As most not living under a rock will know, cryptocurrency’s chief meme, Dogecoin (DOGE), has been on quite the tear of late. From a price of just $0.005 at the start of the year, the canine-themed coin hit a high of $0.68 last Saturday, May 8th — an increase of 13,500% in a little over five months.
DOGE’s stratospheric rise has outstripped that of even Ether (ETH), which has recently made headlines for its 442% spike, from $738 in January to surpass $4,000 just this week. Unlike ETH, though, DOGE has little function or application beyond buying basketball shirts and keeping Elon Musk in the headlines, leaving many scratching their heads.
A Doge dog decade
Founded by two cryptocurrency enthusiasts with a passion for memes, DOGE’s story is an interesting, if not ridiculous one. Its creation in 2013 was fuelled by a popular internet craze for a picture of a Shiba-Inu dog with a curious expression named Doge that featured non-sensical scribbles placed at jaunty angles around the animal’s head that suggested its thoughts.
Much like the “I Can Has Cheezburger?”/LOLcat craze before it, Doge became a runaway global success that eventually caught the attention of Adobe software engineer Jackson Palmer and IBM software engineer Billy Markus. Palmer, who had been eyeing the then newly listed Bitcoin’s trajectory, jokingly tweeted he would be buying “next big thing”: Dogecoin.
To his surprise, Palmer received a swathe of encouragement and so he bought the domain Dogecoin.com. This caught the attention of Markus who had been tinkering with the idea of creating a new cryptocurrency to rival Bitcoin. He tweeted at Palmer and a week later DOGE was born, forged from Litecoin’s open-source code.
Celebrity hype pumps a meme
Beyond immortalizing Doge the dog, DOGE did little more than provide fodder for Reddit from when Dogecoin started to nearly a decade after its birth. This year, however, the biggest cryptocurrency bull market since 2017/18 prompted renewed interest in the coin. It attracted the attention of TikTok’ers and celebrities from Musk to Snoop Dog, all keen to get the coin to $1 using promotions the SEC would serve with a prison sentence in traditional markets.
This mega-hype has seen DOGE join the top five of all global cryptocurrencies, overtaking USD Tether, Cardano, Chainlink and the native coin of decentralized finance’s biggest exchange, Uniswap. For those unaware, the latter represent the pillars of the cryptocurrency ecosystem — from the most widely held stablecoin to the native token of the infrastructure system that makes transactions across chains and platforms possible.
With its $63 billion market cap, DOGE is now bigger than the token of any single platform or protocol in the DeFi space — one now worth more than $80 billion thanks to the ingenuity of developers and entrepreneurs that have finally brought banking and investing to the blockchain. While all of us like a good joke, most would agree this is a very worrying signal.
Dogecoin vs Bitcoin
DOGE’s value, some would argue, is underpinned by the same enthusiasm that underpins Bitcoin. After all, it is just another digital asset with little real-world value or application. So, are Dogecoin and Bitcoin the same? Not quite. Bitcoin was founded on a very different set of values and aims: namely to provide an alternative financial system to the one that had brought about global economic collapse in the year of its founding, 2009.
Bitcoin and the transparent, immutable blockchain technology it is based on, wanted to be a currency and store of value controlled by the people, for the people. It has not yet achieved that aim — rather, it has become a hulking speculative asset that the very banks it wanted to bring down are now buying into. What it did do, however, was pave the way for the ecosystem that would eventually provide that alternative: decentralized finance.
From its early beginnings in 2017 with the creation of the DAI stablecoin, DeFi has been laying the foundations of an entirely new, blockchain-based global economy. Right now, almost anyone can buy a token pegged to the value of the US dollar and deposit it on a DeFi banking or wealth management platform to earn APY’s of more than 10% (up to 20% with YIELD App). This is a feature not seen in traditional finance since the 1970s.
The future of crypto is DeFi
In fact, in traditional finance, the actions taken by governments and central banks to shore up the big banks that Bitcoin pinpointed in 2009 have led to a new era of endless borrowing that has suppressed wage growth and all but killed interest rates. As we have seen clearly over the past 12 months, this has left the average person poorer and significantly less financially stable.
In contrast, DeFi and its ever-growing network of platforms and protocols allow for anyone with an internet connection to start generating personal wealth like never before. It has the potential to create a borderless universe of wealth creation and transfer that could change the lives of millions. Indeed, were governments to embrace DeFi as they do hedge funds, it would arguably already be happening.
And so, while it does not have the LOLZ factor of DOGE, DeFi is likely a much better investment. Whether you are depositing stablecoins on a secure wealth management platform like YIELD App to generate passive income or investing in long-term projects with real application, this will almost certainly generate more value than pouring your money into a coin based on a dog meme.