The name is based upon an internet meme doge. Doge is described by Wikipedia as follows:
Doge (often pronounced /ˈdoʊʒ/ DOHZH or /ˈdoʊɡ/ DOHG) is an Internet meme that became popular in 2013. The meme typically consists of a picture of a Shiba Inu accompanied by multicolored text in Comic Sans font in the foreground. The text, representing a kind of internal monologue, is deliberately written in a form of broken English.The meme is based on a 2010 photo… A cryptocurrency based on Doge, the Dogecoin, was launched in December 2013, and the Shiba Inu has been featured on Josh Wise’s NASCAR car as part of a sponsorship deal.
Palmer says: “When I jokingly tweeted about “investing in Dogecoin” in late 2013, I never imagined that the tongue-in-cheek cryptocurrency I had just brought into the world would still be around in the year 2018, let alone hit a $2 billion market cap like it just did over the weekend.”
Coins in circulation and value
Dogecoin has a huge number of coins circulating. As of the end of June 2015, 100 billion coins were in circulation. 5.256 billion coins are added each year. Not surprisingly, its value in US dollars is minuscule. As I write this, the value of one Dogecoin (DOGE) is just 0.012561 or a bit more than a cent. Its market value is about $1.4 billion since there are so many coins.
The present price is well down from its recent high of around 0.017 on January 08. For a brief period it even had a market cap of over $ 2 billion.
2017 saw an explosion of interest in cryptocoins and huge increases in prices
Market investment vastly increased and the price of many coins rose dramatically. 2017 would seem to have been the best year to date for the industry with many investors seeing their investments worth, at least on paper, many times what they had originally paid.
However, Palmer sees 2017 as one of the worst years for cryptocurrencies. He uses what he learned from his experiences with Dogecoin to explain why he thinks this way.
The role of dogecoin
Dogecoin came on the market in 2013 with many other cryptocurrencies or “altcoins” as they were called. Dogecoin began to take on the role of an educational gateway for many newcomers often through social media especially on an active Dogecoin community on Reddit. It had a welcoming community and a very low price.
Palmer says:“In 2013, the vision for the future of cryptocurrencies seemed relatively clear: “To deliver a peer-to-peer alternative to cash that, through decentralization, did away with the need for trust in financial institutions, which the 2008 crisis showed to be unscrupulous, and often corrupt. Bitcoin, which ignited the cryptocurrency movement in 2009, brought real technical innovation to the table in achieving this vision. Back then, I hoped that through the power of community, a project such as Dogecoin may help drive further awareness of and innovation in that technology.”
However, the market was a huge attraction for scammers and opportunists out to make a buck. Some of them infiltrated the Dogecoin community and fleeced members of millions. Some of this activity is discussed on the appended video. The Kickstarter plan was a scam perpetrated on the dogecoin community. Scammers took advantage of a community that had engaged in a number of charitable campaigns. GIven dogecoins were so cheap the community would often donate many for charitable purposes.
Palmer withdraws from Dogecoin in 2015
Palmer claims the energy in the Dogecoin community had changed. Many of those who lost funds to scammer left and community interest declined as did the price of the coin. Confidence was also shaken as bitcoin too was hit with scams such as Mt. Gox. Merchant adoption of bitcoins and other cryptocurrencies was slow. Yet, Palmer notes huge amounts of venture capital were still coming into the market “into fresh cryptocurrency companies backed only by buzzword-laden websites and lacking any discernible business model”.
Palmer decided to withdraw from any involvement with Dogecoin or other cryptocurrencies: ” I handed development of Dogecoin over to a team of community members that I trusted. I made it clear at the time that any Dogecoin I previously held—the small amount I have now came from people “tipping” me after I left—had been sent to charity drives run by the community, and that I’d made zero profit from my involvement with the project. ”
Palmer saw the cryptocoin area being taken over by opportunists out to make a buck rather than people interested in investing in the new technology. He observed the space over two years and observed what he claims was a shift away from developing the core technology in favor of “shiny new projects that shoehorned in “blockchain” whenever possible.”
