Although Dogecoin (DOGE 2.95%) was created as a joke in 2013, with the intention to be a fun competitor to the top cryptocurrency, Bitcoin (BTC -2.02%), little did the developers know that this meme coin would absolutely surge in popularity.
Dogecoin skyrocketed almost 12,000% from the start of 2021 up until the beginning of May, when it hit an all-time high of $0.74. It has fallen precipitously since, as the Reddit-fueled meme-stock craze cooled down.
Can Dogecoin, valued at more than $19 billion and now the world's 12th-most valuable cryptocurrency (as of Jan. 10), eventually hit $1 per token? Let's take a closer look.
Where's the real-world utility?
From its current price of just under $0.15, Dogecoin would need to rise more than sixfold to reach the $1 mark. Since its creation in December 2013, it has risen 42,000% in eight years, so significant price appreciation wouldn't be unprecedented.
However, Dogecoin has virtually no real-world utility today. According to Cryptwerk, an online directory that provides information about where cryptocurrency is accepted, only 1,900 merchants worldwide accept payment in Dogecoin. For comparison's sake, there are more than 200 million companies worldwide, according to data from Statista.
And although it processes transactions faster and cheaper than Bitcoin, Dogecoin doesn't even come close to the most valuable cryptocurrency's status in the industry. Bitcoin is approaching a $1-trillion market cap, is increasingly becoming a tool to diversify institutional portfolios, and has a growing set of infrastructure and financial products supporting it.
Additionally, having Dogecoin's merits heavily influenced by what Elon Musk tweets at any given moment doesn't really make for a good investment case. Retail investors, who are easily swayed by what they see or hear on social media, will flock to Dogecoin in order to get rich quick. As we've seen, this can push the token to new heights, but it can also quickly reverse when speculators lose interest.
There isn't anything stopping anyone from easily creating a new digital currency that attracts people's attention. Dogecoin would lose its appeal in that scenario. Even the original founders, Jackson Palmer and Billy Markus, stopped working on Dogecoin in 2015.
Dogecoin is an inflationary asset, so there is no cap on how many can be made. There are currently about 130 billion Dogecoin tokens in circulation today, with 10,000 new ones mined every minute. As a result, demand would need to outpace a rapidly growing supply base. The basic economics of Dogecoin have artificially created an uphill battle. Furthermore, because there isn't much in the form of real-world utility and no fundamental catalysts, it is impossible to even remotely predict the chance of price appreciation.
While it's fair to say that anything is possible in the cryptocurrency world, the likelihood of Dogecoin reaching $1 is pretty slim in my opinion. Even during the height of meme-stock mania at the beginning of 2021, it still was a long way off. Owning it now would be a move based purely on speculation.