Dogecoin (CCC:DOGE-USD) started as a joke, doesn’t have a use case and currently has a market capitalization approaching $7 billion. It continues to remain a joke until proven otherwise.
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Yet, in the wild times that may or may not become the new normal, the cryptocurrency has value. The fact is that people are making real money by trading it.
It should be noted that there is no current reason to consider Dogecoin as anything other than a bit of fun right now. The alt-coin’s founders’ opinions about what it has become speak volumes to this.
Let’s start there.
The March Toward $1
If recent headlines are to be believed, Dogecoin will continue to move upward and reach $1. In fact, Dallas Mavericks owner and business icon Mark Cuban is optimistic, if less than 100% convinced of it reaching that threshold.
In early March he announced that his NBA team will accept Dogecoin as a form of payment for tickets and merchandise. While that at first seems to strengthen the case for buying into the altcoin, it should be taken with a grain of salt.
Responding to questions about the decision, Cuban said “We have chosen to do so because sometimes in business you have to do things that are fun, engaging and hopefully generate a lot of PR. So we will take Dogecoin today, tomorrow, and possibly forever more.”
Billy Markus, the co-founder of the coin, had this to say about what the reality of $1 Dogecoin means.
“That would make the market cap larger than actual companies that provide services to millions,” Markus said. “Does Dogecoin deserve that? That is not something I can comprehend, let alone answer.”
Can you make money from Dogecoin? Sure. The most recent data from Coindesk indicates that over the last 24 hours, $106.90 million of value was transacted. Play that game if you want, I have no judgments against that. But at the same time, heed Markus’ point that nothing is really being produced by Dogecoin.
Market Cap Notes
Right now Dogecoin’s market cap is more than $6.86 billion and trading at around 6 cents. Extrapolated out to $1, that brings Dogecoin’s capitalization to $129.43 billion. That seems unlikely in the light of Markus’s comments.
The point here is that it seems somewhat outlandish that its value has already risen 20-fold since November. The markets keep churning out surprises, so maybe $1 is possible. It will clearly take some sort of use case for that to happen in my opinion.
What I can confidently say though, is that Dogecoin certainly can’t hit $10. At that price, Dogecoin would have a market cap of 1.2943 trillion. That would make it roughly $800 million more valuable than Tesla (NASDAQ:TSLA), and roughly $800 million short of Apple (NASDAQ:AAPL)
Dogecoin mining has no limit. This is in stark contrast to Bitcoin (CCC:BTC-USD). Fundamentally, there is no scarcity inherent to the coin. The fact is that you can’t really do much with it outside of limited trading on Reddit and Twitch.
Right now the reason to buy Dogecoin frankly looks like simply trying to pass it off to someone at a profit. If you want to play that game, and believe you can do so successfully, be my guest, so long as you remember that it is a game and will remain so until an exchange ecosystem is developed.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.