A cryptocurrency that was initially devised as a joke, Dogecoin, has suddenly increased in value by 6000% this year. Given the fact that just like Bitcoin, Dogecoin’s worth is limited to what people are willing to pay for it, there is no logical reason why this digital token would be priced at 30 cents per piece. There is no asset or investment backing it and unlike Bitcoin, its supply is not limited.
Since it is unlikely to generate any income, its ongoing popularity is only a result of the hyped buying and selling. It is more like a fad; people are buying Dogecoins in response to a viral joke, just to laugh over their unwise investment decisions. This has become a trend as many are willing to buy these digital currencies at a price more than they are worth and then selling them at even higher rates. This is the reason Dogecoin’s price started soaring and has ultimately reached a record high level.
A senior analyst at Oanda Asia Pacific Pte. is of the view that Dogecoin’s extremely low price as compared to Bitcoin might be the reason people are taking the risk and investing in it without careful thought.
Even one of the co-creators for Dogecoin has agreed that their intention was not to generate financial returns when creating this cryptocurrency, but rather amusement and humor.
“Dogecoin and its community prides itself on being friendly, fun, and spreading joy,” Billy Markus reportedly said.
Trading of Dogecoin was basically fuelled by a meme. However, after trading of GameStock shares was restricted by Robinhood, investment into Dogecoin suddenly increased by millions of dollars.
The breakthrough came on 20th April, 2021 when users of Dogecoin decided to celebrate DogeDay instead of Pot Smokers Day. The basis for this decision was again, a pun that aimed at raising the price of this digital token to 42 cents, 69 cents or $1. All these figures were derived as a joke and the movement was started more like an entertainment activity. However, the result was a drastic increase in Dogecoin’s price that actually raised its value to 41.9 cents.
The Dogecoin craze has not even spared celebrities like Elon Musk. He uploaded a picture of himself on Twitter where he was seen holding a Dogecoin along with a replica of a fictional magazine entitled Dogue. Since then, memes like “Papa Elon Will Protect the Doge Coin” have been circulating the internet.
Even the Dogue magazine seems to be a humorous take at the word “dog.” By the way, this is where Dogecoin got its name from. It is inspired by the “Doge” meme that became popular in 2013. The world doge represents“dog” deliberately spelt wrong. Hence, the face of a goofy, yet all-knowing Shiba Inu represents Dogecoin.
One reason for the Dogecoin phenomenon becoming widely popular might be low barriers to entry in the world of cryptocurrency. Purchase can be made merely with a click, and digital tokens are available on commission-free brokerage apps.
Despite its increasing financial value and popularity, Dogecoin appears to be a pump. What happens in a pump is that internet users focus their attention on an invaluable item and strive to increase its price by provoking each other to buy it, till a rat-race begins and every person follows the other without having any logical reason to do so. Even though pump actually “pumps up” the value of the asset in question, the wise thing to do is pull out finances before the meme becomes obsolete, and this is exactly what we would recommend.
