The No. 12 largest cryptocurrency, with a market cap of $6.1 billion, is a joke.
Dogecoin (DOGE) started out as a joke in 2013 and is still a joke today—but its value is up 380% in the past month, 696% this year so far.
The coin has ridden the same Reddit-driven retail investor wave as stocks like GameStop and AMC over the past two weeks, further accelerated by a handful of cheeky Elon Musk tweets pumping dogecoin.
On Jan. 28, dogecoin became the most tweeted-about cryptocurrency in a single day, beating a bitcoin single-day record from Jan. 2. Dogecoin was surging so dramatically last week that Robinhood turned off its Instant Buying feature, which allows customers to get instant access to bank transfers, for bitcoin and dogecoin.
“Dogecoin is the people’s crypto,” Musk tweeted very late on Wednesday night. He added, “No highs, no lows, only Doge,” and shared a Lion King meme of himself as the monkey Rafiki holding up baby Simba with a Doge head.
The Tesla CEO has tweeted about dogecoin a number of times since April 2019, when he declared, “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” And as Musk has proven multiple times, his tweets can move markets—which has gotten him into legal trouble in the past.
In a live chat on the audio app Clubhouse on Sunday night, Musk warned, “Occasionally I make jokes about dogecoin, but they are really meant to be jokes.” That didn’t stop him from sending out more tweets pumping the coin this week.
The “doge” meme dates back to 2010, started by a Shiba Inu owner in Japan. The meme evolved to show any Shiba Inu face along with silly phrases in Comic Sans font and stilted English.
Dogecoin was created in 2013 by programmers Jackson Palmer and Billy Markus as a fork of luckycoin (now defunct), which itself was a fork of litecoin (LTC). Cryptocurrency forks are tweaks to the underlying source code of a blockchain protocol to result in a divergent protocol or coin. In 2014, dogecoin adapted merged-mining support with litecoin.
Palmer walked away from dogecoin in 2015. He has said repeatedly that he intended dogecoin purely as a joke, didn’t make any money from its creation, and sees real danger in its rise: “I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap,” he said in 2018.
Three years later, the coin’s market cap is six times bigger—with no practical function behind it and no limit on how many dogecoins can be mined (there are 100 billion in supply, and growing). Bitcoin is capped at 21 million.
And yet, you can buy and trade dogecoin relatively easily on dozens of crypto exchange sites, including Binance, Kraken, Huobi, and Robinhood, and real people are making real money from it. (Coinbase does not support buying of dogecoin, but you can store dogecoin in the Coinbase Wallet app.)
Don’t chalk it all up to Musk.
Viral, meme stocks are having a moment along with cryptocurrencies amid the pandemic-prompted rise of the at-home retail investor.
Wall Street hedge fund titans who previously dismissed bitcoin are now allotting some percentage of their portfolios to it. PayPal, Square, Visa and other consumer-facing household payment names have opened their arms to crypto. Old-school video game maker Atari launched a crypto token. Apple cofounder Steve Wozniak launched a crypto token. The market cap of all cryptocurrencies touched $1 trillion for the first time in January, and even a joke coin like dogecoin is a very real part of that.
So, should you buy dogecoin as an investment?
Advice shared at a Yahoo Finance crypto summit in 2018 by Nick Tomaino, a Coinbase alum who now runs crypto VC firm 1confirmation, still applies: “How I describe most of these coins is they are meme-based currencies,” he said. “In the past year, there’s been so much interest and fervor in this space that if you create a coin and have a good meme, you could have a billion dollars in market value… Why is that a bad thing in the short term? Because a lot of people are probably going to lose a lot of money. Why is it a good thing in the long run? Because for every person that just cares about getting rich quick, there’s also a person that becomes more deeply interested in the technology. And that’s going to help the space in the long run.”