect towards you for putting in the effort.
The idea was never to make money.
Things changed at the beginning of this year when Musk tweeted that he is going to put the Dogecoin on the moon. The entire internet janta started talking about it. Remember, they anyway loved it. Other celebs like Snoop Dogg also endorsed Dogecoin and now one Dogecoin is worth $0.5.
So, what is the problem?
The problem is that unlike Bitcoin, there is no regulation on Dogecoin. You will be surprised to know that there are only 21 million Bitcoin in the world. This number will not change at any point. On the other hand, 15 million Dogecoins are being minted, every day. The crypto enthusiasts call it the decentralisation of cryptocurrency.
So, by the simple demand supply logic, the value might start dropping after a point because there will be just too many Dogecoins in the world and not enough demand. And trust me, this is not the last meme currency we have. Shiba Inu coin is already making headlines and there will be a lot more soon.
Should you invest in Dogecoin and other meme cryptocurrencies or not?
See, there are a lot of emotions involved with money. Everyone is talking about Dogecoin, you may invest in it, make some profit and then may want to invest again. If you don’t, some of your friends might invest, and then you may regret about passing on the opportunity. It’s not easy to control yourself in these exciting times, but that’s exactly what you need to do.
Investing in Dogecoin and other meme currencies is like taking a punt at this point. It’s good if you want to experiment and put in some money but, don’t go too far with this joke. And, please do not invest your savings into it. Listen, I am not a financial advisor, I am not here to tell you what you should do with your money, but I am sure you will listen to the Dogefather and here is what he had to say –
“First of all, I think people should not invest their life savings in cryptocurrency. To be clear, I think that’s unwise. Cryptocurrency is promising, but please invest with caution.”
You also have to consider the fact that even the creators of these cryptocurrencies aren’t taking them seriously. Dogecoin, for example, hasn’t received a software update in more than two years and its market cap at one point almost touched $90 billion. There is a clear lack of infrastructure around these meme currencies.
So, if you want to invest in Dogecoin, do some research, talk to crypto experts and do not just believe every piece of information that is thrown at you.
How do I identify meme cryptocurrencies?
The first identifier is the name. Most of these cryptocurrencies are named after an internet meme or joke. That should be enough for you to stay away from them. For example, Shiba Inu coin or SHIB token is a meme currency of an already existing meme currency. There are many others like MonaCoin, MemeCoin, SafeMoon etc that have become popular on the internet but are not as reliable as Bitcoin or Ethereum.
Gosh.. Musk joked that if there was a crypto scandal about him, it should be called Elongate. We already have an actual cryptocurrency by that name. It was created from a tweet. How can it be taken seriously!
Many people are quick to compare Dogecoin with Bitcoin but, don’t understand that the latter has a far robust system. Bitcoin is a well-thought cryptocurrency that has lasted for 12 years. Millions of dollars are spent on its ecosystem every year.
Dogecoin was a basic copy-paste job. Its source code was literally lifted from another cryptocurrency. And, let me remind you again, it hasn’t got a software update in years. People lose their mind when their phone doesn’t get a software update. We are talking about currency here. So, infrastructure around a cryptocurrency is the second way to identify if it is a meme currency or not.
Most of these meme cryptocurrencies don’t seem to have a long-term future. After a while, it will be about who sells it first and who is left holding on. Again, that should not stop you from investing. Put in some money, see where it goes but please do not use your life savings.