Dogecoin, an animal cryptocurrency that has soared in value owing to Elon Musk and other celebrities, embodies 2021, according to this article from Coinwire. It was the 10th-largest cryptocurrency. Dogecoin market price ended 2020 with less than half a cent per DOGE. Its year-to-date gains are 1,000% at or above 5 cents.
This is more than a cyclical upswing or a fluke. Dogecoin’s ascent is significant because it reflects current tensions.
The Dogecoin craze reveals several truths about our reality.
Absurdity and seriousness are close
Dogecoin is a Shiba Inu, named after a dog. Snoop Dogg renamed himself Snoop Doge. It’s all ludicrous. Dogecoin was designed to be ludicrous.
Dogecoin’s popularity annoys some professional crypto industry members. Even though no one outside the business understood how it worked, they spent years attempting to persuade people that Bitcoin had genuine technology. Finally, the world notices. Every day, another brand enters the fray. PayPal. Tesla. Mastercard. Harvard. MS. America’s oldest bank (BNY Mellon). Bitcoin passed $50,000 this week as the list goes on.
Now, new currency is stealing some of bitcoin’s attention. What does it say to non-cryptographers?
It conveys a familiar message: The ludicrous may turn deadly. Before 2016, many considered Trump as an outlandish reality TV personality who could never become president. Many still consider him a joke. He ruled the globe for four years.
The objective is not to compare dogecoin to Trump. Dogecoin “joked” its way to a $7 billion market valuation, which is actual money. If DOGE frenzy busts, some individuals will suffer serious losses.
Collective belief may override “fundamentals”
How? How can something ridiculous become real? Because collective belief appears to be shaping reality more than underlying facts.
This shared conviction may override practical considerations. Developers stopped updating Dogecoin two years ago. Its lack of miners renders it susceptible, according to some. Critics argue the DOGE growth is totally speculative.
Dogecoin is sentiment-driven. Lately, many things seem like way. Crowd emotion and social media rocket value. Redditers rallied to boost GameStop’s massively shorted stock. MarsCoin, which Musk tweeted about, rose over 1,000%.
Social media can now convert collectivist mentality into mass bargaining at unprecedented speed and scale.
TikTok’s algorithm and followers propel teens to stardom. Can those seconds-long videos merit worldwide acclaim? Do they deserve fame? Perhaps, but it doesn’t matter. Some become millionaires. This is innocent, yet internet-based conspiracy theories may have real-world effects. Just trust them.
Collective conviction has always been strong, but it cannot shift markets alone. Social media can now convert collectivist mentality into collective action at unprecedented speed and scale. Musk has used his large fan following to get others to buy DOGE and raise its price.
Decentralization is desired yet unattainable
Money—and crypto culture—is based on communal belief. Fiat money would be worthless without widespread acceptance. Bitcoin is designed to be independent of central governments, which may issue money and affect pricing. Bitcoin’s price is set by demand. Initially, it was a few pennies. Over $50,000.
Dogecoin embodies the cryptocurrency ideal. It is strange and beyond the financial system. The community ruled after its founders departed. Big banks refuse. Goldman Sachs & dogecoin will likely not appear in a prominent headline for some time.
Bitcoin is maturing and earning recognition from conventional players. That may benefit mainstream acceptance and the business. Bitcoin has matured, yet whale investors, mining pools, and exchanges have outsized impact.
Musk, a bitcoin enthusiast, has urged that dogecoin become the “people’s crypto,” or democratic money. This echoes the GameStop mania, when individual investors triumphed against hedge funds. GameStop was fun, but will it change the financial world?
Finance democratization is difficult. Thus, Dogecoin’s centralization isn’t surprising. Musk said Dogecoin’s wealth is excessively concentrated. Coin Metrics found that the top 100 DOGE accounts possess 68% of its supply, compared to 13.7% for bitcoin. The top 1% of DOGE addresses control 94% of supply.
Musk has encouraged huge DOGE owners to sell, even by offering to pay to cancel their accounts. Irony is unavoidable. An unfathomably wealthy individual boosted DOGE’s price and then whined about power concentration, offering to repair it.
Take Dogecoin seriously. Its growth shows ongoing tensions. Consider them. We’re joking.