Dogecoin started off as an open-source project essentially mimicking Litecoin’s adaptation to the Bitcoin code. In fact, Dogecoin can be mined simultaneously alongside Litecoin. Dogecoin has rapidly increased in market capitalization over the past year. At only a 3rd of a cent last September, Doge is 60% off the all-time high, and still up over 100x in a year.
Dogecoin has suffered from Elon Musk’s fabricated mania. With one tweet he could make or break short-term price action. However, over this past year, Doge has greatly aided in increasing the mass adoption of crypto assets. This has helped break down the barrier between the average person and crypto. People who had never heard of Ethereum or many of the projects we are interested in learned of these projects by first being interested in Dogecoin. Dogecoin is slowly becoming less of a meme and more of a social token. Mark Cuban, owner of the Dallas Mavericks and on Shark Tank, is a very successful billionaire entrepreneur. Mark Cuban has stated that he “ doesn’t prefer Dogecoin over Bitcoin, but to say Dogecoin doesn’t have a place is wrong” .
Dogecoin has a low barrier to entry, and a strong community. Mark Cuban and other prominent investors and entrepreneurs believe social tokens will surpass the market cap of bitcoin in the future. Mark Cuban has gone as far to allow purchase for Mavericks goods with Dogecoin. Cuban has stated that the Mavericks will not convert any of the Dogecoin into fiat, they will HODL for the long term. Logically speaking, with Doge sitting 60% off the all-time high, and with many intelligent crypto investors calling for a 1$ (doge is currently at around 30 cents) Doge in the near future, this could pay off.
The most bullish news for Dogecoin is the recent revival of the Dogecoin Foundation, adding Elon Musk and the famous Vitalik Buterin to the group as advisors. With Vitalik’s experience as the main developer and founder of Ethereum (we love Ethereum) and Elon’s general influence on social media, Dogecoin could prosper with the right changes. This foundation plans on meeting monthly to reinvigorate the Dogecoin development and trajectory. Dogecoin could potentially be a great currency to send among friends with the low transaction fees and low cost to get involved. Social currencies are just getting started. Imagine a token for Disney, or the NFL teams. The possibilities are endless.
Not all Tulips and Sunshine
Dogecoin does not come without its major downsides at the time of this writing. Intelligent and studied crypto investors are wary of the project and its endless supply of tokens. One main reason investors are flocking to crypto is the failure of the fiat dollar, and its endless supply and inflation. Dogecoin prints 10,000 new tokens a minute with no current cap or deflationary strategy. In order for it to maintain its price action and continue to move upwards this supply must be eaten up on the market as it is produced. Another major downside currently is the whale wallets holding Doge. Using this chart below one can see very concerning allocations. Just 10 wallets control 45.35% of the entire supply of Dogecoin, with 1 wallet holding 28%. If any of these wallets were to dump the token on the open market the price would plummet, if they were to collude simultaneously Doge would drop to a few cents or less in hours. Memes aside, using the investor thesis discussed during many of our articles, would you buy a large allocation of Dogecoin today? Hopefully with Vitalik on board these tokenomics will be fixed and the large wallets will be addressed.
All jokes aside, Doge is something people feel comfortable buying with its wide array of platforms and exchanges allowing purchase. That happy Shiba Inu invites new users and has created an entire massive society following the project. Who knows what the future holds for Doge?
For us, until the whale wallets and inflationary tokenomics are addressed, Dogecoin isn’t part of our portfolio. However, the premise of Doge is interesting and something we are always monitoring.