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Has Dogecoin Become The New GameStop Pump-and-Dump?

Dogecoin

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 is throwing his weight behind a rather obscure altcoin that has never even cracked a dollar-a-pop--Dogecoin.

Dogecoin has another big supporter--Tesla Inc.’s (NASDAQ:TSLA) CEO Elon Musk, who recently, through a series of cryptic tweets, encouraged his followers to "hodl" DOGE.

Dogecoin has also received recent boosts from rockstar Gene Simmons and rap legend Snoop Dogg. 

Forget about the bitcoin rally; Dogecoin has surged 2,400% in the space of a month, with Mark Cuban revealing that the Dallas Mavericks are now the largest Dogecoin merchant in the world.

That insane rally means that a dogecoin is currently changing hands at $0.05687, with a fully diluted market cap of $7.3B, making it the 14th most valuable cryptocurrency.

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

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, dogecoin appears like another massive pump-and-dump scheme.

On Jan. 19,--around the time when the GameStop mania started--rapper Soulja Boy recorded a Cameo video advertisement for Dogecoin and even talked up his cryptocurrency portfolio on Twitter.

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 has told Bloomberg TV.

By Michael Kern for Oilprice.com 

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