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It was created as a joke but now has a market capitalisation above US$70 billion. What is it? Dogecoin of course

It was created as a joke but now has a market capitalisation above US$70 billion. What is it? Dogecoin of course

It was created as a joke, there's no limit to its supply, and it appears to lack a serious use-case supporting wide adoption. Nonetheless at the time of writing it has a market capitalisation of US$76 billion.

What am I talking about? Why, Dogecoin of course.

Dogecoin is a cryptocurrency that has been around since 2013. Its price has been on a tear this year, making it the best performing cryptocurrency year-to-date. Interest in Dogecoin stretches all the way to New Zealand, with RNZ reporting on Friday of increasing interest from retail investors.

You can buy Dogecoin on a cryptocurrency exchange and it can be used for payments and purchases. But it's not a great store of value. That's because there's no limit to the volume of dogecoins that can be created through mining, making it highly inflationary.

A research report helpfully sheds light on Dogecoin to the initiated, who have been missing quite a party. The report's by Galaxy Digital Research's head of firmwide research Alex Thorn, and research associate Karim Helmy. It's title is; Dogecoin: The Most Honest Sh*tcoin.

Thorn and Helmy go back to the start, detailing how Dogecoin began.

"Dogecoin was created in 2013 by Jackson Palmer, then an employee in Adobe Systems’ marketing department, and Billy Markus, then an IBM software engineer. The pair quite literally created the currency as a joke to capture the spirit of a popular internet meme at the time, the doge. The doge meme featured a picture of a quizzical Shiba Inu [a Japanese dog] with multicolored text in Comic Sans font depicting the dog’s inner monolog."

"The first public mention of Dogecoin occurred on November 28, 2013, when Jackson Palmer tweeted 'investing in dogecoin, pretty sure it’s the next big thing.' (Palmer has since deleted his Twitter account and mostly vanished from the internet). Palmer then registered on December 4, 2013, which still provides introductory material for new users," Thorn and Helmy say.

"The Dogecoin genesis block was mined two days later on December 6, with the first known price of DOGE established on January 23, 2014 at $0.001540753."

"Dogecoin is a codebase fork of Luckycoin, which itself was a codebase fork of Junkcoin, which was a codebase fork of Litecoin, which in turn is a codebase fork of Bitcoin. Dogecoin originally launched using the Scrypt hash function for its proof-of-work consensus algorithm, before forking to become merge-mined with Litecoin in late 2014. This means that Litecoin Scrypt miners can mine Dogecoin simultaneously at no additional cost," say Thorn and Helmy.

Deficiencies are not hard to find.

"Dogecoin has zero development. Few people run full nodes, and those who do often have difficulty downloading the chain or staying synced with the network. There’s no market infrastructure, barely any wallet software, and despite being more than seven years old, many exchanges still don’t support it. There is no serious long-term narrative or use-case supporting its wide adoption," Thorn and Helmy say.

And unlike Bitcoin, there's no supply limit.

"Dogecoin was originally intended to have a capped supply, like Bitcoin. Early in the network’s history, though, community members realized that a bug in the code had caused the supply cap to be unspecified, causing there to be no limit to its future supply. Rather than fix the bug and fork the network, the community moved to maintain the asset’s uncapped supply."

"With a permanently fixed 10,000 DOGE per block subsidy rewarded to miners approximately every minute, the supply of Dogecoin grows by 14.4 million DOGE per day and 5.2 billion DOGE per year on average. Without halvings, the ultimate supply of Dogecoin is infinite, although the annualized inflation rate reduces as the supply grows," say Thorn and Helmy.

The Coindesk chart below shows the incredible rise in the Dogecoin price. At the time of writing the market capitalisation was US$76 billion, with the price at US58 cents, having been above US70c recently. (Update: eight hours later it is US$90.1 bln!)

Since its early days Dogecoin has had a significant following on the Reddit social media site, and more recently has featured prominently on TikTok.

Elon Musk, CEO of Tesla and SpaceX, has been the key celebrity promoter of Dogecoin. In 2019 Musk replied to a request from the official Dogecoin Twitter account for someone to become “CEO” and “lead us into the future.” Musk responded saying; “Dogecoin might be my fav cryptocurrency. It’s pretty cool.” He was granted the role of “CEO."

Thorn and Helmy note the Dogecoin price has often risen after Musk has tweeted about it. The chart from their report below details this.

The Galaxy Digital Research report points out that more than 60% of dogecoins’ total supply has changed hands over the past year, highlighting a significant transfer of coins from older holders into the hands of newer entrants.

