It has been more than a week now since that stormy announcement about the re-establishment of the Dogecoin Foundation which caused an outpouring of enthusiasm for Doge fans.
In case you didn't know, the Dogecoin Foundation is a registered nonprofit in the united states that was first established in 2014 to support the Doge community. However, various financial and technical problems along with other unknown reasons stroke the foundation and caused it eventually to fall by the wayside and go into a 6-year coma.
After that long period of total silence, On Tuesday, Aug 17, The Dogecoin Foundation surprised the crypto space by announcing that they came back to life with a band of big-name advisors, including but not limited to Ethereum founder the legend Vitalik Buterin, Dogecoin co-founder Billy Markus, and Neuralink CEO Jared Birchall who will serve as the mouthpiece for the cult-like figure Elon Musk...
Throughout these few days, I watched and read a lot of bullish talks by many Doge fanatics who sometimes went as far as to say: "Dogecoin is going to become the uniform global currency", "Doge to the moon", "Dogecoin is Bitcoin 2.0"... and the like...
But now that it has been more than a week, I think it's time to take off the enthusiasm robe and put on the rationality robe...
And like anyone with some experience with crypto, I have a conservative stance towards meme coins in general. These are cryptocurrencies that offer no distinctive technologies, no real use cases, no livable economic model, just hype and false hopes of richness to their fans.
Dogecoin is arguably the "godfather" of this crypto category which I still avoid investing in.
Despite all that though, Dogecoin has managed through its 8-year age to gain the trust of millions and has become a 37,5 billion asset as of writing. This is a fact that no one can ignore. And while there is no denying that Dogecoin has now an exciting star-studded team, I believe that it's going to take a lot of time to address the drawbacks Dogecoin suffers from.
In this post, I'm going to present some of these issues that need to be solved by the re-established Dogecoin foundation if they ever want to go out from the "scam coins category"...
This is obviously the most serious problem that Dogecoin faces. Only a very few wallets owned by a handful of whales acquire the lion's share of the supply while the vast majority of regular wallets hold just a very little fraction. Looking at the DOGE's chain data, there is a single wallet that controls over 28% of the Doge in circulation and the top top-800 addresses acquire over 80% of the entire network. You can hardly find another crypto that is more centralized than Doge throughout the entire market. The fatal part is that no one exactly knows who or how many people standing behind those rich wallets or how much they believe in Dogecoin. Just imagine how disastrous it would be if they started to dump their holdings all at once. In one sentence, it would be "GAME OVER" for Dogecoin no matter how much Elon Musk and his mates tweet...
This is another drawback for Dogecoin that limits any potential for price growth. While BTC, Ether, and BNB have about 18, 117, and 170 million respectively, Dogecoin ridiculously has over 131 Billion coins in circulation.
We all know that value and rarity are two sides of the same coin. If an asset is plentifully available, it will be hard imagining it of high value, right? After all, we must respect economic rules and dynamics if we're serious about pushing the price of an asset forward. And obviously, "a dime a dozen" meme will never reach the moon...
Now, I honestly don't how or what exactly can be done or solve such an issue, but maybe a 1:100 swap should be discussed by the foundation and the community? or at least, buying back a decent chunk of the supply and burning it might be helpful...
We live in a fast-developing world and one of the fastest things we can learn about is crypto...
Every day we hear about new technology that holds new potentials to improve the world we live in. Smart contracts, NFTs, DeFi, Scaling solutions...the list is endless...
In the middle of this development race, we see Dogecoin frozen at the same stage it has been since 2015 or more specifically since the dissolution of the Dogecoin Foundation.
There has to be an entity to support and sponsor developers and programmers in a seek to push the project forward. Fortunately, this is something that the re-established Dogecoin foundation seems to be aware of. In their last week's announcement they say:
We believe Dogecoin deserves the attention of a team of full-time contributors who can help carry the burden of these more mundane tasks that keep the Dogecoin project alive.
The Foundation has been preparing a budget and has received expressions of interest from a number of people who are able to contribute. We aim to build a group of annual sponsors who can cover Foundation activities and a modest development team.
source
At the outset of Dogecoin's launch which was something "as a joke", there was no real incentive to mine Dogecoin because it was not profitable to mine. This short of mining activity put the Doge network under a 51% attack risk which would eventually cause it to collapse.
And in order to overcome that danger, there was a sort of an agreement between the Dogecoin foundation and Liecoin foundation to activate Merge mining between the two coins.
"Merge mining" is a technology that allows to mine two cryptocurrencies at the same time without having to use any extra calculating power.
This made LTC&Doge like a united entity which played a crucial role to help Doge stand the test of time.
Jackson Palmer (the co-founder of Dogecoin at the time)described this relationship with the quote:
Dogecoin is merged at the hip with Litecoin
However, something tells me that despite how helpful this merging was for Dogecoin in the past, it is counterproductive in the current time.
As known, Litecoin is going implement privacy features on its protocol very soon, which could traditionally cause regulatory wars against it.
It wouldn't be surprising to see requests from legal authorities to get Litecoin delisted from major exchanges, for example.
Keep in mind that anything bad that might happen to Litecoin will indirectly affect Dogecoin since they have the same mining network.
It might appear just negative speculations now, but after all, I don't think it is a good idea to keep relating with another asset if you are boasting decentralization. The crux of decentralization is to be quite independent of anything else, right?
The last but not least thing that the Dogecoin foundation needs to focus on is to set a robust road map for the fiery-eyed Doge community. Despite the global attention that Doge has managed to receive, it's still very hard to find a big investor who takes it seriously for the long term. Most Doge investors are either here for fun or to make some fast gains through pump and dump. The reason why in my humble opinion is that Dogecoin doesn't have any road maps in which we can see its goals and milestones. While it seems the re-established Dogecoin Foundation is aware of that, I hope the roadmap that they announced to be in the works will be achievable, realistic, and tied to a clear timeline.
Dogecoin is no doubt one of the most controversial and dramatic cryptocurrencies on record.
From just a joke in 2013, Doge has grown to become even a bigger joke which continues to rank among the top-10 cryptos in 2021. Form having no team just a few days ago to have the most exciting star-studded team today…
There are many questions that need to be answered, so it will be interesting to keep a close eye for a year or two…
I for one predict a lot of potential for Dogecoin because I know that titans such as Elon Musk and Vitalik Buterin will not come together for a little thing. I don’t know what exactly the future holds, but there is one thing for certain- so long as governments and central banks keep printing fiat money, cryptos will continue to survive and thrive and that includes Dogecoin…
What do you guys think about the announcement of the Doge foundation?
Do you have any hopes that Doge will not be just a meme anymore?
I'm keen to read your opinions.
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PS, Unless otherwise stated, all images in this post are either my own design or from free photo-sharing sites (e.g. pixabay.com)
