The value of the dogecoin (quotation in real time) has increased in recent months thanks to the alignment of several factors, including capital from stimulus controls, the popularity of apps like Robinhood, and the support of billionaire Elon Musk.
But one reason has been underestimated in media reports, Billy Markus, the software engineer who co-created the coin, made a few statements to CNBC Make It.
It is a pure community
Markus created dogecoin, based on the Doge shiba inu meme, in "about two hours" in 2013 as a parody of the most famous bitcoin cryptocurrency; the absurdity of Dog Money, as he puts it, is the design. But investors aren't closely tied to memes, he says. “The crypto community can be quite elitist and not very inclusive, and we wanted to create a more fun, carefree and inclusive community,” says Markus. "It worked, which is why the community is so active."
Being its creator, Markus has an inherent interest in the coin's success (although he claims he only owns what people have recently given him). But he says the community typically follows its Do Only Good Everyday motto, as evidenced by responses from members to the American Cancer Society which now accepts dogecoin donations.
Markus, who tweets under the name of Shibetoshi Nakamoto, as a parody to the founder of bitcoin, the alleged Satoshi Nakamoto, often encourages his followers to donate their dogecoin to worthy causes, warning them against potential scams.
In a Reddit post, he states that donating to charity isn't the only way to do good, however. "Anything that is fun also has value," he writes.
It is difficult to establish the real value of the Dogecoin
Dogecoin has given investors something to catch up on in recent tough months, when there was little else to expect, says Markus. "People have suffered, are stuck in their homes and have struggled, seeing their dollar not go as far as it used to."
While no one can be certain of the dogecoin's long-term prospects, Mike Bucella, general partner of cryptocurrency investment firm BlockTower Capital, says he has done a lot to draw attention to cryptocurrency investments more generally. It has lowered the barrier to entry for average investors to a sometimes confusing space.
“Very few things have done so much to attract the eyes and people into cryptocurrencies,” says Bucella. "It's a crazy thing to say, but dogecoin specifically brought the masses to retail."
But to be clear: like other cryptocurrencies, dogecoin is extremely volatile and many have warned that it is a bubble waiting to burst. While the coin rose by more than 10.000% in 2021 overall, it has dropped around 30% from its recent high.
Investors should not invest money they cannot afford to lose and should be doubly cautious of the dogecoin, because there is no finite number of the coin (a fixed issue of 5,2 billion additional coins can be issued each year, according to Markus).