Conceived as a joke and supported by social networks, the altcoin bearing the effigy of a meme has been enjoying an unprecedented rally since 2021. But appearances are deceptive. While Dogecoin may seem to be gathering a popular community, the figures tell a very different story. Likewise, taken too seriously, the joke could backfire on the crypto-sphere.
Introducing Dogecoin in 3 key points
"Doge" is a meme popularised in 2013. On a photo of a Shiba Inu with a puzzled look, phrases added in comic sans ms are supposed to represent the dog's naive inner dialogue.
In 2013, programmer Billy Markus teamed up with Adobe developer Jack Palmer to create a cryptocurrency based on the meme: Dogecoin. They created the token as a parody, to poke fun at the ever-growing number of altcoins claiming to dethrone Bitcoin.
Since 2021, the price of Dogecoin has been on the rise. It currently has a market capitalisation of $77.2 billion, and is the world's 4th-largest cryptocurrency. This is due in particular to the support of famous personalities and a very large community.
reddit doge
A vibrant community
Social networks' favourite altcoin
It's not imposed on us by a government or other central authority, it's chosen by us, for us – by the people, for the people. Wow. – Tyler Winklevoss
These words from the CEO of exchange platform Gemini prove just how popular Dogecoin is as a cryptocurrency.
It has to be said that the altcoin's destiny is closely linked to social networks, in particular Reddit, Twitter and TikTok. On Twitter, Elon Musk and Snoop Dog are self-proclaimed "Dogefather" and "Snoop Doge" respectively, and their tweets are helping to make altcoin famous among a very wide audience.
A particular ideology
Stupid as he may be, the 'doge' has an ideology, and that ideology is one of relentless, exaggerated optimism and kindness. – Ben Doernberg
Dogecoin's friendly, accessible image is not just down to its popularity on social networks. Its community has also helped to fund a number of projects linked to mutual aid and support for the underprivileged.
In particular, altcoin has helped to fund Jamaica's participation in the 2014 Sochi Winter Olympics, as well as the creation of a well in an African village.
In 2013, when millions of Dogecoins were stolen following a hack, Ben Doernberg (a digital rights campaigner) and a few users organised to pay them back.
A crypto-joke that exposes the absurdity of the financial world
It's true that you get the impression that this community is driven by a desire to do battle with the short sellers – Alexandre Baradez (Financial Times)
The Dogecoin project is part of a wider movement that is challenging the world of finance (real and virtual) with varying degrees of humour. With this token, Billy Markus announced that he wanted to parody "all the 'serious' altcoin coins that tried so hard to differentiate themselves, but all looked the same".
In the same way, the r/WallStreetBets subreddit community, which supports Dogecoin, has been responsible for the financial rescue of several brands that are losing ground. These internet users have waged real "ideological battles" against bearish speculators, investors who make money by deliberately driving down share prices.
To counter what the subreddit users saw as a situation of injustice and relentlessness, they bought shares in the target companies to force the speculators out of the market. This is how Gamestop, the AMC cinema chain and the Blackberry brand, all three of which are losing ground, have recently recorded unprecedented share price rises.
whale doge
A much more nuanced reality
The "Doge" hiding the whale
Is Dogecoin really the "people's currency"? It's true that, in addition to its popular image, Dogecoin can be bought very cheaply and in unlimited quantities, unlike Bitcoin. You might therefore think that altcoin represents an accessible investment, and that the owners of its tokens are not necessarily wealthy.
But the reality is quite different. The Wall Street Journal and a number of cryptocurrency specialists have looked at Dogecoin data and published some very revealing figures.
28% of tokens are in the hands of one and the same person. Some traders suspect that this is in fact Elon Musk.
67% of tokens are held by just 12 people.
The average value of a DOGE transaction is $800,000, almost twice that of Bitcoin ($420,000). Yet the number of transactions on the blockchain is low.
Far from being the champion of the people, DOGE is the champion of the whales.
A joke that could backfire on the cryosphere
An absurd blockchain
Charles Hoskinson (founder of Cardano) and Alex Thorn (researcher for the Galaxy Digital fund) recently alerted the crypto-sphere to the dangers of taking the joke too seriously.
In a report, Alex Thorn humorously notes that the very workings of Dogecoin are a joke. It is true that some of the information about its blockchain is laughable, so absurd is its design and so uncommitted is its community.
Dogecoin's blockchain code has not been updated since 2017.
Only 26% of its nodes are fully synchronised, meaning that very few active computers are working to maintain the network's security.
There are still very few practical uses for Dogecoin. While it can be used to give tips on Reddit, buy certain luxury goods, an airline ticket or basketball team goodies, this alone will not be enough to maintain its position in the long term.
In an interview, Charles Hoskinson warns the crypto-sphere about the lack of developers and the flawed technology of blockchain. In his view, this could discredit cryptocurrencies and force lawmakers to get involved: "If we keep doing these things, we'll be regulated to the point where we won't have any freedom".
A "DOGE bubble"?
The co-founder of Ethereum also warns against the particularly high volatility of the altcoin, whose price can soar and then plummet because of a simple tweet. This "pump & dump" phenomenon also affected Dogecoin very recently, on "Doge day". Announced on Twitter and Reddit on 20 April, the aim of the event was to try and push the price up to $1. It was a resounding failure, resulting in a 20% fall in the Doge price.
Although the altcoin remains in 4th place in the global rankings, Charles Hoskinson warns against what he calls a "DOGE bubble" that will eventually collapse and cause investors to lose money.
Conclusion
"Dogecoin has always been a joke, and the joke just keeps getting funnier and funnier," says Alex Thorn. It's true that even Billy Markus, one of the creators of Dogecoin, recently announced that the current value of DOGE was "absurd". Even if its current capitalisation is considerable, the project remains a joke and represents a very risky investment in view of its volatility. What's more, despite its image as a champion of the people, its buyers are far from coming from working-class backgrounds. In short, Dogecoin above all embodies the culture and humour born on the Internet, as well as the communities of Internet users who make them evolve. Like any good joke, it works as long as you don't take it too seriously: that could have dramatic consequences for its buyers and for the crypto-sphere in general.
