Why Dogecoin is a Reflection of Rising Speculation in the Crypto Market
Dogecoin, the cryptocurrency that was created as a joke back in 2013, has now passed the $2 billion mark in market capitalization. Unlike other cryptocurrencies that offer benefits like blockchain usefulness, practical application and transaction speeds, dogecoin seems to be an attempt to simply cash on cryptocurrency popularity.
According to Shaun Dindial, the Managing Director at LDJ Capital investments, investor speculation has led to the growth of Dogecoin popularity and has continued since its launch.
"Dogecoin is a great example of how speculation can run a currency up to such a high market cap. This trend is surely not over as investors pulling out of other currencies are looking for huge returns on the cheaper coins. Even if it’s not a long term strategy, the short term can be quite lucrative," Dindial notes.
In early December 2017, Dogecoin was trading at $0.0021, and at the time of writing this article, it’s trading at 0.012. The creator of Dogecoin, Jackson Palmer has been reported saying that since 2015, he has not held a significant amount of the cryptocurrency. According to Palmer, the rising value of Dogecoin is a reflection of the speculation happening in the cryptocurrency space.
In 2013, Dogecoin was launched as a parody inspired by the Japanese Shiba Inu dog breed. Despite being perceived as a joke currency, some players in the industry think that it has the potential to grow.
"The Dogecoin logo is a pretty internet meme. This coin is also called "child's money", and it has great potential. The gradual increase in the complexity of mining affects the number of coins in free circulation," Anton Mitrohkin, CFO and Co-founder of Descrow.
Dogecoin gained popularity fast after its launch, leading to a surge in its value. According to Mitrohkin, the rising value of Dogecoin may be attributed to its adoption by hype projects. He predicts that based on its past performance, its value is likely to rise even further in the future.
"The current growth of Dogecoin is due to the fact that some hype projects began to accept it in their projects. We already twice could observe a splash in the growth of the value of this coin. In 2013, by 300% and then another 2014 five times. Therefore, I see no reason to say that "cheap" coins went into growth. Even if there is such a trend, it does not apply to this coin," Mitrohkin adds.
According to its website, the currency is described as a peer-to-peer, decentralised digital currency that allows users to send funds online with ease. Among its popular uses is tipping internet users who share or develop great content. This concept of tipping is more like a vote or a Facebook like, but one with real value attached to it.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.