Why Is Dogecoin so Popular?

 

You've probably heard of Dogecoin by now. There are so many questions around it and just not enough answers. How exactly did a joke become a multi-trillion-dollar investment? And isn't cryptocurrency a scam?

There are plenty of videos and articles about putting your money in Dogecoin or Bitcoin to make money. But do we need to? And what do memes have to do with all this? 

 

What Is Cryptocurrency? Is It Legal?

Banks have made it easy to send money over the internet, but they charge a fee. And this process is prone to hacking and theft. Whereas cryptocurrencies, like Bitcoin, use a public ledger to maintain the transactions making it impossible to cheat. 

This public ledger is called 'blockchain', and it solves many problems apart from exchanging money digitally. And since there isn't one bank or company to verify your transactions, blockchain is called 'decentralized'. Paper money, on the other hand, is centralized by the government. 

The legality comes into question because:

1. There aren't any entities to be held accountable in case of any crime. SEBI is responsible in India for the Stock Market, and the government is accountable for the Rupee. 

2. There is no guarantee that the value will remain the same. The prices of these digital currencies fluctuate unpredictably. However, paper money is stable and will not lose value as long as the government assures the public.

So is a cryptocurrency like Dogecoin a scam? No, it started as a joke on Bitcoin. Memes are an effective way to market a product; Dogecoin leveraged that popularity to donate its profits to charities worldwide.

But this trend in 'Memecoins' or meme-based coins has made it easier for scammers to lure people into Dogecoin copycats. They scam people who learn about cryptocurrency through memes and naively invest in the next big Memecoin. 

Even Dogecoin put out a statement through Twitter to be careful of such scammers and only invest if you have money to spare. People have loaned out money and invested their savings, hoping to earn 10,000 times their investment. 

 

New to Investing? Dogecoin Is for You

Currently, there are several cryptocurrencies in the market. Bitcoin is the original cryptocurrency, and the rest are known as 'Altcoins' or 'Alternative to Bitcoin'. Dogecoin is one such Altcoin.

There are well-established cryptocurrencies in the market right now, such as Ethereum, Litecoin, and Ripple. So why Dogecoin? 

For someone who has no prior experience in investing, Dogecoin provides the freedom to explore cryptocurrency and understand how it works. The correlation with the stock market can help with building confidence for a stable investment. 

Dogecoin is cheap, accessible and quickly transferable. Users on Reddit, an internet discussion platform, have been using it to tip users. The amount of coins used on Reddit has surpassed bitcoins. 

However, Bitcoin is a heavy investment. You could buy an SUV in India for one Bitcoin. So, it is not as accessible and cheap as Dogecoin. Also, the transaction speeds are slower since every transaction needs to be verified by multiple people who maintain the public ledgers or 'miners'. 

 

How Jokes on the Internet Move Markets

In 2013, Dogecoin was created by two software engineers as a joke on Bitcoin. They branded it with the photo of the doge to be funny, and Bitcoin was notorious for illegal transactions. 

Dogecoin wanted to distance itself from Bitcoins image and function. Dogecoin holders sponsored Jamaica's Bobsled Team, India's Winter Olympians, and they donated to Kenya for their water crisis. 

So, Dogecoin should be seen as a cultural product or collectable rather than a financial asset. People buy Dogecoins because it is fun to own and be part of a warm and welcoming community. 

The sudden surge in their prices due to Elon Musk's tweets or how they rallied to get the price of one Dogecoin to a dollar is telling of their laid-back vibe. 

Dogecoin and its community were there to be fun and enjoyable from the start. So, people expecting it to be the next big thing after Bitcoin are mistaken. It is a product of the people, for the people, by the people. 

Meme marketing has grown over the past decade into a systematized form of marketing. Brands pay meme pages to create posts that highlight their products. Meme pages do so in the form of a joke or a senseless meme trend. 

For example, within six months of the launch of Apple's Airpods, a meme went viral with Thanos, the villain from Avengers movies, wearing Airpods. The sales of the Airpods boosted and made them the highest-selling wireless earbuds in that year.

So, it is not a coincidence that the surge in cryptocurrency interest and Dogecoin is simultaneously happening. 

Consequently, this has marketed block-chain and cryptocurrencies to an even bigger audience. Curiosity for Bitcoin, Ethereum, and Dogecoin is peaking at an all-time high. All thanks to a meme and fun-loving people on the internet. 

 

Written by Adityavikram Bajaj

Edited by Adrija Saha