Once introduced as a joke, the cryptocurrency Dogecoin continues on its record-breaking course. In 2021 alone, its value increased by almost 14,000 percent.
Dogecoin has reached a market capitalization of over 65 billion euros. Since January 1, 2021, its price has risen by around 14,000 percent. This means that the virtual payment method, which was once introduced as a parody of bitcoin, leaves well-known competitors such as Ripple’s XRP token behind and occupies 4th place among the most valuable cryptocurrencies in the world.
Only the Binance Coin with 82 billion euros, Ethereum with 336 billion euros, and Bitcoin with 897 billion euros currently have a higher market capitalization (May 6, 2021). As things stand, the virtual coin with the dog in its logo is more valuable than various well-known companies such as US carmaker General Motors, computer game developer and publisher Activision Blizzard or the pharmaceutical company Moderna.
The value of a Dogecoin is currently around 0.50 euros. As recently as December 2020, one unit of the digital money cost 0.002 euros. The rally was triggered, among other things, by several tweets from celebrities such as Tesla CEO Elon Musk and rapper Snoop Dogg, who had spoken favorably about the fun currency in social networks in January and February, thus indirectly promoting it.
In the weeks that followed, the phenomenon developed a momentum of its own, driving the price ever higher for no apparent reason. Supporting this was the general hype around cryptocurrencies, which has gained additional momentum since the IPO of the trading platform Coinbase in April 2021. Most recently, the joking call for a worldwide Doge Day generated further attention.
Elon Musk has denied an appearance on the U.S. TV show Saturday Night Live on May 8, 2021. He announced it on Twitter with the words “The Dogefather.” Experts assume that this allusion will further boost the Dogecoin price because Musk could comment on the currency during the show and trigger further euphoria.
Critics warn against investing in Dogecoin for several reasons. For one, the current price explosion is based on the hype that could disappear sooner or later just as quickly as it came. For another, Dogecoin is subject to unchecked inflation. While Bitcoin is limited to 21 million units, there is no limit to the production of Dogecoin. There are currently around 129 billion units in circulation, and five billion more are added every year.
Dogecoin was programmed in 2013 by US-based Billy Markus and Jackson Palmer to poke fun at the then-burgeoning hype surrounding bitcoin. The currency was designed as a joke intended to highlight the nonsense and lack of value of cryptocurrencies. The inventors were in over their heads with this joke years ago. By his own admission, Markus has not owned any Dogecoins since 2015 and described the current price developments as insanity in interviews. Palmer also donated his copies to charity some time ago.
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