Dogecoin (CCC:DOGE-USD) is one of many cryptocurrencies that is way off of its highs. But it is not down as far as might be expected, given the origins of the crypto. It was started as a joke by two programmers but has since gained its own momentum.
As of May 24, DOGE is trading at 32.4 cents with a market cap of $42 billion, according to Yahoo! Finance. But Dogecoin ended last year at 0.5685 cents per token. That means it is still up about 55 times year-to-date.
That is incredible. Dogecoin ended March 31 at 6.198 cents per token, giving it a Q2 performance so far of 504%, also impressive.
But, of course, the token soared to a 52-week high of 73.75 cents, so it is down 32.97 cents from its peak or -56%. That is still quite a tumble. But, within its context the cryptocurrency is holding up quite well.
Dogecoin’s Standout Features
The rate of increase in the number of Dogecoins, once mined, is no more than 5 billion per year. As just 128 billion Dogecoin are allowed to be in the market, this allows for an inflation rate of 3.9% this year.
Dogecoin was created by Billy Markus from Portland, Oregon, and Jackson Palmer from Sydney, Australia. They wanted a fun cryptocurrency, one that would appeal to more than just the typical crypto audience.
Coingecko says that the only major use so far for Dogecoin is as a tipping system on Reddit and Twitter (NYSE:TWTR). Users tip each other for creating or sharing good content.
As might be expected, there is no white paper, no major group of developers attempting to upgrade the blockchain. There is also no foundation or organization that oversees and promotes its usage. These are all typical elements of most other launched cryptocurrencies.
Musk as “Honorary CEO”
However, that all changed when Elon Musk, the CEO of Tesla (NASDAQ:TSLA) decided to get involved. Recently Decrypt reported the story of a software developer who was casually working on Dogecoin. He details how Elon Musk came into his life encouraging and directing him and his friends. Musk, apparently, wants to make Dogecoin “the world’s most-used cryptocurrency.”
According to Decrypt, Musk was offered and accepted the Dogecoin CEO role on an honorary basis in 2019. This was after the founders had abandoned the role. Since then five developers worked on Dogecoin (less one who sadly died of cancer) in their spare time. Musk messages them “every now and then” and they go into a “flurry of activity” whenever he does.
So, forget all that Elon Musk said on May 8 on Saturday Night Live. Musk takes Dogecoin very seriously. He wants to make it a success. He is probably personally supporting the developers that are working on making this happen.
What To Do With Dogecoin
Incredibly, Dogecoin is the 6th largest cryptocurrency with its whopping $42 billion market capitalization. That is also amazing given that there are only 4 developers working on the blockchain part-time.
But the Musk effect is huge. His support, encouragement and apparent goal to make it a come-from-behind crypto success is telling. This may, in fact, be enough, to make the altcoin enough of a lifeline for the crypto to survive over the long term.
As a result, it might be worthwhile to invest a small portion in Dogecoin, on the off chance that it succeeds. In effect, it is a contrarian play, if you will, as its support system is nowhere near as sophisticated as many other cryptos.
On the date of publication, Mark R. Hake held a long position in Dogecoin (DOGE), and Bitcoin (BTC). The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.