What can we make of DOGE?
Anyone who is around the crypto world by now has heard about what is taking place with this cryptocurrency. Originally started as a joke for memes, it has become a sensation. Proponents of the token are Elon Musk and Snoop Doggy Dog.
But what is the value of it?
It seems everyone is talking about it and, to the crypto community, that might be its highest value. The attention it is attracting is truly unfounded in the world of crypto up to this point. Also, unlike Bitcoin which is on the radar of the big money institutions, DOGE is being scooped up by average people.
While this might not be the best thing from a financial perspective, it does help get people into the crypto-sphere while introducing them to the nuances of what this is all about.
The short answer to this is yes.
Even though it was started as a joke to epitomize the run of crypto, there are a number of factors that make DOGE viable.
To start, it is a proof-of-work blockchain. This is a fork of Litecoin, providing decent transaction speeds. Also, according to Wikipedia, unlike Bitcoin mining, different equipment is needed.
The use of scrypt means that miners cannot use SHA-256 bitcoin mining equipment, and instead must use dedicated FPGA and ASIC devices for mining which are known to be more complex to produce.
This means that the network can be decentralized and secured in a manner that fits other PoW chains.
It appears as a payment system, DOGE would work fine. Like most that are structured in this manner, it is not the best in terms of speed. So far, little is written about the fees on DOGE but, if it became very popular as a payment system, it might encounter some problems there.
Again, the short answer is yes.
DOGE is exemplifying the point that the likes of Warren Buffett and others miss about Bitcoin. Everything that pertains to this token is based upon the Network Effect. The massive attention it is receiving is highly valuable. The potential for the user base is incredible.
The challenge is to figure out what truly is the user base. Users are different from speculators. It does not seem there is much going on in terms of transferring value among the different nodes. Instead, we have the game of casino being played.
It is not a unique situation in crypto. In fact, we see this across much of the spectrum. Many feel the same thing is happening with Bitcoin and Ethereum at this time, albeit there is a lot more going on.
We must remember that users are golden. This is what makes Facebook, Google, and Amazon so valuable. The user base is very large and keeps returning on a daily basis.
It is something that cannot be overlooked in this discussion.
That is up to each individual.
There are a lot of things to pay attention to. For instance, what is really taking place with DOGE from a development standpoint? This is a serious question that bears answering. If one is simply buying DOGE as a trade, have fun. However, if one is looking at it for a long term hold, he or she better determine what future projects there might be.
Also, it is imperative to determine what the user base truly is. At first glance it looks like 99% of the DOGE community is just along for a fun (and profitable) ride. That is terrific and, personally, I hope they all make millions. It can only help the rest of crypto if there is a lot more individual money floating around.
That said, from a utility standpoint, we know speculators jump ship at the first sign of a bear. Any major pullback that lasts a while will flush most of those hands out. Then what is DOGE left with? That is the crucial question.
Without the appearance of overt development and the excess focus upon price, it seems this is a classic pump scheme. Here is where everyone should be careful. There might be a lot more upside but then, again, there might not be.
On the surface, other than a bit of fun, and a lot of mania, it is hard to understand DOGE. It seems like the market is just toying with people and a lot are being sucked in. This is a warning sign for the average person since they typically are the ones who are hung out to dry in these situations.
But who knows. Perhaps all these people have insight the rest of us do not. There might be something to all this after all. As mentioned, we cannot underestimate the power of the Network Effect. When large numbers of people gravitate towards something, especially in the digital realm, it can send values skyrocketing. This is what we saw with DOGE.
Perhaps Elon keeps acting like the Pied Piper and the community grows even more. We might see Cuban convince the NBA to accept DOGE as payment for tickets and products. It is possible that someone within the sea of humanity that is following DOGE comes up with a use case that makes it the "Killer DApp".
To me, this seems like a passing fad. Yet, many thought that about Bitcoin too and the opposite is true. That ecosystem is only getting stronger, with major players now joining it in support.
With DOGE, it is possible this forms into something much bigger. What we each need to determine is whether it is probable. That is what it all comes down to.
In my view, there are much better projects for me to allocate my resources to. Perhaps my misunderstanding of this is causing me to pass up the opportunity of a lifetime. Then again, it could be a mirror of situations we saw thousands of times in many markets.
Time will tell which category DOGE falls into.
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