What started as a complete joke seven years ago has turned into the best-performing asset of the year: Dogecoin is up more than 13,000% year to date at Friday’s prices.
Dogecoin is a cryptocurrency that really was started as a joke by two software engineers at the end of 2013.
Like most digital currencies, this means Dogecoin tokens can be sent instantaneously to anyone on the internet without a bank having to facilitate the transaction, because it’s part of a decentralized network.
The reason why Dogecoin is often referred to as a joke even now is that there is nothing special or unique that sets it apart from Bitcoin, the first cryptocurrency, which pioneered blockchain as a technology and movement.
For instance, Etherum has its own programming language, which allows coders to build applications with it that can run around the clock and without a third party.
In recent months, Tesla founder Elon Musk has been making jokes about the currency to his large social media following.
In fact, more than 1,300 merchants now accept Dogecoin for paymentThis kind of promotion from celebrities with large social media followings has given the cryptocurrency lots of publicity across social media as well as coverage by all of the big financial media outlets.
Now, with all of that said, could Dogecoin ever be a legitimate investment? I don’t know if it will ever warrant this kind of a run, or the $70 billion total market value it had when it recently neared $0.70 per token.
Mike Bucella, a general partner at BlockTower Capital, recently told CNBC said that the path toward legitimacy is not impossible.
There have been a lot of instances this year where stocks have exploded with very little behind them in the way of fundamentals — GameStop and AMC certainly come to mind.
Given what we know about Dogecoin’s technology and supply, I really don’t see it as a good investment right now, and I am not sure it will ever really be able to offer any unique characteristics as a cryptocurrency.