Dogecoin may have started as a joke, but traders are laughing all the way to the bank as the value of the once hapless cryptocurrency soars.
Backed by Tesla car supremo Elon Musk, small traders are piling into the cryptocurrency.
The Dogecoin price has jumped 700% in a month after a history of inactivity.
The cryptocurrency hit a peak of nearly 9 cents a coin early in February but has dropped back to 5 cents.
Dogecoin was picked up by the same Reddit users in early February who forced a huge rise in the value of shares of struggling video games retailer GameStop which has since dramatically fallen from grace.
What is Dogecoin?
Dogecoin is one of 3,000 or more cryptocurrencies trying to emulate the success of Bitcoin but with much less impact in the market.
The story is Dogecoin was created as a joke in December 2013 just to see what happened in the markets.
Doge is slang for dog and is mainly linked with Shibe, a Shibu inus dog pictured on the meme with captions depicting what the animal is thinking
Founded in 2013 by former Adobe and IBM software engineers Billy Markus and Jackson Palmer, the market cap is £7.4 billion compared with Bitcoin’s £630 billion.
The low price per coin contrasts with Bitcoin’s more established reputation and high cost of over £30,000 per coin.
Dogecoin is a mined digital currency. Unlike Bitcoin there is no limit on the amount of Dogecoins that can hit the market. Dogecoin is mined by individuals or pools of miners, while the process is merged with that for mining Litecoin.
How is Dogecoin performing?
Dogecoin has rocketed from zero to hero with the help of Tesla car billionaire Elon Musk.
The digital currency was up 137% in a week after Musk intervened with an undisclosed purchase for his toddler son.
After flatlining for months, the price shot up to a record high of $0.08092 on February 8, only to start a slide to $0.052786 on February 16 – a n 11% fall in 24 hours.
Musk’s influence had pushed Dogecoin from one of a mass of digital currencies vying to be noticed to a sizzling must-have among cryptocurrency punters looking to make a quick buck.
His Dogecoin campaign is aided and abetted by Kiss frontman Gene Simmons and rapper Snoop Dogg.
Unlike Bitcoin, the popularity of Dogecoin is not grounded in the belief digital currency will eventually be the future of money.
The peak in value was prompted by a series of social media postings by Musk and a campaign from the same Reddit users who backed the recent GameStop phenomenon.
How Is Elon Musk Backing Dogecoin?
Elon Musk’s first Tweet about Dogecoin was on February 4 – the same day the price started to surge.
Then came the revelation he had bought an undisclosed amount of Dogecoin as a long term investment from his son X Æ A-Xii.
Next came a plea to other major holders of Dogecoin requesting that they empty the coin from their digital wallets.
According to his Tweets, he feels the obstacle that Dogecoin cannot surmount is too few investors hold too much of the cryptocurrency, which gives them too much influence over how the coin performs.
But for some cryptocurrency traders and fans, Musk’s ability to manipulate the market is also a concern.
‘Dogecoin is the people’s crypto,’ another tweet read. ‘No need to be a gigachad to own. No highs, no lows, only Doge.’
A gigachad is another internet meme representing a dominant alpha male figure wrapped with fame, money and power.
It’s difficult to decipher if Musk is wielding his influence to enhance his own Dogecoin interests or if he is just giving an opinion.
How Can I Buy Dogecoin?
A few cryptocurrency exchanges trade Dogecoin, including Binance and Kraken, but the coin is harder to source than more popular digital currencies like Bitcoin and Ethereum.
In the States, leading free stockbroker Robinhood does support Dogecoin, which has played a role in driving up its price because of links with the Reddit Robinhood forum.
The good news is you can pick up Dogecoin for free as a try-before-you-buy offer.
Get your free Dogecoin
Just go to a Doge faucet and enter a Dogecoin address – your wallet key – and click the ‘Gimmee’ button.
The faucet is a gift that keeps giving as you can ask for a trial every three hours.
So far, the Doge faucet has donated almost 12 million Dogecoins.
Other faucets or water bowls are available online.
Spending Dogecoin is not as easy as buying the cryptocurrency. The low value means consumers need a significant number of the coins to make even a small value purchase.
There are few outlets that accept the digital currency but Dogecoin has become one of the internet’s most popular tipping currencies.
Holders tip others online for insightful contributions or help.
Has The Dogecoin Joke Backfired?
Dogecoin may have started as a joke, but the big winners could be the anonymous traders who have hundreds of billions of the coins stashed in their digital wallets.
As yet, they have ignored Elon Musk’s appeal for them to loosen their grip on the cryptocurrency, but his Tweets have focussed attention on Dogecoin – and often where Musk treads others follow hoping to gain a foothold on his gravy train.
With the huge success of Bitcoin, which now trades at $51,000 a coin and the possible demise of XRP Ripple as the SEC bunkers in for court action, cryptocurrency are finding traction with a broader range of investors.
That could mean a revival in interest for Dogecoin proving that Elon Musk isn’t barking mad with his investments after all.
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