Ever heard about the $ 50 billion joke?
In 2013, two friends created Dogecoin – a parody of a cryptocurrency that was supposed to be worthless. His mascot is a meme-worthy Shiba-Inu who cannot spell or understand his grammar properly.
Dogecoin’s mascot is a Shiba-Inu.
Photographer: Yuriko Nakao / Getty Images
It certainly did not remain worthless. The value of Dogecoin has increased by 18,000% in the past year. Even as Bitcoin dropped dramatically over the weekend, Dogecoin was trading near record highs. As the Shiba-Inu would say, “Wow. Much inexplicable. “
Elon Musk tweets about it. Mark Cuban, owner of Dallas Mavericks, finds it educational and entertaining. And crypto bull Mike Novogratz says he would be “very, very worried” if any of his friends invested in it.
On Tuesday, Dogecoin traded close to 35 cents. Previously, it had risen above 42 cents – proof that not everyone is paying attention to Novogratz’s skepticism. Many even see unexpected gains.
Some private investors benefit …
That includes Alyssa Vazquez, a 26-year-old Dallas accountant.
Vazquez originally bought $ 600 worth of Dogecoin in January and February with her husband as a joke, thinking they probably wouldn’t get anything out of it. “When we started, we agreed that we would never put in more than we could afford to lose,” she said. Now they are up about $ 6,000.
“We started it around the time GameStop went off. We started reading tweets about how this coin was made, ”she said in a telephone interview. When the currency rose, she was completely taken by surprise. “My husband texts me like, ‘Have you seen this?’ I was just shocked. “
Vazquez and her husband had previously invested in Litecoin and Ethereum, but said they hadn’t worked much further. “We didn’t really trust it then,” she said. “The explosion of Bitcoin changed our mind.”
The couple try to find the best time to get out of Doge. They hope to use their earnings to pay off some debts, including student loans. But before then they will likely buy more. And they have already started investing in another new cryptocurrency: SafeMoon. They put about $ 500 in it.
Brayden Johnson, 26, an electrician from Alberta, Canada, bought Dogecoin in memory of his Shiba Inu named Hudson who passed away last year at the age of 15.
“I actually think of him every time someone says the word doge,” Johnson wrote in an email. “I can imagine all the times in my head seeing him do the meme’s crazy face and all his fur getting crumpled into his collar.”
When Johnson saw that Dogecoin was big, he was very excited and didn’t expect it to win so quickly.
“It feels good to be awake because who can’t use some extra money?” he said. “It feels a bit sweeter that an investment I made because I missed my dog has brought such great returns.”
… but why is this happening?
This week’s increase may seem confusing. How can a joke be worth so much?
FOMO has a lot to do with it.
“People are trying to recapture the magic that Bitcoin created for those who got there early,” said Michael O’Rourke, chief market strategist at JonesTrading. “The main differentiator here is that Bitcoin will be capped, there will be a limited number of coins.”
Since its inception in 2009, Bitcoin has a fixed stock 21 million coins that will ever be minted. Not so for Dogecoin: there is no limit to the amount that can be created.
Ardent enthusiasts can use this fact to make comparisons between Dogecoin and fiat currencies. Of course, there is no Bitcoin-esque limit on the number of dollars the US government can print. But while Dogecoin has a lot of memes and jokes behind it, the dollar has the US economy and population. O’Rourke says this explains why there is so much confidence in the dollar.
“I still don’t know what the purpose of Dogecoin is other than a speculative tool,” he said. ‘You speculate about something out there just because people speculate about it. That is a very dangerous mix. “
Plus, there was one campaign to increase the price of Dogecoin to 69 cents on or by April 20 – the 4/20 holiday associated with smoking weed.
Do you dare Doge?
So, should you get in on the Dogecoin promotion?
“It’s almost irresponsible to give credence to the speculation by even asking that question,” said David Trainer, CEO of New Constructs, an independent securities research firm based in Nashville.
But people ask after seeing their friends’ pocket money without doing too much work or research. Trainer says everyone’s situation is different.
“If you have excess funds that you like to speculate with instead of betting on the Yankees, and you want to put it in cryptocurrencies, that might make sense,” he said. “As long as you’re not afraid of losing everything.”
What may cloud investors’ views, Trainer says, is the fact that despite all the recent talk about how overvalued some stocks and cryptocurrencies are, the excitement really has yet to subside. It is unclear how long this can take.
“I think the root cause of all this is that people have forgotten the difference, the distinction, between investing and speculating,” he said.
Some have compared the rise of the Dogecoin – with its memes and explosive growth – to the burst of interest in GameStop Corp. earlier this year. But Brent Weiss, a financial planner and co-founder of Facet Wealth in Baltimore, says Dogecoin falls into an entirely different – even less serious – asset class.
“When it comes to Dogecoin as a cryptocurrency, that’s an absolute joke,” he said.
Weiss isn’t a fan of GameStop as an investment either, but says that at least with stock for the video game company, there was an underlying company with tangible underlying assets.
“Every Doge has its day,” Weiss said. “But today is not the day to include Doge in your portfolio.”
Updates Dogecoin pricing. An earlier version of the story corrected the name of the crypto coin in the 10th paragraph.