Dogecoin and the Siren Song of Crypto

There are arguments to be made about how useful cryptography may or may not be, but it often fails when it comes to Dogecoin, the $ 8.3 billion memecoin created as a joke that attracted investors based in large part on a fan’s mermaid song. Elon Musk.

Dogecoin did something unusual when it rose 13% on June 21 after Musk told Qatar Economic Forum attendees: and support Dogecoin, so I’m responding to those people. “

Those people, he added, include some of his employees, who, he added, also “asked me to support Dogecoin, so I do.”

If that sounds like a Roman emperor tossing coins to the common people, well, yes.

Musk, who is not known for his retired personality, has been fueling Doge’s fires since early 2021.

Dogecoin was virtually unknown and almost useless at the time, but the irregular tweeting of the CEO of SpaceX and Tesla of memes about cryptocurrency discarded it which was essentially an internal joke: its logo is a famous photo on the Internet of a used Shiba Inu dog. on meme-generating sites for years, in a cryptocurrency 10 with a market capitalization of $ 8.3 billion.

And its current price, just above 6 cents, is a long way from the nearly 25 cents it commanded in November, when the current crypto-winter bear market began to drop all cryptocurrencies.

‘A Hustle’?

Nor is its influence purely positive. When Musk called Dogecoin “a rush” while hosting Saturday Night Live last May, it dropped 30 percent immediately – at a time when it was worth more than $ 0.73 – it has never been the same since. And while that also coincided with the first major crypto bear market of 2021, Dogecoin is currently down more than 90%, only jumping, usually very briefly, when it calls.

There have been more than a few complaints that Musk’s mercurial ability to move crypto markets via Twitter should push regulators to stop it, although that rose sharply when the price of bitcoin rose 20% in January 2021 when adding “#bitcoin” heads his biography on Twitter.

See also: With the purchase of Twitter, Musk’s fascination with Dogecoin and Crypto payments will gain importance

Certainly, the Securities and Exchange Commission (SEC) tried, with some success, to keep it under control after tweeting a fake, marijuana-themed advertisement that it was taking Tesla in private with a big profit on the price of its shares. That moved the market and cost Musk and Tesla $ 10 million each to resolve a SEC complaint, and required the company to review all tweets related to it.

How well it will work now that Musk is about to own his favorite bully pulpit – where he already has more than 99 million followers – remains to be seen.

Although this is a very long option, at best, a disgruntled Dogecoin investor has filed a $ 258 billion lawsuit that, according to Reuters, accused Musk of “extortion for promoting Dogecoin and raising its price, and then leaving drop the price “.

The lawsuit, filed on June 16, said Musk was “aware since 2019 that Dogecoin had no value yet promoted Dogecoin to benefit from its trading … Musk used his pedestal as the richest man in the world to operate and manipulating the Dogecoin Pyramid Scheme for profit, exhibition and fun. “

The Song

There are a couple of more important points to make about both Musk’s ability to move the price of Dogecoin and to make it, as of June 22, the tenth largest cryptocurrency.

First, if cryptography is so decentralized, how can a man, even the richest man in the world, move it so fast and so far? That’s a question that’s been asked a lot in the cryptocurrency business lately, especially when it comes to decentralized finance (DeFi), which is supposedly so decentralized that no one is in charge, but when problems or controversies arise, there is often a human capable to take charge.

However, the other side of Musk’s games with fans of cryptography is that it has drawn a lot of attention, and largely positive, for all its antics, to the wider industry. Dogecoin aside, it is essentially the first real titan in the industry (so to speak) to take bitcoin very seriously as a payment and investment tool.

Read more: Dogecoin taking a big bite of Crypto Mindshare, PYMNTS report finds

And for a few days, he made bitcoin a currency accepted by a major corporation for high-priced merchandise when he announced plans to accept it as payment for Tesla cars. Although this clashed head-on with bitcoin’s environmental issues, forcing it to reverse course, it was a much more concrete sign of support than tweeting a meme. While it may not be good for the bitcoin representative as a payment currency, it has shown that cryptocurrency payments could be used for something beyond movie tickets and cryptocurrency debit cards that pay cash merchants.

Second, Dogecoin’s $ 8.3 billion market cap places its value well above some of the most useful cryptocurrencies such as Polkadot (No. 11), Polygon (No. 19) and Algorand (No. 26). ), all considered “Ethereum Killers” competing with crypto number 2, Ethereum, for market share. They are doing this with features that include genuine utility such as better scalability, faster completion, and cheaper transaction rates.

Not to mention the well-established payment currencies, designed to be bitcoin alternatives like Litecoin (# 20) and Bitcoin Cash (# 27), as well as Stellar (# 24), which has expanded beyond its cross-border payment roots. .

As for Dogecoin, the biggest sign of its inherent futility is probably the fact that its foundation (every self-respecting cryptocurrency has one) revived last August after a long period of inactivity with the express goal of rewriting its code to do it realistically. payment currency and giving you smart contract capabilities to create a blockchain that could actually be used as a basis for real projects like DeFi projects. This was necessary because it was intentionally designed to be useless.

If the investment bar in cryptocurrency is so low, and so uninformed or carefree, about the real value of a currency as a business tool, which is, in theory, why they have value, that says it about the other parts of a currency universe. alternatives. , encrypted in more than 10,000 according to some estimates, which may or may not be very useful?

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About: The PYMNTS survey of 2,094 consumers for The Tailored Shopping Experience report, a collaboration with Elastic Path, shows where retailers are right and where they need to improve their game to deliver a personalized shopping experience.

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