The post went viral and caught the eye of programmer Billy Markus who had been working on his own cryptocurrency. Thinking dogecoin could be more than a joke, he teamed up with Palmer to develop the dogecoin cryptocurrency. It bears a similar structure to Bitcoin with a limited coin supply and POW block validation.
Despite the original sarcasm behind its creation, the technology powering dogecoin is legitimate. It has since been used across the crypto community for tipping and micropayments and is gaining further traction in the wake of Binance’s announcement.
Binance announced on Friday, June 5th that dogecoin would be available for trading starting at 12:00 PM UTC that day. The announcement led to a 40% price increase from $0.0030 to $0.045, inciting a whirlwind of news stories and social media comments.
CZ of Binance tweeted:
This calls back to Elon Musk’s April tweet:
About a month after Musk’s famous comment, Coinbase added dogecoin to its platform. Making dogecoin accessible to crypto newbies on the well-known crypto on-ramp further validated the coin’s legitimacy.
Coinbase’s announcement greased the wheel for the swirl of interest generated by Binance’s listing. Though the price later dropped from its high of $0.045 down to $0.0035, the dominos had already been set in motion. Google searches of dogecoin spiked, and news stories erupted across blockchain and crypto publications.
The question up for debate is whether all the media attention around dogecoin helps or hurts the overall crypto economy.
Crypto is still a relatively small universe, and so any media attention is positive for gaining traction among new users. So what if dogecoin started as a joke if it ultimately leads to thousands of more people joining the greater crypto community? Furthermore, the motivation behind the creation of dogecoin shouldn’t make a difference in terms of its current value.
CryptoKitties, for example, demonstrated that blockchain could be used to create apps to appeal to more than just developers and investors. Just because the CryptoKitties game was invented as a way to have fun with blockchain, doesn’t lessen its impact as a driver towards mass adoption.
Despite dogecoin’s current use in tipping and in micropayments, it’s been difficult for it to grow out of its infancy as a funny meme. Dogecoin’s continued perception as a joke has not helped its case to be a worthy ambassador for the greater crypto economy.
Big-fish institutional investors, such as pension funds and endowments, have yet to take the leap into crypto. The reasons for their hesitance include volatility, security issues, and headline risks.
The rise and fall of dogecoin following Binance’s announcement won’t help to assuage these fears. If anything, recent events have looked like a pump-and-dump scheme. The subsequent flurry of media activity is also likely to reinforce the perception of crypto as immature.
Media attention can help draw more users to the ecosystem, but the wrong kind of headlines can foster skepticism and doubt. Some have speculated that we are on the precipice of another bull market for crypto like what occurred in 2017. On the other hand, too much hype can lead to a market bubble. Time will tell as to whether dogecoin and other headline-making announcements, such as Project Libra, help or hurt crypto on its journey toward mass adoption.
About the Author: Daniel Popa, Founder and CEO of Anchor, is a serial entrepreneur with over 20 years of experience successfully launching numerous telecommunications and software companies, including NECC Telecom, Pulse Telecom, ECS Soft, CCI, TimeWalk, and others. Companies founded by Daniel have generated over $1 billion in revenue over the past 20 years and currently operate in 5 different countries, including the USA, Canada, Australia, Romania, and Ukraine. NECC Telecom employed more than 600 people and several thousand contractors around the world and earns revenues in excess of $54 million annually. Daniel and his team of PhD-level academics have been developing the algorithm behind the MMU since 2017.
Disclaimer: The views expressed in the article are solely those of the author and do not represent those of, nor should they be attributed to, CCN.