I really must have been drunk at the time of the acquisition. Like Jordan Belfort and his gang of boiler room associates ala “The Wolf of Wall Street,” I simply have no recollection of how I ended up with Dogecoin (CCC:DOGE-USD). But there it was. Thousands of these DOGE units, sitting in a barely there cryptocurrency account, the digital equivalent of a shady motel waiting for a narcotics deal to go down.
Of course, I have no personal experience with the latter. However, I imagine that if I were a smuggler of illicit goods, I’d hide some of my ill-gotten gains in Dogecoin. Why not? The thing is a joke, nobody really pays any attention to it – except for perhaps Elon Musk of Tesla (NASDAQ:TSLA), which is another story altogether.
The point I’m trying to make is that I need a new disclosure notice. A statement about Josh Enomoto being long Dogecoin gives far more credibility to this nonsense blockchain reward token than it deserves. Indeed, any investigation into DOGE will show that the cryptocurrency started off as a joke, basically a copy of the Bitcoin (CCC:BTC-USD) architecture used to create internet funny money.
Of course, these currency notes aren’t worth anything. But what if in some crazy twist of fate the internet funny money was real? No, this isn’t an episode of The Twilight Zone. Rather, it’s your reality now.
According to a Wall Street Journal article, at the time of publication Dogecoin had a market value that exceeded Western Union (NYSE:WU) or Under Armour (NYSE:UA, NYSE:UAA). That’s no longer the case as of the time of this writing due to the recent crypto correction.
Still, the junk coin has a market capitalization of over $6.4 billion. It’s staggering.
The Dark Side of Dogecoin
In a way, the rise of Dogecoin is incredibly and aptly ironic. Featuring a popular meme of a Shiba Inu – “Shiba Inu dog” is redundant in the same vein as American Ninja Warrior’s “Mt. Midoriyama” – the image is one of the village idiot, happily and inexplicably bumbling his way to a pot of gold.
And you’d have to be a real killjoy to not see the humor in this. An exercise in innocuous plagiarism spiraled up into an entity that at one point attracted more value than an internationally recognized payment processor.
But this is also where the fun and games end. No matter where Bitcoin and the major cryptocurrencies end up, I believe there’s consensus that eventually, Dogecoin will reach its true value — zero. That will leave a lot of bag holders hurting. However, this is a price that must be imposed before DOGE and other coins like it threaten the sanctity of the top virtual currencies.
Here’s the deal – I don’t remember how I received my Dogecoins and I believe this is a similar situation with many other DOGE “stakeholders.” Moreover, Dogecoin in particular raises a very uncomfortable truth: it can sidestep Bitcoin’s double-spend solution.
As you probably know, one of the greatest achievements of Bitcoin was that its developer(s) created an architecture where you couldn’t just copy and paste BTC, thereby having one currency unit conduct multiple transactions by the same party.
However, nothing stops anyone from copying the Bitcoin blockchain architecture – it’s open source so it’s essentially encouraged – then creating a new cryptocurrency and sparking a digital economy around it. From there, it’s very possible as Dogecoin proved to do a copy-and-paste job on a copy-and-paste job, thereby taking a junk crypto to buy a “real” crypto and exchanging that for U.S. dollars (or any other hard currency).
It’s a loophole I’m sure the Secret Service did not see coming.
Not Likely but Still a Threat
Possible does not mean probable, which suggests that for now, cryptocurrency investors have little to worry about. Dogecoin is likely a one-off event, a moment of collective insanity that will die out sooner or later.
But the lingering threat is that for one thing, DOGE proved that anyone can create a crypto economy, which in turn can be exchanged for assets of value, such as Bitcoin or greenbacks. Further, we’re in an environment where many people are susceptible to extreme speculation.
Perhaps most problematic of all is that Dogecoin offers a moral incentive. You see, Bitcoin, for all its democratization of money crap, features a magnitude of exclusivity that would make elitist aristocrats blush. By catalyzing a proletariat economy, it’s possible that DOGE can undermine Bitcoin by “forcibly” expanding its distribution – think a short squeeze but against the longs (or “whales” in crypto parlance).
Again, I believe this is a far-fetched concept. But the worry is that Dogecoin proved that the probability of this threat is a nonzero number.
On the date of publication, Josh Enomoto held a long position in DOGE and BTC.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.