The extraordinary popularity of an ordinary meme

What to expect from a cryptocurrency that has been issued as a joke?

The creators certainly did not expect such success.

Dogecoin, because it is in question, was created in 2013 by developers Billy Marcus and Jackson Palmer and its logo has become a popular dog known for its Shiba Inu memes. Currently, it is the fifth most recognizable cryptocurrency after Bitcoin and Ethereum.

The creators’ intention was to ridicule risky speculations on the cryptocurrency market, at the same time not to be associated with the controversial past of the others. They wanted a community of generous participants, not a get-rich-quick group. Considering that other cryptocurrencies offer advantages in the form of transaction speed or practical use, Dogecoin simply exists and only earns on its popularity.

The popularity of Dogecoin is not weakening due to celebrities and their opinions about it.

Last year, DOGE increased by more than 800% due to Reddit user activity driven by the backlash of Elon Musk and Snoop Dogg. Then the American basketball club Dallas Mavericks announced that tickets for the team’s games will be available for purchase using Dogecoin.

At the end of 2021, Burger King began rewarding its most loyal customers with Dogecoin. In the statement, we can read that the company is aware that cryptocurrencies may be a bit incomprehensible for customers, but thanks to this process, they would like to reduce the idea of virtual money to a more accessible version.

Another jump in price is the entry on the NASDAQ exchange of the Coinbase cryptocurrency, although Dogecoin itself was not even entered on the Coinbase cryptocurrency list.

Currently, we can observe how strongly the Dogecoin price is connected with Elon Musk.

It is clear that this is his favorite cryptocurrency and the information that he bought it for his son (the value of the purchase is unknown) has encouraged many internet users to take the same steps. This move saw Dogecoin’s value increase by 16%.

At the beginning of 2022, the billionaire announced on his Twitter account that Tesla products could be purchased for DOGE. Currently, it is the only cryptocurrency that can be paid for Tesla products.

This month, Musk purchased the Twitter social network, and that too pushed Dogecoin’s price up significantly. Analysts believe that this move may introduce this cryptocurrency to the network and make it become a means of payment, which in turn will increase its price again.

As of today, financial experts still view Dogecoin as a volatile, risky, and speculative cryptocurrency. It is said to be the currency of so-called “meme stocks” and should not be taken seriously.

Investors should be aware of the main risks of such an investment:

- The unlimited supply makes it an inflationary currency and the price is not supported by the scarcity as new coins are constantly introduced into circulation.

- Technology development based solely on the work of volunteer programmers, which makes code updates rare.

- Concentrated ownership in nine wallets over 40% of all coins means that the market can be manipulated at any time, e.g. one-time very large withdrawal of funds.

However, it is difficult to predict the direction in which Dogecoin is heading and whether its popularity will be a sufficient driving force for it to become a reliable means of payment and safe investment placement.