The original meme token Dogecoin (DOGE -1.75%) launched toward the end of 2013, largely as a joke about cryptocurrencies, leveraging the Shiba Inu dog as its mascot. But what started as a joke rose to unimaginable highs in 2021 and has lasted far longer than most could have imagined. Today, Dogecoin is the eighth-largest cryptocurrency in the world with a market cap over $37 billion as of Sept. 24.
Still, despite its survival, Dogecoin has no real-world utility. Unlike Bitcoin, the world's largest cryptocurrency, which is viewed by many investors as a superior store of value due to its 21 million finite tokens, Dogecoin grows its supply by 5 billion tokens every year.
Image source: Getty Images.
Additionally, Dogecoin does not have a strong technical network because it doesn't process many transactions per second (TPS), a key feature of many highly regarded blockchain networks. Dogecoin's network also lacks smart contract functionality, which is what enables decentralized applications.
Now, this could eventually change. MyDoge, the organization behind a free custodial Dogecoin wallet, has reportedly raised funds to build a layer-2 solution that would enable smart contract functionality, but it's unclear if and when this would actually happen.
If you'd invested $500 in Dogecoin five years ago
From a fundamental perspective, it doesn't make a ton of sense why Dogecoin has delivered such incredible gains over the past five years, but it has. One explanation is that it was one of, if not the first cryptocurrency to truly take advantage of the power of virality and build a social media community, which has made the token thrive.
Dogecoin Price data by YCharts
As you can see, a $500 investment in Dogecoin five years ago would be worth over $44,000 today! That's a return of more than 8,730%, which crushes the broader benchmark S&P 500 index's five-year return of over 100%.
