Much fun, no work: DOGE must ditch meme status to be valued as money

Much fun, no work: DOGE must ditch meme status to be valued as money

Doge reaching $1 is practically impossible unless the currency witnesses some Bitcoin-level buy-ins in the coming future.

[ihc-hide-content ihc_mb_type=“show“ ihc_mb_who=“reg“ ihc_mb_template=“1″ ]

There is no denying the fact that Dogecoin (DOGE) is by far one of the most polarizing crypto projects in the market today. On one hand, many think of the cryptocurrency as largely being a joke that has long overstayed its welcome; however, there also those people — including many celebrities, business moguls, etc. — who evidently believe it’s a viable financial instrument that will stick around for a long time to come, or at least they are leading people into believing that.

For example, the owner of NBA franchise the Dallas Mavericks, Mark Cuban, recently stated that he is fairly confident that DOGE is here to stay and even has the potential to hit a price point of $1 in the near future. This proclamation comes a few days after the Mavericks started accepting Dogecoin as a form of payment.

He further revealed that fans were already behind this latest payment avenue, and as of March 7, the Mavs had already sold 20,000 Dogecoin — roughly $1,018 at press time — worth of merchandise, adding: “If we sell another 6,556,000,000 Dogecoin worth of Mavs merch, DOGE will definitely hit $1.”

It is worth mentioning that over the course of the last few months, DOGE’s list of prominent mainstream followers has been growing at a furious pace, with celebrities like Kiss co-lead singer and bassist Gene Simmons, former adult film star Mia Khalifa and American rappers Snoop Dogg and Lil Yachty all showcasing their support for the digital asset.

However, the most prominent backer of the “meme coin,” by far, is Tesla CEO Elon Musk, who has been vocalizing his support for DOGE through his Twitter account in a big way for nearly a year now.

Is the hype here to stay?

DOGE, just like any other cryptocurrency, is dependent on how many people adopt it. As a result, who’s to actually say that the currency can’t become the “future of money” if enough people were to start supporting it?

On the subject, Kadan Stadelmann, chief technology officer of Komodo — an open-source cryptocurrency project and blockchain solutions provider — told Cointelegraph that contrary to what Cuban and some other folks may believe, DOGE reaching $1 is practically impossible until some Bitcoin-level buy-ins are witnessed in the near future:

“We aren’t currently seeing this even with increased adoption by Mark Cuban and other NBA owners. DOGE does certainly already have a use case as a niche currency with avid fans, and adoption can certainly grow from here. But for it to genuinely be considered ‘future money,’ the narrative of DOGE as a meme coin will have to erode.”

On a more technical note, Stadelmann pointed out that when one takes into consideration the amount of new DOGE that is being minted every day — 10,000 per minute/14.4 million per day/5.2 billion per year — the price action of DOGE faces some harrowing challenges in the near term.

Furthermore, 14.4 million DOGE/day or 5 billion/year will soon become a small drop in the bucket, and the coin’s price action will be expected to stabilize as the 14.4 million/day today already represents only just over a ~4% supply increase/year of its available circulating supply.

Another way to talk about DOGE, its price speculation and its use as a legit financial instrument, as per Stadelmann, is by looking at the amount of United States dollars it absorbs every day to maintain its current price action levels against fiat. The token is currently trading at around $0.056, which requires Dogecoin to have $806,000 of new fiat in addition to its existing inflow in order to maintain its value, according to Stadelmann.

However, Johnny Lyu, CEO of KuCoin, pointed out to Cointelegraph that he is quite optimistic about the future of Dogecoin since it’s already one of the symbols of crypto for many people today: “I won’t be surprised to see DOGE being used in hotels, restaurants or cinemas in the future.” That being said, he believes that despite its potential, the token is unlikely to break into the top five anytime soon, adding:

“The search interests of DOGE have overtaken BTC from time to time. Compared to Bitcoin, DOGE is more suitable to be futures money for higher supply, lower price and faster transactions. It’s tailored for daily payment, and its community culture can easily resonate with the general public.”

Not everyone is sold on DOGE

Though DOGE’s recent success makes for an amazing feel-good story, a lot of industry experts are not entirely buying into the hype. For example, Stadelmann pointed out that when compared to other cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), institutions are far less likely to adopt Dogecoin or other similar coins: “DOGE doesn’t have a narrative like ‘digital gold’ and isn’t being seen as a store of value.”

In this vein, it bears mentioning that the price action of coins like DOGE is driven largely by their respective communities rather than by changes in the value of their underlying technology or use cases.

On the subject, Joel Edgerton, chief operating officer of cryptocurrency exchange bitFlyer, told Cointelegraph that coins like DOGE are meant to be fun rather than solve real-life problems and that it has not proven its value just yet: “Any asset can reach a certain price target if people are willing to pay for it. However, that type of momentum investing, without underlying value, is pure speculation.”

Where is DOGE heading?

DOGE has been on a tear recently as is made evident by the fact that over the course of the last 12 or so months, the currency has seen gains of over 2,440%. As a result, it’s worth delving into the question: Where does DOGE’s monetary ceiling actually lie?

