DOGE must ditch meme status to be valued as money
There is no denying the fact that Dogecoin (DOGE) is by far one of the most polarizing crypto projects in the market today. On one hand, many think of the cryptocurrency as largely being a joke that has long overstayed its welcome; however, there also those people — including many celebrities, business moguls, etc. — who evidently believe it’s a viable financial instrument that will stick around for a long time to come, or at least they are leading people into believing that.
For example, the owner of NBA franchise the Dallas Mavericks, Mark Cuban, recently stated that he is fairly confident that DOGE is here to stay and even has the potential to hit a price point of $1 in the near future. This proclamation comes a few days after the Mavericks started accepting Dogecoin as a form of payment.
He further revealed that fans were already behind this latest payment avenue, and as of March 7, the Mavs had already sold 20,000 Dogecoin — roughly $1,018 at press time — worth of merchandise, adding: “If we sell another 6,556,000,000 Dogecoin worth of Mavs merch, DOGE will definitely hit $1.”
It is worth mentioning that over the course of the last few months, DOGE’s list of prominent mainstream followers has been growing at a furious pace, with celebrities like Kiss co-lead singer and bassist Gene Simmons, former adult film star Mia Khalifa and American rappers Snoop Dogg and Lil Yachty all showcasing their support for the digital asset.
However, the most prominent backer of the “meme coin,” by far, is Tesla CEO Elon Musk, who has been vocalizing his support for DOGE through his Twitter account in a big way for nearly a year now.
Is the hype here to stay?
DOGE, just like any other cryptocurrency, is dependent on how many people adopt it. As a result, who’s to actually say that the currency can’t become the “future of money” if enough people were to start supporting it?
On the subject, Kadan Stadelmann, chief technology officer of Komodo — an open-source cryptocurrency project and blockchain solutions provider — told Cointelegraph that contrary to what Cuban and some other folks may believe, DOGE reaching $1 is practically impossible until some Bitcoin-level buy-ins are witnessed in the near future:
“We aren’t currently seeing this even with increased adoption by Mark Cuban and other NBA owners. DOGE does certainly already have a use case as a niche currency with avid fans, and adoption can certainly grow from here. But for it to genuinely be considered ‘future money,’ the narrative of DOGE as a meme coin will have to erode.”
On a more technical note, Stadelmann pointed out that when one takes into consideration the amount of new DOGE that is being minted every day — 10,000 per minute/14.4 million per day/5.2 billion per year — the price action of DOGE faces some harrowing challenges in the near term.
Furthermore, 14.4 million DOGE/day or 5 billion/year will soon become a small drop in the bucket, and the coin’s price action will be expected to stabilize as the 14.4 million/day today already represents only just over a ~4% supply increase/year of its available circulating supply.
Another way to talk about DOGE, its price speculation and its use as a legit financial instrument, as per Stadelmann, is by looking at the amount of United States dollars it absorbs every day to maintain its current price action levels against fiat. The token is currently trading at around $0.056, which requires Dogecoin to have $806,000 of new fiat in addition to its existing inflow in order to maintain its value, according to Stadelmann.
However, Johnny Lyu, CEO of KuCoin, pointed out to Cointelegraph that he is quite optimistic about the future of Dogecoin since it’s already one of the symbols of crypto for many people today: “I won’t be surprised to see DOGE being used in hotels, restaurants or cinemas in the future.” That being said, he believes that despite its potential, the token is unlikely to break into the top five anytime soon, adding:
“The search interests of DOGE have overtaken BTC from time to time. Compared to Bitcoin, DOGE is more suitable to be futures money for higher supply, lower price and faster transactions. It’s tailored for daily payment, and its community culture can easily resonate with the general public.”
Not everyone is sold on DOGE
Though DOGE’s recent success makes for an amazing feel-good story, a lot of industry experts are not entirely buying into the hype. For example, Stadelmann pointed out that when compared to other cryptocurrencies such as Bitcoin (BTC) and Ether (ETH), institutions are far less likely to adopt Dogecoin or other similar coins: “DOGE doesn’t have a narrative like ‘digital gold’ and isn’t being seen as a store of value.”
In this vein, it bears mentioning that the price action of coins like DOGE is driven largely by their respective communities rather than by changes in the value of their underlying technology or use cases.
On the subject, Joel Edgerton, chief operating officer of cryptocurrency exchange bitFlyer, told Cointelegraph that coins like DOGE are meant to be fun rather than solve real-life problems and that it has not proven its value just yet: “Any asset can reach a certain price target if people are willing to pay for it. However, that type of momentum investing, without underlying value, is pure speculation.”
Where is DOGE heading?
DOGE has been on a tear recently as is made evident by the fact that over the course of the last 12 or so months, the currency has seen gains of over 2,440%. As a result, it’s worth delving into the question: Where does DOGE’s monetary ceiling actually lie?
In Lyu’s opinion, $0.20–$0.30 is a reasonable range in this bull run; however, he believes that there’s still a long way for DOGE to go before it can become anything more than a sort of short-term cultural phenomenon. For starters, it will have to be regulated — an aspect that will have a major impact on the currency’s future use and overall potential:
“Compliance is almost a must if it wants to be widely used in our daily lives, while it can also exist in a niche market without any regulation. Not bad for the future of DOGE in both ways. If the price of Dogecoin rises to $1, its market cap will be $100 billion, becoming the third-largest crypto. I think this is unlikely to happen in the short term.”