Dogecoin is a peer-to-peer cryptocurrency which has entered the top 20 by market capitalization a few weeks ago. According to https://coinmarketcap.com/, is has a market cap of nearly 662 million US$, as of this writing. That means, is has just lost the 20th place to Zcash with a market cap of 695 million US$. Place 22 is currently hold by OmiseGO with a market cap of 495 million US$.
There is an ongoing debate in the community if you should buy Dogecoin, especially if you are aiming for a broad portfolio.
We at crypto-stepbystep are invested in most of the top 20 coins as well as in some highly promising sub 20 tokens. Whenever a currency is approaching the top 20, we take a closer look. Nobody wants to miss the next Amazon.
The history of Dogecoin
Dogecoin was originally created by Billy Markus and Jackson Palmer in late 2013. It is based on Luckycoin, which itself is a derivation of Litecoin. The idea for this token came from a, at this time, famous internet phenomenon, the doge meme. The meme features a Shiba Inu dog, accompanied by Comic Sans text, which represents the inner monologue of the animal. Dodge is a variation of the word dog, hence the name Dogecoin.
The token quickly became popular, especially as the project’s community started to gather money for a possible participation of the jamaican bob team at the olympic games. At the end of January 2014, it reached a market cap of 61 million US$, which made it the 5th biggest digital currency at this time.
While it has vanished from the top 20 in the meantime, it recovered lost ground very quickly during the last weeks.
Why we don’t invest in Dogecoin
Dogecoin is a joke
First and foremost, Dogecoin was introduced as a joke currency. Ok, a joke worth 700 million dollars. But come on, a currency which is based on an internet phenomenon, featuring a dog and and some Comic Sans, will not be the next Amazon.
Lack of a unique selling proposition
Dogecoin is often referred to as the tip currency. It allows users of famous platforms like Reddit to send small amounts of Dogecoins to others very easily. While this is indeed something which makes the coin, somehow, stand out from the competition, I think this can be relatively easy adopted by other digital currencies.
GitHub activity slowing down
There has not been a significant amount of contributions to the master branch on the project’s GitHub page since 2015. We take this as an indicator that the technical development of the project is slowing down. While a crypto project can certainly live off his name, popularity and the community’s enthusiasm for quite a while, it might not be enough for the long term.
Dogecoin is inflationary
Dogecoin does not have a maximum supply and allows 5 billion new coins created each year. This means by definition Dogecoin is using an inflation model like traditional FIAT money (e.g. US$). While this is not a bad thing per se, it does not increase our belief in a coin value rise in the future.
The boss has left the ship
In 2015 Jackson Palmer, the co-founder of Dogecoin, stopped engaging in the project. Of course this has happened to others, look at Apple. But together with the declining activity on the project’s GitHub page, I won’t take this as a positive signal.
In this article, we introduced you to the nearly top 20 token Dogecoin. After a brief overview of the coin’s past, we explained the 5 reasons to you, why we will not invest in this asset. First of all, Dogecoin was created as a joke currency. Moreover we don’t see a unique selling point, we see that the GitHub activity is going down and we don’t like the inflationary concept of the coin. And last but not least, we don’t take it as a good sign, that the co-founder Jackson Palmer has left the project.
Keep in mind, everybody has to make his own decision. We only have explained our thoughts. We may be wrong. There is a good chance that Dogecoin might re-enter the top 20. But will it be the next Amazon? We don’t think so.
Disclaimer: The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.
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