At this point, you’re probably already familiar with the whole issue with Wall Street and GameStop. And if you’re not, best catch up quick, because there’s already a new dog in the financial fight, so to speak. And it’s called Dogecoin.
In case the word has popped up on your social media feed and you have no idea what it’s about (apart perhaps from sharing a name with a super popular meme), we’ve asked an expert to explain Dogecoin: what it is, why it’s trending, and why you should be taking notes. Colin Goltra is the director for Southeast Asia of Binance, a cryptocurrency exchange platform said to be the largest in the world in terms of the trading volume. Goltra, who is Filipino-American, studied Economics, Applied Statistics, and French at the University of California at Santa Barbara. He worked for a while as Coins.ph’s cryptocurrency program chief before moving to Binance.
Safe to say that, with years of exposure in cryptocurrencies, Goltra’s the guy to ask about Dogecoin:
What is Dogecoin? And how is it different from other cryptocurrencies?
Colin Goltra: Dogecoin is actually like a “second cousin” of Bitcoin. It was founded in 2013 at a time when lots of people were launching new variations of Bitcoin. Because Bitcoin’s software is open source, anyone can access or even copy it, and so there was a period in those early days where people were launching new tokens roughly based on the open-source Bitcoin code.
Dogecoin based their brand on the cute, popular “Doge” meme of a Shiba Inu and made key changes like faster transactions and a MUCH larger supply. Ultimately there are a total of 127 billion total Dogecoin versus just 21 million total Bitcoin, because of this much higher supply the price has historically been sort of deliberately low—it’s tinge—and so people have used it as a fun sort of “community token” to mess around and give each other “points” online.
Can you give us a brief overview of its value over the last few years?
CG: Prior to this latest news, 1 Dogecoin historically trades at small fractions of a US cent ($0.01).
Dogecoin’s use case over the past several years has been very community-oriented online. Because it historically trades at such a low value, people would freely send it to one another as a sort of digital kudos for various interactions online. Giving someone 1000 Dogecoins has historically been something like a few pesos, so it was fun and to just spread around as internet credit. While other cryptocurrencies have risen and fallen, Dogecoin had a sort of passive staying power because it relied on a fun community, a novel but not super serious use case, and an adorable internet-native meme icon—the Doge itself.
Why is it suddenly in the news?
CG: So as part of the recent frenzy happening with Gamestop and the various WallStreeBets (WSB) communities on Reddit, Twitter, Discord, and elsewhere, there was a period where the Internet swarm was really trying to shine a mirror on the state of the legacy financial system run by Wall Street.
I think a couple of things happened:
One: people wanted to demonstrate that there was some virtual element to how modern capital markets worked and wanted to sort of demonstrate the raw power of their movement to move the market in some way.
Two: after Robinhood and other platforms started to ban certain user activity, there was a sentiment in the WSB movement that the existing financial institutions had close control over the system, and this sort of uniquely demonstrated the use cases for cryptocurrencies like Bitcoin…and like Dogecoin.
Ultimately, there was a major WSB user (@WSBChairman on Twitter) with several hundred thousand followers that Tweeted out a speculative Tweet wondering about Dogecoin going to $1. At the time it was trading at less than $0.01 (under 1 cent).
Given the community-driven nature of both the WSB movement and the Dogecoin currency, they seemed like a very good match. Dogecoin hasn’t gone to a full $1, but it has gone as high as almost $0.09 (9 cents), which is well over 10x in the course of just a couple days and still appears to have active trading volume and volatility a couple of days later here.
As a professional in cryptocurrencies, what is your assessment of Dogecoin's prospects in the short and medium term? Do you think it's a safe or smart investment?
CG: Well as someone who helps to run a cryptocurrency exchange business (Binance.com), I am always very careful about giving direct investment advice, so do want to remain cautious about it here!
Dogecoin has definitely been very volatile so major upswings can quickly be met with very quick downswings. If you are an experienced trader who appreciates the volatility as a trading opportunity, perhaps this is your speed. If you are looking to do more of an investment, I would certainly advise people to do a bit more research on the topic and to try to determine more of a longer-term vision for it and if it makes sense for your portfolio and financial goals.
In addition to our various Cryptocurrency trading services, we also have a free research portal that can be a great place to start and we have coverage of Dogecoin there.
As a bit of an aside, part of the reason that Dogecoin was chosen by the WSB crowd was maybe that it was a tight-knit community that was less focused on value and more focused on a great internet experience. In many ways, the fact that the Dogecoin community never took itself too seriously is what made them a fun choice for the WSB crowd in the first place.
If not Dogecoin, what options do you recommend for local cryptocurrency investors?
CG: The Cryptocurrency world is really sprawling and can be difficult to understand as an outsider. I definitely recommend starting by understanding larger more established projects like Bitcoin or Ethereum, through our platform Binance.com does offer a huge variety of tokens to choose from.
In the Philippines, we have a peer-to-peer platform that offers the large-cap cryptocurrencies at zero fees and much more favourable pricing against a lot of the other local options.
Overall, it’s an exciting space that is at the heart of the most critical developments on the internet. It will be very exciting to see more Filipinos start to participate in the global crypto revolution!