On Dec. 6, 2013, Billy Markus and Jackson Palmer decided to combine their love of the internet's most beloved Shiba Inu (aka "Doge") with their passion for cryptocurrency. And thus, Dogecoin (DOGE -0.89%) was born.

At first, Dogecoin was nothing more than a goofy joke, with its cute Shiba Inu mascot and silly name. But as time went on, more and more people started to take it seriously, and before long, Dogecoin had become a surprisingly legitimate cryptocurrency, used by people all over the world for online transactions.

But the real fun began in 2021, when Dogecoin experienced a massive surge in popularity, thanks in part to the rise of meme culture and the support of some high-profile celebrities. The value of Dogecoin skyrocketed, making many early adopters rich. Was the once-ridiculous joke turning into a serious investment opportunity?

Two years ago, one Dogecoin was worth roughly one-third of a penny. The self-described joke token had a total market footprint of $409 million on Dec. 15, 2020. Then, Tesla CEO Elon Musk started to promote the meme coin on Twitter, inspiring investor groups to form in various online forums. The digital coin was briefly worth as much as $88.8 billion, and then the rocket ship ran out of fuel.

Today, Dogecoin trades 88% below the pricing pinnacle of May 8, 2021. Still, it remains the ninth-largest cryptocurrency on the market with an $11.6 billion market cap. Is it time to take the cute crypto joke seriously?

A shiba inu dog is getting a pedicure.

Image source: Getty Images.

Three signs of a serious Dogecoin future

1. A large and growing number of merchants accept Dogecoin as a form of payment

You can't buy a Tesla car with Dogecoin, but Musk's e-commerce portal accepts this digital currency as payment for other Tesla-branded gear, like bomber jackets and caps. The store doesn't support Ethereum, Bitcoin, or any other cryptocurrency -- it's Dogecoin or dollars.

That's an extreme example but many other retailers accept Dogecoin alongside other cryptos, usually including Bitcoin and Ethereum. Prominent examples include the Newegg computer hardware e-tailer and Mark Cuban's Dallas Mavericks basketball organization.

So Dogecoin can actually be used like normal money or credit cards -- sometimes.

2. Dogecoin has a relatively low transaction fee, making it an affordable option for online transactions

The average transaction fee for a Dogecoin payment currently stands at 1.20 DOGE, or $0.11. That's lower than Bitcoin's average fee of approximately $1 per transaction and Ethereum's $0.53.

More to the point, these cryptocurrencies handily beat the transaction fees for old-school credit cards. Credit card issuers like Visa and American Express charge between 1.15% and 3.3% on each transaction, plus a smaller assessment fee. And the merchant's card processing network also wants a small cut of each purchase.

In that company, Dogecoin stands out as a consumer-friendly payment option.

3. The Dogecoin user community is numerous, noisy, and committed to its success

The r/dogecoin subreddit on Reddit sports 2.4 million subscribers. On Twitter, the official @Dogecoin account has 3.6 million followers. So when these groups share an idea, their combined voice can move the market in a hurry.

Three signs that Dogecoin isn't totally serious yet

1. The Dogecoin platform is rarely updated, leaving the blockchain network vulnerable to dangerous bugs and security holes

That massive army of Dogecoin fans on social media has not generated a vibrant developer team. Founders Markus and Palmer handed over the development reins to the larger community in 2014 and not much has happened since then.

Only 19 GitHub users are watching the code repository for changes to Dogecoin's central functions. By contrast, Bitcoin's GitHub portal is tracked by 3,900 users and Ethereum's comparable page has 2,200 eyes on it. The larger cryptos are constantly working on bug fixes and future features, generating a steady stream of code changes. Dogecoin hasn't seen an update since early August.

That's not much action behind a whole lot of noise. Dogecoin runs the risk of being left behind by more active developer communities.

2. Dogecoin comes with never-ending inflation and no cap on the lifetime supply

Bitcoin has a firm lifetime limit of 21 million coins. The Bitcoin supply will never move beyond this limit, giving the largest crypto a stable and predictable supply-side figure in the long-term dynamics of supply and demand. Ethereum stopped mining new tokens after "The Merge" in September. This cryptocurrency's supply has hovered near 120.5 million tokens ever since.

Dogecoin has no such limits. Instead, it adds 5 billion new tokens per year, with no limit to the lifetime supply. Palmer and Markus wanted to create a free-flowing currency, not a digital asset to be hoarded as an investment. In other words, Dogecoin was intentionally designed to be a poor investment in the long run.

3. This is still a meme coin, often moved by social media posts and offhand remarks from famous people

For example, Musk's Dogecoin tweets can send this coin halfway to the moon -- and straight back down again. There are upsides and downsides to this unique quality. On the whole, Dogecoin's massive volatility at the drop of a tweet makes it harder to take the token seriously.

Dogecoin: Such bark, where wow?

Today, Dogecoin remains a popular and valuable cryptocurrency, beloved by meme lovers and risk-amenable investors alike. Its history may be short and cute, but it has been a wild ride.

The ultimate meme token is down in the dumps, and there's no telling where it will go from here. It could rise to actual real-world prominence if the developer community rolls up its sleeves and more retailers start accepting it in lieu of cash. Or, Dogecoin's backers might decide that a joke is a joke. If they stay committed to Dogecoin's lighthearted image without attempting to overcome its challenges, the only way is down in the long run.

Please be careful with this one.

It's a coin flip at this juncture. I like Dogecoin's fast processing and low fees, but even then, other cryptocurrencies arguably do it better. Grabbing a handful of Dogecoin tokens makes sense, just in case the rocket ship takes off again, but it's still hard to call Dogecoin a serious investment.