Dogecoin: Journey to the Moon (and back)
$0.38, $0.53, $0.64, $0.72.
Confused? Well, this was the upward trend seen for Dogecoin from May 1, 2021, to May 8, 2021.
If you would have purchased 5000 Dogecoins on May 1, your estimated profits would have been $1700 by May 8. Yes. $1700 (~ ₹1,24,000) in 8 days. That’s a lot of profit for someone new to cryptocurrency.
What started as a joke by Billy Markus and Jackson Palmer, has currently (as of June 2021) a market cap of $48.29B. It is highly unlikely that you may not have heard about it given all the hype it has received, however, if Dogecoin does not ring a bell to you, just sit back and read till the end to know more!
How did a meme-coin become so popular, it was treated as the currency of the moon? Well, let’s find out!
Dogecoin | History :
The roots of Dogecoin can be traced back to this tweet by Jackson Palmer in 2013. His idea was to create a cryptocurrency only for fun. Soon, he registered a domain with the name dogecoin.com with the face of the popular Shiba Inu dog as its homepage.
Billy Markus, a software engineer at IBM, contacted Palmer to make Dogecoin a reality. Dogecoin had already become the talk of the town on Reddit, even before it became an actual thing. Rumors have it that it took Billy only 3 hours to code and create Dogecoin. Finally, on the 6th of December, 2013, Dogecoin came into existence.
This particular cryptocurrency has several features inherited from Bitcoin — Anonymity and Mining. However, Dogecoin does not have a cap, which means, its supply has no end.
Initially, Dogecoin was used for philanthropic purposes, for example, it was used to raise close to $7000 (4.2M dogecoins) to help India’s underfunded winter Olympians raise money for the 2014 Olympic Games in Sochi, Russia. It was also used to raise $11000 to help people in Kenya get clean drinking water. It was also very popularly used as a micro tipping currency on Reddit
Soon after dogecoin started to gain much popularity, people started to inject all their money into it. The outcome? Dogecoin was now starting to look like another money-making tool and the good causes for which it was being used started to fade away. The creators of dogecoin backed out, stating that the purpose of dogecoin for which it was created is now beginning to lose its path. Billy and Palmer themselves didn’t earn much from it. For reference, Jackson showed a jar of Nutella and Billy showed a second-hand Honda Civic vehicle as materialistic proof of their earnings through Dogecoin.
“I saw the space being overrun by opportunists looking to make a buck, rather than people investing in evolving the technology”
said Palmer in an interview, after he stepped down.
Dogecoin | Rebirth
All the hype surrounding the altcoin (altcoins are the alternate cryptocurrencies that were launched after the success of Bitcoin) had started to die out since the creators stepped down. Its value had dropped significantly and there were very few trades executed successfully till late 2017. Elon Musk, CEO of Tesla and SpaceX changed his Twitter bio to “CEO of Dogecoin”. This created a new wave among people, as something big was yet to come.
In 2020, several TikTok videos surfaced on the internet which claimed that Dogecoin was a dead coin and people can make easy money if everyone pumps money into it. As they say, it does not take much time for something to go viral on social media, investments began to roll in again.
With dogecoin becoming ever so popular (again), its market cap grew to $10B in 2021, because of the continued support from Elon Musk.
In May 2021, the price of dogecoin peaked at $0.72, with everyone hoping for it to reach $1. Everyone became financial advisors for themselves as well as for their friends and family, marketing the purchase of dogecoin. From celebrities to spam comments, everyone rooted for the prices to touch the much-awaited $1 mark, and hence reach the moon (now you know why 🚀 this emoticon became so popular!).
Almost everyone invested a portion of their savings into it, aspiring to become rich, only to be treated with a shock.
Dogecoin | The Downfall
“Buy the rumour, sell the news”.
Everyone was rooting for dogecoin prices to pump up since Elon Musk (who now emerged as the unofficial ambassador for Dogecoin) announced that he would be appearing on Saturday Night Live (SNL) on May 8, 2021.
Volumes grew to a great extent, however, to everyone’s surprise, the price of the alt coin plummeted from $0.72 on May 8 to as low as $0.45 on May 9. It reached $0.23 on May 24. Clearly, a lot of capital was lost. With so much money gone to waste, one must really ask themselves, “Was that even worth it”?
With the price rally of dogecoin coming to a halt, with no set timeline when it will gain momentum again, it is important to decide whether those who went into loss should accept it and exit from it, or should they wait for it to gain momentum again. Furthermore, it is also important to know that those who purchased it earlier at lower rates (i.e those who still are in profit currently), should book their profits now.
It is recommended that such decisions be taken on some sound financial advise, and one must not invest their hard-earned money only for the sake of the fear of missing out. With GameStop and Dogecoin, it shows us how social media and the meme culture, in particular, can influence thousands, if not millions, to participate in what we can call a massive social phenomenon to mass invest in a “joke coin”, only to incur losses later. For those who lost everything on this coin, it would be an understatement to say that investing in dogecoin was the “most valuable joke” of their life.
Disclaimer: Readers are advised to invest in cryptocurrencies at their own risk. Neither the author nor MSAC, KIIT is responsible for any losses incurred. As a thumb rule, one must always invest only the amount that he can afford to lose. All currencies mentioned in this blog post are in USD.