"Today, the Dogecoin investor base is primarily retail and recent. In prior crypto eras, Dogecoin holders were comprised primarily of sophisticated bitcoiners and crypto enthusiasts who appreciated the joke, but today the market is dominated by retail investors driven by unit bias and access to platforms like Robinhood."

Founders Palmer and Markus became disillusioned as Dogecoin proliferated.

"Dogecoin had become a tool for speculation, rather than just crypto 'for sillies,' as it was intended. The founders left the project, with Markus saying 'when someone puts $20k in… that makes me really, really uncomfortable. I don’t want to be a leader of a cult.' Palmer unsubscribed from the r/Dogecoin subreddit on June 24, 2014. In 2015, Palmer announced that he was 'taking an extended leave of absence' from the cryptocurrency community, calling the ecosystem 'toxic.' Whether for reasons related to Dogecoin or not, Palmer later deleted his YouTube and Twitter accounts entirely," Thorn and Helmy write.

In conclusion Thorn and Helmy suggest despite its deficiencies, Dogecoin is an admirable project capable of rallying significant support.

"Unlike many projects in the cryptocurrency ecosystem, Dogecoin does not thrive on grand pronouncements of a better future or major technological breakthroughs. Instead, Dogecoin has one simple purpose: to be the world’s most fun currency. It is a goal that seems too good to be true, one that you would assume comes with a hidden agenda. But with no pre-mine or initial coin offering, Dogecoin’s fair launch positions it more closely to Bitcoin than most other projects in the space, ensuring that no hidden group of insiders stands to benefit disproportionately from its rise."

"Aristotle said, 'the gods too are fond of a joke,' and it’s clear the cryptocurrency gods continue to favor Dogecoin. DOGE is likely to live on as long as Bitcoin lives, and as long as jokes are funny. It is perhaps the purest 'gallows humor' investment vehicle ever created, mocking a frothy market with its playful indifference," Thorn and Helmy say.

"In our view, current Dogecoin volatility is fueled by mania, but it is likely that Dogecoin will continue to be part of this cryptocurrency story over the long run, always in Bitcoin’s shadow, but always lurking and periodically outperforming to surprise us all. DOGE has a long history of self-awareness and simplicity that makes it an attractive tool for expressing a wry cynicism about the state of the world. The coin offers a certain honesty that resonates in a complicated world and an often duplicitous cryptocurrency ecosystem. Most assets cannot rival that honesty, and Dogecoin’s longevity is ensured so long as one truism remains: people love a good joke."

Dogecoin certainly has entertainment value. But for those investing or speculating in Dogecoin, it's a case of caveat emptor. Let the buyer beware.

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Nothing should surprise in a financial world going haywire due to the actions of central banks. Because interest rates are massively suppressed and fiat currency is being debased at an extraordinary rate, speculation is rife. People are looking at anything to get a return. Central banks have driven this behaviour, this is cause and effect. People are looking to escape the fiat trap and the interest in crypto’s grows daily as a consequence.

... luckily , craptocurrencies haven't grown so big that a collapse will cause a meltdown of the financial system ... the real elephant in the room remains artificially low interest rates and property bubbles around the world .... we live in " interesting times " , as they say ...

Slow day?

There will be suicides when this thing blows up. And I'm not joking.

I doubt anyone is investing their life savings in doge are they?

Some of the stories Ive seen on the dogecoin subreddit are pretty wild. People taking out second mortgages, maxing out credit cards.

I would hope there arent many of these cases but theres definitely some around.

People are going to get wrecked. Dogecoin will gap down HARD~!!!

Please, Please, Please use your basic math skills and common sense; DO NOT Buy Dogecoin

After Elon Musk appears on Saturday Night Live tomorrow, I'd expect Dogecoin to start dumping.

Another example of a world going haywire here -
The U.S. economy created just 266,000 jobs in April, far short of the consensus forecast for a rise of 1 million. US equities are loving the appalling news.
“The market is rallying as the disappointment leaves the door open for the Fed to keep financial conditions easy for longer and delays the tapering and rate-hiking conversations for the time being,” said Cliff Hodge, chief investment officer at Cornerstone Wealth.
Simply put, it’s a case of bad news on the economy translating into good news for stocks.

Alternatively put, keep the lazy good for nothings unemployed so we can continue to suck the teat and don't have to work for it.


Has no store of value due to an unlimited supply, making it highly inflationary.

