What exactly is Dogecoin? What does the 5th most popular cryptocurrency on the planet represent or what purpose does it serve?
Crypto buffs received a quick crypto 101 on Saturday after being left flabbergasted after one of dogecoin’s foremost proponents, and the self-proclaimed “Dogefather”-- Elon Musk--took to the floor in the latest SNL show and labeled the virtual currency a “hustle.”
What? A mere hustle? After massively pumping up the value of dogecoin in the lead-up to Musk's SNL appearance, that certainly came as a shocker. The dogefather was at pains to explain explain what dogecoin really is--ultimately admitting it's just "a hustle."
Dogecoin crashed nearly 40%, trading as low as 44 cents early Sunday, well below its recent high of 70 cents.
Maybe the writing was already on the wall.
Despite cryptocurrencies being well-known for their extreme volatility, dogecoin appeared to be punching above its weight, rallying a staggering 12,000% since January and more than 800% this month alone.
In the space of a few months, dogecoin has gone from being a nondescript digital coin to the fifth most valuable cryptocurrency with a market cap of nearly $65 billion.
Buy the rumors, sell the news
Tesla Inc.’s (NASDAQ:TSLA) CEO Elon Musk is perhaps dogecoin’s best-known bull, who recently, through a series of cryptic tweets, encouraged his followers to "hodl" DOGE.
In April, Musk tweeted "Doge Barking at the moon" and shared a photo of a painting by Spanish artist Joan Miró, titled "Dog Barking at the Moon." Needless to say, the DOGE rally went to the moon, literally.
Musk is hardly the only high-profile supporter.
Eccentric billionaire and owner of the Dallas Mavericks, Mark Cuban, has in the past expressed serious misgivings about the bitcoin/crypto craze. But Cuban has recently done a 180-degree on cryptos, claiming that were he to start a company today, he would center the business around blockchain technology, NFTs,and smart contracts.
But make no mistake about it. Cuban is not endorsing the usual crypto suspects such as bitcoin, ethereum, litecoin or ripple. Instead, he has been throwing his weight behind a rather obscure altcoin that has never even cracked a dollar-a-pop--Dogecoin.
Mark Cuban has revealed that the Dallas Mavericks are now the largest Dogecoin merchant in the world.
Dogecoin has also received recent boosts from rockstar Gene Simmons and rap legend Snoop Dogg.
That’s quite impressive for a crypto that was created to satirize the hundreds of altcoins that have been trying to copy bitcoin’s success.
The bitcoin parody: The birth of Dogecoin
A lot of altcoins in circulation today emerged in the early 2010s as hordes of people tried to create their own magical internet money. Their methodology was simple: Copy the Bitcoin software, change a few details here and there then launch a new coin that you could trade for bitcoins.
Dogecoin was created in 2013 at the peak of the first big bitcoin bubble as a slightly tweaked copy of Litecoin, which itself was a slightly tweaked copy of Bitcoin.
Dogecoin was originally meant to be a joke cryptocurrency, taking its name from the shiba inu “doge” internet meme: a picture of a dog talking in Comic Sans font. The idea behind dogecoin was to have fun and be silly with an ultracheap cryptocurrency--which explains why dogecoin remains dirt cheap despite the massive rally. And just like the infamous GameStop short squeeze debacle of a few weeks ago, Dogecoin fans gathered on the Reddit forum /r/dogecoin where they would tip each other dogecoins for amusing comments.
And, curiously, just like GameStop Inc. (NYSE:GME) recently, dogecoin appears like another massive pump-and-dump scheme.
On Jan. 28, a Twitter user by the name “WSBChairman”picked dogecoin as the next potential asset to pump, and the Reddit forum followed through with dogecoin price skyrocketing.
Shortly after, Elon Musk, a larger-than-life tech CEO and an obsessive Twitter user, tweeted a mocked-up magazine cover called DOGUE and put “$DOGE” in his Twitter bio leading to dogecoin soaring once again.
TSLA has been on a major downtrend ever since Musk revealed the company had purchased bitcoin worth $1.5B though the selloff could be part of a sector-wide correction.
Enter Mark Cuban.
Cuban says the Dallas Mavericks has carried out more than 20,000 Dogecoin transactions, and dogecoin could hit the magical $1 if the NBA team sells merchandise worth another 6.5 billion dogecoin.The legendary investor has even told DealBook the = Mavericks would begin accepting Dogecoin as payment for tickets and merchandise because,‘‘Sometimes in business you have to do things that are fun."
Cuban recently admitted that dogecoin has no intrinsic value but says he bought some for his son anyway for educational reasons.
"It gives you a better chance of winning than a lottery ticket, all while teaching the economics of supply and demand and introducing people to crypto assets."
Novogratz Rips Cuban on Dogecoin
Not everybody is buying into the dogecoin madness though.
Long-time crypto bull Michael Novogratz has reiterated his prediction that Bitcoin will probably hit $100,000 before year-end, but has questioned Mark Cuban’s decision to allow Dallas Mavericks fans to buy tickets and merchandise using Dogecoin.
“Let’s put people in the safest best stuff, not these joke coins. I think Mark’s making a mistake there. He’d be better off with 15 other different ways to pay for his tickets,” Novogratz told Bloomberg TV.
Unfortunately, it’s the less-savvy retail investors that have been left holding the dogecoin bag.
By Michael Kern for Safehaven.com