Dogecoin is a joke. It is a meme. But its early investors seem to having the last laugh.
33-year old Glauber Contessoto works at a hip-hop media company in Los Angeles. He drives a worn-out Toyota and has no home to his name. In February, he invested his life savings of nearly a quarter of a million dollars in dogecoin, much to the discomfort of his family and friends, hoping to make big bucks quickly. His gamble paid off - and he's worth $33 million. With this money, he hopes to buy his own home. However, he refuses to sell, as he anticipates the prices to go higher, according to the New York Times.
Similarly, Tommy and James are two New York-based brothers who found themselves to be millionaires on April 17. Again in February, they bought Shib coin - a dogecoin spinoff and a coin that is less than a year old. This coin has gained almost 11,000% in the year, keeping them from the pitfalls of near joblessness.
Dogecoin itself has rallied substantially year-to-date - rising 7,341%, being priced at just above 35 cents. This is far below its price a week ago, where it was above 50 cent, rising 10,770% this year since the beginning of January, all according to data from Coindesk. Dogecoin joined a legion of other cryptocurrencies to fall heavily - in its case 50% from its opening of 48 cents to its low of 23.9 cents.
Nonetheless, the cryptocurrency started the year with a price of less than one cent, and its investors and followers want to push it on to a dollar.
It has overshot its peers, bitcoin, and ethereum, which have gained only 65% and 415% respectively. While dogecoin has entered the top five cryptocurrencies with a market cap of $66 billion, its still a far cry from the much larger bitcoin with $900 billion, and ethereum with $450 billion.
Amid the mad rally, here's all you need to know about it.
What is the 'much wow' dogecoin?
Dogecoin is cryptocurrency founded in 2013 by two engineers - Billy Markus and Jackson Palmer - literally as a joke; a spoof on the boom of other rudimentary cryptocurrencies that had frequently started emerging.
An open letter from Markus on Reddit says that he created the cryptocurrency for the "sillies", without any expectation or plan, to call it the "next big thing". It took them three hours to make the coin.
The term 'doge' is slang for 'dog', and features a Shibu Inu breed, and words put together haphazardly in broken English, usually written in a cartoony and colourful Comic Sans MS font. Along with other quips, the 'doge' meme usually carries words "much wow" to convey fascination. Due to this, dogecoin has earned the moniker 'memecoin.'
Dogecoin has never shied away from representing itself realistically, as the official website of dogecoin links the origin of 'doge' to knowyourmeme.com, another joke website - as the name suggests, explains memes.
How does dogecoin get its value?
Dogecoin gets its value from the forces of demand and supply. The supply of cryptocurrencies is increased by a process called "mining" - which is a process where "miners" lend computing support to the cryptocurrency's network in exchange for dogecoin.
Other cryptocurrencies are also mined, but the main feature setting dogecoin apart from a cryptocurrency like bitcoin is that while bitcoin has an upper limit of 21 million token - meaning that only 21 million tokens of bitcoin can ever exist - dogecoin can have an infinite supply of tokens. Nearly 14.4 million dogecoin are entering circulation daily. Up to 2014, dogecoin had a supply ceiling of 100 billion tokens; a cap that was removed by Palmer to dissuade hoarding and encourage using the coin to tip.
While dogecoin may be rallying faster than more well-known alternatives like bitcoin; experts use bitcoin's fixed-supply argument and the recent formal institutional support it has received to bat for it over dogecoin in the long run.
Why is dogecoin rallying?
There seems to be no objective underlying reason for its overdrive, but it can be largely attributed to two reasons.
First, its rally is rubbing off the 'Reddit Revolution', that took organised stock markets in the United States by storm earlier this year. Users of social media platform Reddit led a rally in those stocks that had been shorted by Wall Street hedge funds and large investors, causing these investors billions in collective losses. These users often resorted to memes and informal language to convey their messages, and picked quirky yesteryear stocks like Gamestop, AMC Entertainment, Nokia and Blackberry, which rallied strongly, driven by small and retail investors.
Dogecoin is a mirror of this trend, but in the cryptocurrency space. Reddit continues to provide a significant push to dogecoin, which they colloquially put as "doge to the moon", which they show by 'doge' sitting in a rocket going towards the moon.
Second, dogecoin is getting celebrity attention, especially from Elon Musk of Tesla, who is considered to be a messianic figure for dogecoin investors and whose tweets play a role in vehemently moving its prices.
A tweet by him recently, that he was working with dogecoin's developers to improve its transactional efficiency, sent it soaring 22%.
Working with Doge devs to improve system transaction efficiency. Potentially promising.— Elon Musk (@elonmusk) May 13, 2021
A little before that, dogecoin rose from 46 cents to 54 cents after he ran a Twitter poll asking if his electric car company, Tesla, should start accepting dogecoin as a medium of payment, garnering nearly 4 million votes.
Several other investors and celebrities, such as Mark Cuban and rapper Snoop Dog have also tweeted about dogecoin.
How can I get dogecoin?
In order to buy dogecoin, one would need a dogecoin wallet - similar to any other cryptocurrency.
These wallets can be downloaded as PC apps for Linux, Windows or Mac OS, and even for Android as given on dogecoin's website, and later configured, which can then be used to accept and remit dogecoin anonymously and securely to any other wallet.
In order to gain these dogecoins, one could buy them off cryptocurrency exchanges by paying for them in formal currencies, trade for them, accept them as a mode of payment or mine them.
In India, dogecoin could be bought off exchanges like WazirX and CoinCDX. However, the Reserve Bank of India has asked banks to reconsider ties with cryptocurrency exchanges as a new law to ban them still remains on the horizon.
Read our earlier coverage of dogecoin below.
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