So just like all fiat currencies? Lol

The USD has also become a joke coin in the last 10 years

The USD is a joke currency that no one accepts that you can print yourself at home?

Depends how good your printer is I guess. Read up on North Korea counterfeiting USD.

.. But it's not a great store of value. That's because there's no limit to the volume of ...." Irony! so it's kinda like fiat currency then.

Its rate of inflation isnt all that high.

Dogecoin has annual inflation of 4.2%, Bitcoin is currently at 1.7%

Technically correct, as BTC will continue to be minted until it hits 21m coins. But as a whole, because it is capped it is a disinflationary store of value.

The annual uptake of new doge users/adopters is currently vastly higher than 4.2%

Dogecoin has an inflation rate around 4.2% currently, but the amount of Dogecoins are increasing at a constant rate, around 10,000 per day, eventually (if shown on a graph) the inflation rate for it will flatline.

I can't even remember where I put my doge.

Who let the doge out...

For those who get out before things correct - good money to be had, which will predominantly flow into other cryptos before people even consider stocks. There's plenty of utility coin options that will get an infusion of DOGE cash over the next week.

For those who are still holding on when things unwind, it's going to be messy. But having said that, distrust in other types of investments and the banking system itself is at an all-time high, and crypto seems to have far more legitimacy as an investment option than it did in 2018, as well as a range of DEFI options that haven't been there in previous alt seasons.

As stated by other commentators, if central banks and markets had acted ethically towards everyday people then this wouldn't be happening. But they didn't and it is.

I don't agree at all regarding your 'ethically' comment. Dogecoin as a phenomia is a lesson about what happens when greed, ignorance (financial illiteracy), and unregulated markets all collide. It is just the 'greater fool theory' at work and nothing more. It will probably run longer than seems rational, and then vanish. Or until regulators step in (or the tax man does).

What makes fiat currency systems work is ethical regulation. It isn't perfect, but it does create a money system that serves many purposes, and does it well. For all its critics, QE (excessive, sudden money printing in a crisis) is resulting is a V-shaped recovery and one of the shortest recessions ever. Who would have thought 12 months ago?

You know cryptos are dodgy when you read that the founders of Coinbase all cashed out as soon as they could - into fiat currency. The insiders know what they are doing. The outsiders and financially ilitterate will be the 'fools' of this unregulated wild west frenzy. You may not like regulation or regulators, but the world world be a complete mess if our monetary systems was based on cryptos. It is a system that will create very few 'winners' and enormous numbers of 'losers', the worst social ethics possible. We have enough issues with inequality now. Cryptos (and a 'gold standard') would make them hugely worse.

Ethical regulation!! Hahahah

"You may not like regulation or regulators, but the world world be a complete mess if our monetary systems was based on cryptos."

That would explain why central banks are frantically competing against each other to form alliances with blockchains to underwrite digital currencies, right?

I don't have a problem with regulation. I have a problem when people pretend the existence of regulation ensures there cannot possibly be any corrupt outcomes, despite the swathes of evidence around us that we have of the politicisation of central banks, the flow-on effects in terms of housing and inflation and the impact it has on the wider population.

And whether you like it or not, a huge part of global commerce is already based on cryptos - through supply chain management. Stop looking at the admitted-jokecoins like DOGE as representative of all cryptos. It's not 2012 anymore.


Ironic how DC says that it’s a system that’ll create only a few winners with many losers. That’s literally what our current system is delivering through central bank manipulation and corporate greed


Yep. Crypto-currency as an investment isn't a scam, it's a response to one.

Crypto is dodgy DC? Let's revisit some of the headlines from this week only:

-NYDIG: hundreds of US banks to offer #bitcoin services this year
-Galaxy Digital to acquire BitGo for $1.2B
-Square’s bitcoin profit rises by 11x yoy
-MercadoLibre discloses bitcoin position
-Bitso raises $250M Series C from Tiger Global, others
-DCG plans to buy another $500M worth of GBTC shares
-Coin Metrics raises $15M from Goldman Sachs, others
-Coinbase acquires analytics firm Skew
-Staking project Lido raises $73M
-A16z to raise up to $1B for new crypto fund
-Multicoin Capital raises $100M for second fund

I'm sorry, but anyone who thinks crypto isn't legitimate at this stage simply has their head in the sand.

And as for this comment:

For all its critics, QE (excessive, sudden money printing in a crisis) is resulting is a V-shaped recovery and one of the shortest recessions ever. Who would have thought 12 months ago?

