The cryptocurrency Dogecoin (CRYPTO:DOGE) is the talk of the town right now. The digital coin with a cute dog symbol never shied away from its meme-based origins. For example, the official Dogecoin site proudly claims that the currency is "favored by Shiba Inus worldwide." But trading volumes and coin prices have skyrocketed in recent months.
Is it time to take the doge-themed joke coin seriously?
Dogecoin is still kind of funny
The cryptocurrency was designed as a lighthearted alternative to more serious digital coin platforms such as Bitcoin (CRYPTO:BTC) and Litecoin (CRYPTO:LTC). The adorable dog meme was chosen to represent this coin and its underlying community as an approachable symbol. Original designers Billy Markus and Jackson Palmer wanted to reach a broader market than the cryptic Bitcoin and Litecoin tokens, so Dogecoin leaned into the humor and graphic appeal of the doge meme with full force.
Even the recent surge of publicity and trading activity has relied on Dogecoin's cheerful image. When Tesla (NASDAQ:TSLA) CEO Elon Musk pumped out a bunch of tweets to promote the currency in early February, he aimed right for the funny bone. "Who let the Doge out," mused one Musk tweet. "No highs, no lows, only Doge," said another. A third tweet featured a mandrill with Musk's face lifting a baby doge to the sky in an edited Lion King scene that seemed to ask: Can you feel the love tonight?
And the coin has carried very little actual value for most of its history. Dogecoin prices briefly peeked above $0.01 per token in the crypto boom of 2017-2018 but quickly dove back to fractions of a cent again. At the start of 2021, one Dogecoin token cost just 0.5 cents. The ultra-low prices played into Dogecoin's joke status.
Things have changed
The semiserious push from Elon Musk and a concerted effort from the Reddit community known as WallStreetBets has shown Dogecoin in a different light. The coin now stands among the ten largest cryptocurrencies by market value and is number four in terms of daily trading volumes. Dogecoin has exceeded parent currency Litecoin, from which the cryptocurrency's technology was copied with a couple of tweaks, in both of these metrics.
To be clear, Dogecoin's market cap of $40 billion is comparable to that of auto giant Ford (NYSE:F), and the trading volume of $22 billion in the last 24 hours exceeds that of Wall Street heavy hitters like Apple (NASDAQ:AAPL) and its $13 billion daily trading volume. This humble token is moving a lot of money right now, almost demanding to be taken seriously.
The story doesn't end there. Retailers are dipping their toes into the Dogecoin waters, accepting DOGE payments for things like online security services, Dallas Mavericks tickets, and of course Tesla cars. In fact, hundreds of merchants will accept Dogecoin since the popular cryptocurrency payments portal BitPay started to process DOGE payments in March. That's how the Mavs are managing their incoming Dogecoin payments, for example.
Is DOGE the real deal, then?
The rising interest in Dogecoin may actually burnish the token as a legit payment option for the long haul -- but we're not there yet.
Dogecoin's technical underpinnings were always quite serious, being a near-perfect carbon copy of those of Litecoin, which in turn relies on blockchain technology snagged directly from market leader Bitcoin. The differences are small and technical in nature. Litecoin and Dogecoin rely on a different encryption algorithm from Bitcoin, which calls for a different type of digital mining chip. Furthermore, Dogecoin doesn't have a hard cap on the total number of tokens that can be mined over time, as the other two currencies do. For most people, none of these changes make much of a difference to the token's real value.
The value of any cryptocurrency is ultimately determined by its utility as a payment service or store of value, and both of these concepts depend on a widespread market embrace. Therefore, Elon Musk and Mavs owner Mark Cuban may have started Dogecoin on the road to long-term respectability -- assuming that their efforts and the skyrocketing asset price inspire lots of retailers and investors to treat the jokey token as a seriously valuable transaction tool.
Only time will tell, of course. For now, Dogecoin remains a bit of a joke, but the digital currency might be going places that call for a suit and tie soon enough. It's far from my favorite investment idea in the cryptocurrency space, and I would recommend that you keep your Dogecoin moves small until further notice. It's a long way down to $0.005 per token if this surge fizzles out.