Perhaps the title of this blog should have been “Why is the Doge-ie in the window so expensive?” Recently, Dogecoin has been flying high even though it is based on a meme. Since its inception, Dogecoin has been set apart from other cryptocurrencies by its satirical beginnings and roots in an oddball online community. Even so, the so-called “friendly” coin has seen a surge of success over the years, increasing in price by about 6,000% by May of 2021 before sharply dropping in June. It has also attracted notable investors such as Elon Musk.
Doge has existed for years and weathered ebbs and flows in popularity, raising the question of how a cryptocurrency borne of a joke between friends can maintain mainstream appeal. One reason may be interest from Elon Musk. Most recently, Musk brought attention to the coin through a push to put a physical Dogecoin on the moon. Many in the Doge community are reverent of Musk, dubbing him the “Dogefather” or “Doge CEO”. Tweets from Musk have been known to increase the value of the cryptocurrency.
There are many other possible reasons for investors’ continuing interest in Doge. Some feel that it is attributable to the tight-knit online community and accessibility to non-traditional investors. It has also been dubbed “the people’s crypto” because investors who may be intimidated by or not have the funds to invest in more established cryptocurrencies may find Doge and its community a more welcoming space. Additionally, Doge has low barriers for investment, with low cost and low transaction fees.
It is also possible that Doge may be appealing to younger and less enfranchised investors who enjoy gaming the establishment by pumping meme or joke stock, especially in the wake of Game Stop. This view is supported by the theory that its most recent surge is largely attributable to a push from a Reddit investment community.
While the approachability and anti-establishment nature of Doge has attracted investors and contributed to its longevity, it has also been subject to a volatile market. After an initial resurgence, Doge lost almost half of its value between May and June. Doge’s popularity also masks (or perhaps Doge is popular despite) its “flaws” as seen from an investment perspective: (1) it has what amounts to an unlimited supply, (2) is has no inherent utility other than as source of payment or store of value, and (3) the total computing power available to Doge at the moment is small (infinitesimally so when compared to BTC), meaning that it is vulnerable to a 51% attack. None of these flaws mean that Doge cannot have useful applications, but it explains why experts remain wary of Doge as a meaningful investment.