by Jamie Holmes
Dogecoin, the alternative cryptocurrency that has the Japanese dog Shiba Inu as its mascot, reached new milestones as we entered the new year. The market capitalization of the blockchain network exceeded $2 billion (temporarily), and the price per doge is now close to two cents.
Initial Irony turns to Genuine Solution
The cryptocurrency that started as a joke is now one of the 43 cryptoassets with a valuation of more than $1 billion according to CoinGecko. The price of Dogecoin (DOGE) against the US dollar is shown below, with stability seen leading up to December. On Christmas day, the price reached the $0.01 psychological level for the first time in its history. At the time of writing, the price sits just below $0.02.
Similar to how products, such as cereals, fill a space dimension according to their different characteristics, dogecoin filled the void of a humorous cryptocurrency.
Products continue to appear on the market until the ‘space’ is saturated. Similarly, with cryptocurrency, while dogecoin swiftly filled the void of a humorous cryptocurrency (with FUCK token and Useless Ethereum Token following in their footsteps later), it also provides cheap transactions, making it ideal for tipping and gifting.
Also, the distance or switching costs between bitcoin and dogecoin are suggested to relatively low; other altcoins are placed further away from bitcoin in the product space, for example those not based on Bitcoin’s code. Could it be that the joke coin in the early wave of alts now looks serious amongst all of the ICOs and altcoins being released and hyped more recently? Or are the cracks of the fiat system beginning to show now that a cryptocurrency created as a joke is now worth more than one cent?
In fact, as DOGE makes new highs, so has the median transaction value, which has ascended to triple-digit figures regarding US dollars. For early January 2018, the figure has risen to $584.83, converging with the much more famous altcoins bitcoin cash and dash. For most of 2017, the median transaction value for dogecoin was around $20-$30.
The only other period for when this is true is January 2014, when the median transaction value peaked at $399.58. As cryptocurrency enters the mainstream consciousness in the past few months following bitcoin’s price gyrations, is the community gaining support again?
Background on DOGE
Dogecoin carved out their market niche in the early days of crypto and appeared alongside memes depicting the Shiba Inu mascot in December 2013, like the one shown below. By January 2014, a robust online community was growing, and the market capitalization reached $60 million. However, many are concerned that the altcoin is part of a more widespread bubble since development has been stagnant for two years.
Dogecoin’s inventor, Jackson Palmer, was encouraged by Billy Markus to create the altcoin after the latter had attempted to birth a new cryptocurrency that would draw in a wider audience. Markus, who did some initial work on reconfiguring Bitcoin’s source code to make the coin a reality, and Palmer then teamed up to release Dogecoin.
Roughly four years later, and the altcoin is now worth more than $1.5 billion, with no corporate backing and no full-time developers; all driven by the work of volunteers.
CoinDesk reported on the milestone achieved by the altcoin, but the Dogecoin creator claimed that the online publication cherry-picked his statement. While concerned about DOGE’s valuation taking the limelight over technological innovation, he says that this concern applies to the entire cryptocurrency market:
Here are my full, un-cherry picked thoughts: pic.twitter.com/BBfYtVBhrf
— Jackson Palmer (@ummjackson) January 5, 2018
“I think it’s relatively safe to label the current market as a bubble, although it’s hard to predict how much it’ll inflate and for how long before it inevitably bursts. My one hope is that when that does happen and people lose large sums of money, the negativity in the market doesn’t stifle technological innovation or interest in digital currency from the mainstream.” – Jackson Palmer
Dogecoin: Overvalued or underappreciated?
BTCManager also reached out to Dogecoin developer Ross Nicoll, who stated, “I think the valuation of currencies is always tricky. People think of these numbers like you would a company, at which point they’re crazy-high, but they’re not, they’re currencies. We’re several orders of magnitude smaller than a conventional currency, which seems a lot more reasonable.” Nicoll says that dogecoin is less about being a joke and more about being approachable, reducing the barriers to entry for people drawn into the cryptocurrency space.
One way Dogecoin has furthered innovation is through its use case as a ‘tipping’ currency and the ability for the community to mobilize and use the altcoin for good. For instance, it is well known that charitable initiatives are regularly pursued, using the convenience of sending DOGE to raise money and fund these initiatives; dogesocks for the homeless is one of the most popular campaigns.