Here are some things with a total market value in the neighborhood of $40 billion: Insurance giant Prudential Financial Inc., the manufacturer Carrier Global Corp., and, at just a few billion less, Southwest Airlines Co.  Or, for a recent price of about 30¢ each, the supply of Dogecoin, the cryptocurrency that started as a joke in 2013. After climbing more than 6,000% this year in a hockey-stick rally, it’s still largely a gag—but one with a potentially darker punchline.

There’s no good reason it should be valuable. “Dogecoin has no apparent commercial or investment use other than as a conduit for speculative mania and the attempt to make a buck,” says Jeffrey Halley, senior market analyst at Oanda Asia Pacific Pte., a platform for trading traditional currencies. “I suspect much of its appeal lies in the fact that it is very, very cheap to buy and sell, as opposed to $60,000 for Bitcoin, making it much more approachable to a retail trader who fancies a flutter.”

In reality, the low nominal price hardly matters—whether you put $1,000 into a fraction of a Bitcoin or buy 3,333 Dogecoins, you’re risking the same amount. But as with a penny stock, the lower per-coin price likely has a psychological effect.

Say It’s Hard to Take Dogecoin Seriously, But the Doge Doesn’t Care

Especially when so many people seem to be into Doge for the memes as much as for the money. “Investors buy Dogecoin to participate in a self-deprecating joke about their inability to invest wisely, which keeps going as the price of an individual Dogecoin continues to appreciate,” says Curtis Ting, managing director for Europe at crypto exchange Kraken.

What exactly is a Dogecoin? Like Bitcoin, it’s a digital token that’s only worth what other users are willing to pay or trade for it. It’s not backed by any other asset or business, and it will never produce an income. On the other hand, it lacks the main Bitcoin feature that fascinates crypto believers: a limited supply. There’s no hard cap on the number of coins that can be minted using the computer code governing Dogecoin. 

What it does have is a cute logo, based on the “Doge” meme—a Shiba Inu with a look on its face that’s somewhere between goofy and knowing. Even its creators describe the cryptocurrency as a lark. “Dogecoin and its community prides itself on being friendly, fun, and spreading joy,” says co-creator Billy Markus. “It also wasn’t made with any intentions, as evidenced by myself and my co-founder both not gaining much financial benefit from creating it, unlike many coins and tokens people have created.”

So???

Dogecoin also has some history going for it—it’s relatively old for a cryptocurrency. Tokens with a long track record can benefit from heightened awareness and a gradually expanding set of holders willing to talk it up. As interest in cryptocurrency and trading in general spiked this year, Dogecoin was there waiting to be found by retail investors. Sam Bankman-Fried, founder and chief executive officer of the cryptocurrency derivatives exchange FTX, says that after brokerage app Robinhood restricted trading in GameStop Corp. stock at the height of a meme-driven stock-trading frenzy, “hundreds of millions of dollars moved seamlessly” into Dogecoin.

The coin got a big boost on April 20, aka 4/20, a day traditionally associated with pot. Dogecoin users decided to celebrate #DogeDay and boost the price to 42¢, or 69¢—another, uh, joke number—or even $1. They succeeded, sort of, with the price soaring to a record 41.9¢ that day, according to CoinGecko.com. It’s now down 28% from that peak.

Dogecoin has also drawn celebrity billionaire fans, most notably Elon Musk, the co-founder of Tesla Inc., and Dallas Mavericks owner Mark Cuban. That’s one use of Dogecoin, by the way: You can buy Mavericks merch with it. Musk has tweeted an image of himself holding up the Shiba Inu Lion King-style, as well as the mocked-up cover of a fictitious Dogue magazine. (That one might have just been a dog joke.) “When your Chief Marketing Officer is Elon Musk, anything is possible,” says John Wu, president of Ava Labs, which helps develop digital-asset applications. Users on Reddit and Twitter have helped push the meme with images like “Papa Elon Will Protect the Doge Coin,” or the Shiba Inu getting progressively more muscular.

The benign interpretation of all this is that it’s just fun. The Doge moment echoes the boom in non-fungible tokens, which are used to verify ownership in digital media. Dogecoin can seem like a collective art project you can buy into for as little as 30¢, instead of the millions of dollars some have ponied up for NFTs. “In the traditional sense, Dogecoin is worthless,” Antoni Trenchev, co-founder of crypto lender Nexo, recently told Bloomberg News. “But as everybody knows, value is in the eye of the beholder. And there’s a tribe of investors, many of them millennials, who see it as a cause, a movement.”

Yet Dogecoin’s rally also looks a lot like a pump: An effort by some Internet-savvy users to jack up the price by focusing attention on a cheap asset and egging each other on to buy. The trick with a pump is to get out before the meme dies, leaving behind the newbies who took things too seriously or sold too slowly. The ownership of Dogecoin seems to be concentrated in relatively few anonymous hands, so it may not take much to get the price moving. 

Dogecoin is also part of a wider phenomenon of money piling into increasingly speculative investments. Société Générale SA’s global head of quantitative strategy, Andrew Lapthorne, has cited Dogecoin as an example of “an increasingly large number of weird and wonderful signs of market excess.” (See also: The New Jersey deli that somehow amassed a market value of $100 million.) From that point of view, the coin’s success may be worrying even to investors who’ve steered clear of crypto. Yet despite increasing talk about bubbles, markets keep proving the naysayers wrong. The S&P 500 remains near a record high. Bitcoin, after peaking above $60,000 recently, is currently at about $55,000, a gain of 90% so far in 2021.

The weird thing is that Dogecoin might be fun and a pump, with at least some of the buyers feeling like they’re in on the joke. The barriers to entry on crypto are very low; Dogecoin is available with the tap of a button on some popular zero-commission brokerage apps. You could lose your shirt but there’s no need to bet that much. On the Ellen Degeneres Show on April 27, Cuban explained his thinking on Dogecoin. He said he got his 11-year-old into it with an initial $30 investment. “It’s not necessarily the best investment you can make,” Cuban said. “But you can buy it on Robinhood, and signing up and trading on Robinhood is free. So that’s one thing.” Cuban went on to say that it beats a lottery ticket. 

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