In Lyu’s opinion, $0.20–$0.30 is a reasonable range in this bull run; however, he believes that there’s still a long way for DOGE to go before it can become anything more than a sort of short-term cultural phenomenon. For starters, it will have to be regulated — an aspect that will have a major impact on the currency’s future use and overall potential:

“Compliance is almost a must if it wants to be widely used in our daily lives, while it can also exist in a niche market without any regulation. Not bad for the future of DOGE in both ways. If the price of Dogecoin rises to $1, its market cap will be $100 billion, becoming the third-largest crypto. I think this is unlikely to happen in the short term.”


Zur Quelle
[/ihc-hide-content]

Doge reaching $1 is practically impossible unless the currency witnesses some Bitcoin-level buy-ins in the coming future.

Bitcoin price hits $54K, reaching a $1T market cap faster than Amazon and Google

Bitcoin price hits $54K, reaching a $1T market cap faster than Amazon and Google

Bitcoin’s rally to $54,850 boosted its market capitalization above $1 trillion, a feat which took Amazon and Google decades to achieve.

[ihc-hide-content ihc_mb_type=“show“ ihc_mb_who=“reg“ ihc_mb_template=“1″ ]

Within the last hour, Bitcoin’s market capitalization pushed above the $1 trillion level. This milestone occurred less than a year after its market cap dipped below $100 billion on Black Thursday and the move to a new all-time high took place right as BTC price is on the verge of overtaking $55,000.

Bitcoin market cap in USD. Source: TradingView

The significance of this event will not be lost of those working in financial as only a handful of assets ever achieve this status. While Bitcoin may have started as a mere curiosity in 2009, it only took it 12 years to become a global asset with a $1 trillion market capitalization.

For those unfamiliar with Bitcoin’s unique price history, 10,000 BTC were auctioned at the Bitcointalk.org forum in March 2010 for $50, but no buyer was found.

Two months later, Laszlo Hanyecz bought two pizzas for 10,000 BTC, and the rest is history. Thus, during its first sixteen months of existence, Bitcoin was something between a collectible with no monetary value and an experiment among enthusiasts.

Gold and silver have a much longer history

Largest global assets‘ ranking by market capitalization. Source: 8marketcap.com

According to 8marketcap, besides Bitcoin, there are only seven tradable assets with a market capitalization surpassing $1 trillion. Naturally, gold and silver are on this list as they are synonyms of money and have served as a store of value for over 4,000 years.

Although extinct from coinage and reserve requirements to back fiat currency, gold remains widely used by central banks, mutual funds, and retail investors. While precious metals have the advantage of having a relatively constant supply, many company’s abilities to generate profits are evolving.

Amazon, for example, was founded in July 1994 as an online marketplace for books. Today, the giant conglomerate profits from cloud computing, digital streaming, film and television productions, gadgets, supermarkets, e-commerce and artificial intelligence.

In June 1996, Amazon raised $8 million in seed money from Kleiner Perkins and in that same year the company had lost $5.8 million even though its fourth-quarter revenue doubled from the previous one. Amazon’s IPO in May 1997 had an initial $12-to-$14 pricing range but settling at $18, which valued the company at $438 million.

It took Amazon 27 years to reach a $1 trillion market capitalization took 27 years. Meanwhile, Microsoft, which was founded in April 1975, crossed the $1 trillion milestone 45 years later (June 2019). Google launched in September 1998, and 22 years later (January 2020) the company crossed the $1 trillion mark.

Will Bitcoin overtake gold next?

Gold’s market capitalization crossed $1 trillion in 1972 according to inflation-adjusted numbers. That price would be equivalent to $450 per ounce, breaking a downtrend that was initiated in 1939 by World War II.

Before speculating on whether BTC will overtake gold’s market cap and its status as a global store of value, it’s important to consider that valuing a multi-faceted technology asset such as Bitcoin is a rather unfair comparison with traditional investments.

BTC is a digital store of value that simultaneously functions as a peer-to-peer payment network. Moreover, its censorship-resistant characteristics can’t be mimicked by third-party dependent assets.

Lastly, unlike gold, Bitcoin is a protocol and a programmable shared database. If somehow quantum computing becomes capable of breaking SHA-256 cryptography, the network can auto-arrange a solution, even if it is a temporary one.

In August 2010, 92 billion BTC were mined after an overflow error was exploited. The solution involved the entire network agreeing on a rollover, which proved that the ultimate security consensus lies in its user base.

How would gold enthusiasts react if asteroid mining becomes a reality? What if an extremely ‚authentic‘ and expensive fake gold supply entered the market, causing mass testing to become a necessity for every trade? These are issues Bitcoin investors will never have to worry about.

Moreover, companies run risks of frauds, sizable follow-on offers, liabilities, and potential regulatory changes. Meanwhile, decentralized protocols are virtually free of those perils, thus justifying a much higher valuation in Bitcoin’s case.

Bitcoin’s path to becoming a multi-trillion dollar asset seems to have a much easier route than gold, silver, or tech stocks. For example, the world’s real estate market is estimated to be worth north $280 trillion, according to data from Visual Capitalist.

How much of the real estate and debt (bonds) market could shift to Bitcoin remains an open question.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.