It's far too early to say whether QE has been a success or not. We're just about to start the final act of the 90 year epic entitled "The Madness of John Maynard Keynes".

*K shaped recovery

... " Q " shaped recovery .... we're running around in circles , until something pricks the bubble ... and we all slide down the little stick into the financial abyss ...

QE has nothing to do with "money printing" mainstream economists do not understand monetary operations. Economist Prof L.Randall Wray gives us an explanation here,
"The purpose of bond sales by government (central bank and treasury) is to drain excess reserves; the purpose of bond purchases and retirements (by central bank and treasury, respectively) is to add reserves. Bond sales destroy reserves; they do not provide government with more currency to spend.Thus, bond sales and purchases are part of monetary policy—not a borrowing operation—they help the central bank to hit its interest rate target"

If bond sales did not provide the government with more money to spend, they will not sell bonds. It is that simple.

The central bank buys bonds with 'reserves' CREATED OUT OF THIN AIR. This is why people equate it to money printing. The money supply increases as a result.

The money could be 'deleted' once the bond becomes due, but the central banks always 'reinvest' the proceeds.

You can quote as many economics professors as you like, but the money supply is demonstrably increasing - there is no 'draining of excess reserves' taking place.

You can quote as many economics professors as you like, but the money supply is demonstrably increasing - there is no 'draining of excess reserves' taking place.

Yes. The MMTers seem to want to ignore this. They don't want to see QE included in a broad common vernacular like 'money printing.'

QE is used to lower interest to encourage money creation by the banks, no money from QE is lent by the banks, they do not lend their reserves.

Government borrowing is a monetary operation, it controls interest rates and it has nothing to do with financing spending. Who do you suppose created the money that is borrowed if not the government itself? The Levy Economics Institute tells us this,
Working Paper No. 244 | July 1998
Can Taxes and Bonds Finance Government Spending?
This paper investigates the commonly held belief that government spending is normally financed through a combination of taxes and bond sales. The argument is a technical one and requires a detailed analysis of reserve accounting at the central bank. After carefully considering the complexities of reserve accounting, it is argued that the proceeds from taxation and bond sales are technically incapable of financing government spending and that modern governments actually finance all of their spending through the direct creation of high-powered money. The analysis carries significant implications for fiscal as well as monetary policy.

Government borrowing is a monetary operation....

It's tiring talking to people who have accepted MMT as a faith. Listen, the reference to 'money printing' is going to be used in the common vernacular to refer to the expansion of the money supply directly and indirectly, whether you like it or not. Whether it is technically correct or not by definition is beside the point.

MMT is not a faith it is an accurate description of how our monetary system operates unlike the nonsense that we hear from mainstream economists.

It is a faith. That's why its adherents have to constantly point out that QE is not money printing.

If people were saying that the earth was flat then I would also try to correct them. Would that also upset you? You seem to place very little value in the truth. An understanding of how our monetary system operates is a very important issue for the future of this country. For thirty five years or more we have been lied to and mislead and that is why this country is in such a mess with so much household debt, homelessness and poverty.

The common use of 'money printing' to describe the actions of the central banks is not going to change. And an MMT comparing that to flat earth theory shows how ridiculous it all is.

So you agree that mainstream economics is ridiculous. Central banks create money when the government spends each and every time. Every dollar that the government spends is a new dollar, that is what having a sovereign currency is all about.
Sectoral Balances proves that borrowing doesn't finance government spending, (S-I)=(G-T)+(X-M), there is no B there for borrowing except for the I in the private sector.

‘Dogecoin as a phenomia is a lesson about what happens when greed, ignorance (financial illiteracy), and unregulated markets all collide. It is just the 'greater fool theory' at work and nothing more. It will probably run longer than seems rational’

Replace ‘dogecoin’ with ‘NZ property’ and it’s same same. One is backed by the reserve bank and one is not. But one is ok and the other is not. Seems fair...

Yeah except its not the same is it. If I go to sleep tonight and wake up and my $1Million dollar house is suddenly worth zero, I still have a house to live in but if my $1Million in Crypto suddenly goes to zero you are literally left with a $5 USB stick.


Not if you owe money on it you don’t

I would say both are based on a massive speculation bubble, and both are overvalued. The only difference is property has an actual value above zero, where is crypto currency does not, its 100% speculation, currently property is only 70% or so.

QE (excessive, sudden money printing in a crisis) is resulting is a V-shaped recovery and one of the shortest recessions ever. Who would have thought 12 months ago?