The cryptocurrency craze begins to grip the masses
Palmer says that when his Uber drivers began talking to him about ethereum he knew that there would be a renewed period of speculative crypto-mania. Palmer describes a number of the initial coin offerings that raised a great deal of money, some of which reminded him of scams perpetrated back in his dogecoin days.
Seeing these scams and risky businesses led Palmer back into the cryptocurrency area to try and educate people about the risks and pitfalls of investing in the cryptocurrency area. Palmer notes that money is pouring into cryptocoins with their market value now more than $700 billion US. He worries about the many misleading stories of how people grew rich almost overnight by investing in the coins.
Palmer worries even about Dogecoin that has not received a software update since 2015 reaching a $2 billion cap. Palmer warns: “Dogecoin’s valuation is the result of market mania that has resulted in inexperienced investors buying up low-priced assets on a whim, hoping that they will follow Bitcoin’s meteoric trajectory. This irrational enthusiasm, coupled with large players manipulating largely unregulated markets, has resulted in a weekly cycle of rallies and crashes across just about every crypto asset. While the Dogecoin community on Reddit has seen a recent uptick in participation, the majority of new discussion seems to fixate on the USD price and speculation as to when it will rally once again. ”
Palmer sees the motive behind the present enthusiasm as a desire to “get rich quick” rather than the development of a new technology as the early developers of bitcoin intended. He also notes that the industry faces technical problems of scaling with the transaction costs of sending any significant amount of money on the bitcoin network reaching an average of $30 dollars. The acceptance of bitcoin to pay for transactions is the lowest in years.
The decline of anti-establishment values in the cryptocurrency community
Palmer notes that there is more money pouring into the area from more established financial interests such as the futures trading in bitcoin by the two huge Chicago futures exchanges.
This aspect of the situation has changed cryptocurrency from being a technological peer-to-peer cash into an unregulated penny stock market. The institutions that the coins were meant to dismantle have instead begun to co-opt the technology for profit. He might have noted that those institutions have pressed governments to at least regulate cryptocurrency exchanges and initial coin offerings (ICOs). Indeed, some governments such as China have banned ICOs and are cracking down on mining.
Palmer claims that the cryptocurrency bubble will burst and concludes: “The burning question on my mind is this: Once the cryptocurrency price bubble pops and takes all the hype with it, will the community be able to recover the energy it needs to build real, innovative technology once again?”
I see the situation as more conflicted and complex than Palmer. I agree that there is a huge influx of money both institutional and individual that is wanting to take advantage of the huge rises in the prices of the coins. This is purely speculative.
However, this is not all negative. Some of these funds will be actually used to develop the new technology. The technical problems that Palmer sees needing to be addressed are being addressed and new technologies are being developed. One example is the Iota coin which uses tangle technology rather than the traditional block chain.
Iota also does away with mining and miners and uses members of the tangle to validate transactions. The total number of coins is fixed at a huge number and so there is no need for miners to create new ones. The iota network also solves the scale problem in that the more it is used the faster it works. Litecoin and Bitcoin Cash have also to some extent adopted technology that results in much faster and cheaper transactions than bitcoin. The changes are positive in terms of the environment as bitcoin mining uses huge amounts of energy. Although much speculative money is wasted some of it will be used to facilitate the development of new technologies.
While the Chinese government cracks down on exchanges and bans IOC’s it put the cryptocurrency Tron on an awards list and Tron has an agreement with the largest audio provider in China to use its platform. It also has an agreement with Moneygram.
Ripple’s advance in the cryptocoin world is for the most part a result of its forming links with the corporate world. Indeed its website boasts of providing services for the very institutions that the technology is supposed to replace: ” Ripple connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally.”
Russia and the US may be at odds but Russia already has the Whopper coin and is considering creating a crypto-ruble. Perhaps later this year we will see the Trump coin. It will be the largest coin ever and make America great again.
From the point of view of the establishment, 2017 was an excellent year. 2018 no doubt will be even better. Look for more regulation of the cryptocurrency area and more practical applications to the mutual benefit of cryptocoins and establishment banks and other institutions.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com