I started this post planning to write about how silly Dogecoin is. For the uninitiated, Dogecoin is a cryptocurrency based on a meme of a Shiba Inu. Its price has risen by more than a factor of 20 in the last year. Some recent gains have come from Elon Musk and other celebrities promoting the coin on social media.
But then I read that Dogecoin has basically the same underlying technology as Bitcoin:
It was a find-and-replace job.
Ctrl+F ‘Bitcoin,’ replace with ‘Dogecoin.’
The total value of all Bitcoin is $900 billion. The total value of all Dogecoin is $6.4 billion. If the code behind them is essentially the same, why is there such a huge disparity in value? I would expect these coins to converge in time, whether that means Bitcoin going down, Dogecoin going up, etc.
So, will I be loading up on Dogecoin? No. Like other cryptos, I don’t see any fundamental value there. Unlike a stock or bond, there’s no income stream. Unlike major currencies, they’re incredibly volatile and accepted practically nowhere. Nor do they have much of a track record. For Dogecoin’s $6 billion, you could buy Huntsman Corporation, a chemical company with profits of over $200 million/year, outright. I like that a lot better than a speculative crypto with no income stream.
That said, if you’re a believer in Bitcoin, I think you have to be a believer in Dogecoin also. I’ll be interested to see where it goes!
For more on Dogecoin, meme stocks, and the Wallstreetbets phenomenon, check out these posts:
- Bots Are Pumping GameStop And Dogecoin
- Reddit’s Favorite Stock Is Losing a Fortune And May Be Headed for Bankruptcy
- Palantir Is Losing $100 Million a Month With No End in Sight
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