That's a bit of a stretch. QE has been with use since post-GFC and the price of money has been gradually destroyed over time through central bank policy and actions. If anything, QE is driving slavery (I don't use that word lightly) by contributing to the destruction of the value of labor.

People really hate having cash, don’t they?

Because it is being so thoroughly bebased. The same criticism being lobbed at 'joke' Dogecoin - that there is no limit on supply - can equally be lobbed at fiat.

@brisket, correction:

only people in debt, those who owe a lot of it, hate fiat currency.

You couldn’t make this %#*? up!

Wow even something like Dodgecoin can pull in suckers and people on here think the NZ Housing market is a Ponzi ? Hilarious at first sight, but then again I think its just a sign of the shear desperation out there to try and get ahead. Perhaps I'm wrong but all the cryptos when they crash are going to give the value back to Fiat. Cryptos are just sucking in Fiat faster than the rate of money printing so they are offsetting it big time if they all suddenly become worthless. What a financial system, people don't know where to put there money.

Put $40 in for a laugh 6 months ago. Have traded the highs and lows. Took 700 out and the remainders at 550 at present. Will let it run and see what happens. Beats trading lambs to the slaughter....

From above
... "Dogecoin had become a tool for speculation, rather than just crypto 'for sillies,'.....
I'm struggling to see the distinction.

we may never know the true number but there has to be more than one born every minute,that is the only explanation for the rise of dogecoin.using the beanstalk stategy worked well for jack,he got away with murder,theft and home invasion,but he was an outlier so for the majority going big on the magic beans they risk indigestion and a possible blowout.

If interested, one should check with Mr Orr, if can get interest only loan and if it suits his fantasy, not to be surprised if he finds reason and excuse to support.

Why are the authors/commenters using the word investing when the only possible use case here is speculation?

It has no use case, it has unlimited supply, its literally a joke currency created by private individuals.

Jeepers its like buying fiat from pirates of the Caribbean in the 1500s and saying you're investing. No use case. Backed by nothing. Unlimited supply. But money is free and unlimited so who cares. Welcome to the world of rock bottom interest rates.

... for a mere $ 1 million I'll let you in to get the first 10 million GummiBeariums ever issued ... they're backed by a dream that life should be sweet , and a little bendy-chewy at times ...

I'm in. Where to send my munny?

Interesting insight from the US. Our son works as a leasing agent for an upmarket apartment complex in Montana. They are experiencing an influx of Californians applying to rent there. Part of the vetting is a requirement to provide proof of savings (cash on hand). An applicant provided his Bitcoin account details and that wasn't accepted. When told not-good-enough he went manic. Everyone laughed - typical Californians, eh?

Moral of the story: 'real' cowboys still believe in 'real' cash.

Moral of the story: 'real' cowboys still believe in 'real' cash.

Actually Kate, 'cowboy country' (Wyoming) is where the crypto revolution in the U.S. has begun and is embedded in a legal framework. 'Real cowboys' look at money as a store of value, not as something that can be printed on whim by a central bank.

Can it be used as collateral anywhere though?

Best you read this. U.S. banks can custody crypto legally.

Best you read this. U.S. banks can custody crypto legally.


“ But it's not a great store of value. That's because there's no limit to the volume of dogecoins that can be created through mining, making it highly inflationary.”
Jeez, that sounds like a few other currencies I know!

DOGE remains a joke. It’s f*ck you to the financial system and little more. Yes is a message that resonates with people but regardless, I won’t touch DOGE despite having a stake in crypto.

I think it contributes to suspicion around crypto.

Crypto is here to stay, folks. There will be ups and downs, winners and losers. Enormous transfers of wealth. Throughout this ongoing adoption, we'll be hearing the plaintive cries of particular no-coiners. Which I put in the same basket as climate and property alarmists. A basket of individuals which aren't going anywhere. We only live once, it makes little sense to spend that time complaining about it all.



So if I'm not interested in new zealand property or cryptocurrencies I must be loser.. is that the thrust of your logic? Sorry to distract you, I'd hate for you to fall off your unicyle.

You can be not interested in something without questioning its legitimacy. I'm not interested in shares at the moment because everything seems stupidly overvalued and the entry/exit barriers are far higher than they are for other things. Likewise, I'd never want to own a rental property. That doesn't mean that I can't see why people would invest in them.

We've already had digital currency for 2 or 3 decades.

Not a true digital currency IMO as we still have cash. I'm very surprised that governments have not moved to kill off cash years ago, their tax take will go up significantly and then every transaction becomes traceable. Its only a matter of time before it happens.