Elon Musk’s one-word tweet makes the cryptocurrency stock Dogecoin soar. Kristina Partsinevelos from FOX Business with more.
The reckless abandonment of the investment world has a new fix: a cryptocurrency that started in 2013 as a joke, has been largely forgotten and, thanks to a flood of Tesla Inc. tweets Elon Musk, is suddenly worth more than $ 6 billion .
It’s called dogecoin, a tribute to bitcoin that was not designed to serve any real purpose. Dogecoin holders cannot buy much from it and cannot easily convert it into cash. For most of its life, virtual currency was traded for no reason other than to generate laughter online.
Dogecoin is named after an Internet meme that emerged almost a decade ago. The meme focused on the image of a Shiba Inu dog with bad spelling habits (therefore, doge instead of dog). Users photoshopped the dog’s furry face on everything from astronauts to Twinkies.
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In 2013, software developer Billy Markus was watching bitcoin gain popularity and decided to make his own cryptocurrency cheerful. He first based it on the video game “Animal Crossing” and called it bells, in honor of the game’s lie coin.
People online hated it, he said. So when another developer, Jackson Palmer, shared a new idea for a cryptocurrency based on the doge meme, Mr. Markus reconfigured his code for bells to fit the meme.
He set out to create a currency so ridiculous that it could never be taken seriously. In exchange for the mathematical puzzle solution, dogecoin miners who operated high-speed computers received from a dogecoin to hundreds of thousands of dogecoins.
The coin had a fleeting moment of fame when it started. In 2014, his online supporters helped fund the Jamaica bobsled team’s journey to the Winter Olympics in Sochi, Russia, and sent a Nascar dogecoin pilot to the Talladega Superspeedway in Alabama. Like most memes, it lost relevance.
Then Mr. Musk came. On January 28, he tweeted a cover of a fake “Dogue” magazine.
Dogecoin emerged as a topic on WallStreetBets, the Reddit forum that incubated commerce at GameStop Corp. At the end of January, the price of dogecoin rose from half a cent to 8 cents, when it was traded earlier this month.
Tesla’s billionaire chief tweeted about it again on Thursday, breaking what he said would be a hiatus from the social media platform. “No ups, no downs, just Doge,” he posted. Dogecoin immediately skyrocketed 80% intraday, before slashing earnings.
The Dogecoin network, maintained by volunteers, struggled to accommodate the flow of buyers. The volunteers spent real money – in euros – to buy more space on the server.
Markus, who no longer works with dogecoin, could not believe that the code he wrote in three hours on a Sunday gave rise to a cryptocurrency worth billions of dollars in total market value.
“The idea of dogecoin is worth 8 cents is the same as GameStop is worth $ 325,” said Markus, 38. “It doesn’t make sense. It’s super absurd. The design of the coin was absurd.”
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Users can purchase dogecoin by credit card on cryptocurrency exchanges and trading platforms, including Robinhood Markets Inc.
Damian Wawrzyniak, a chef at a restaurant in Peterborough, England, had not heard of dogecoin before Musk tweeted about it. He quickly got some through a cryptocurrency broker account that he used during the Covid-19 blockade.
Dogecoin is “a completely strange name,” he said, but he realized that Musk, who has about 45 million Twitter followers, has increased his fascination.
In late January, a small group of protesters gathered outside Robinhood’s headquarters in Menlo Park, California, to protest the restrictions the broker imposed on trading at GameStop, AMC Entertainment Holdings Inc. and other popular companies on Reddit.
While Dave Jevans, the chief executive of crypto analytic company CipherTrace, was walking to the supermarket, a woman approached and encouraged him to participate.
“The market is rigged,” she said.
“Buy bitcoin,” he teased her.
“No, no, no,” she replied enthusiastically. “Buy dogecoin! Did you see it? I think we can get a dollar.”
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An active group of buyers on Reddit adopted a mantra to raise dogecoin to $ 1. The Twitter account TikTok Investors posted a video of a woman in purple gym clothes singing about taking dogecoin “to the moon”.
In theory, it will be difficult for dogecoin to reach $ 1. Unlike bitcoin, which limits the number that can be mined to 21 million, dogecoin does not have that limit. The rise of GameStop, however, reminded investors that anything is possible.
The newfound fervor of the cryptocurrency found even converts who once despised dogecoin. Angelicah Shaver, a 28-year-old graduate student who runs a YouTube channel focused on cryptocurrencies, said in a tweet in early January “literally an insult to the tech community” since its inception.
But as the hype grew, she decided to use it as an opportunity to teach cryptocurrency novices how to buy, sell and analyze currencies. It bought $ 1,000 in dogecoin during the last week of January, just before its price skyrocketed, and is maintaining its position.
“Fate loves irony, and it is so true,” she said. “I have spoken against dogecoin so many times. I literally said that dogecoin is an insult to technology, and here I am now holding this dogecoin bag.”