By now, you’ve heard of the crypto currency that started as a meme. So now we need to figure out WTF is a Dogecoin. Most people think Dogecoin is a joke. It actually was created as somewhat of a joke as a response to Bitcoin. The origin story of Dogecoin is simply this: in a world in which money is shared online, why not make a new coin in honor of everyone’s favorite thing to share online: memes. I’m going to break it down to you even further and explain why Dogecoin is both important, but also something to be wary of.
First Let’s Look at The Numbers
Bitcoin’s price, as of a few months ago (it will change) is $53,520/share. Can you guess what Dogecoin’s price is? Any guesses? Bueller?! 26 cents. Yep! This paints the picture of Dogecoin as an adorable, but not very legit investment. And yet, CoinMarketCap lists Dogecoin as the #7 cryptocurrency by market cap, a fancy term for how the market is perceiving the value of the stock. You may be thinking, ‘How is something worth 26 cents making the cut as one of the ten most valuable cryptocurrencies?’ Well, within the first few weeks Dogecoin launched in 2013, it was valued at around $0.0003. That is less than 3 ten-thousand-ths of one dollar. 26 cents may not sound like much now, but when it’s grown from 3 ten-thousand-ths of one dollar?! That’s huge.
Money is All About Meaning
Money without meaning is just paper, and historically, we’ve given that “meaning”, and therefore, value, to many, many things. This includes salt, which used to be really valuable before refrigeration. Have you heard the expression someone is “not worth their salt.” That expression comes from this time in history! And the word “salary” actually comes from the word for salt. So I can’t have you dismiss Dogecoin just because you don’t think it can hold value. We the people ascribe value within our money systems.
What Can You Dismiss Dogecoin For?
There are certainly reasons to dismiss it. First of all, is it a little too cute? The meme uses Comic Sans for God’s Sakes. But another more serious reason to be skeptical of Dogecoin is that there’s speculation that these new forms of crypto are forming a bubble that could burst. Some of these new crypto companies are sketchy and aren’t giving stock in exchange for an investment. Instead, they’re giving investors tokens (essentially, coupons) that grant access to data storage space or an admit-one-ticket to a new social media network. None of this has value articulated to the investor.
So What’s Up Then?
Despite their sketchiness, these start-ups are raising millions, and in some cases, billions for their projects. The problem is that while some of these ventures might be legit and offer real contributions to this interesting new world of digital finance, some of these may just be scams. With crypto being such a hot topic, no one wants to miss out on the next Bitcoin, which is why people may be too quick to invest in these ventures that are just catfishes. Even Jackson Palmer, the co-creator of Dogecoin who left in 2015, warned that the bubble will be like the dot-com bust, but even bigger.
What Would That Scenario Look Like?
Remember the dot-com bubble? If not, I’ll give you a refresh. In the ‘90s there was a huge frenzy around companies based in our beloved internet. Investors were worried that they would miss out on the opportunities presented by internet-based companies, so they hurriedly invested without the data backing up whether those companies would be profitable…and in many cases, they weren’t. Sound familiar? Palmer isn’t wrong to have the foresight to predict another bust. This is why you need to be smart when investing and make sure you aren’t rushing into anything.
I’m not saying that you shouldn’t buy Dogecoin. At 26 cents per share, it can be a pretty low-stakes gamble to take. And for now, Doge is actually mimicking the behavior of Bitcoin, so it’s still showing signs of growth. But if this crypto bubble is real, it will burst at some point and leave the less legit currencies behind. And, to quote the doge meme, that’s concern. So, all that being said, if you’re going to buy Dogecoin, you should commit to keeping up with the research and having your finger on the pulse of the crypto value trends. If Dogecoin is part of the crypto bubble, it will burst at some point— and you want to get out before it does.
A version of this article was originally published on Forbes.