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I began writing for InvestorPlace in a full-time capacity in April 2021. It was my first job out of college, and to say I was nervous would be an understatement. I was, frankly, out of my element. I had a very limited background in finance and found the prospect of reportingfinancial newsto be overwhelming. Yet, I persevered, thanks to my drive to hone my craft. I can also chalk up my success to one asset in particular – Dogecoin (DOGE-USD).
I quickly realized that I’d not only need to become a finance expert, but a crypto expert too. Bitcoin (BTC-USD) was all anyone wanted to read about as it added thousands of dollars to its value. To begin learning about the crypto world, I needed to entrench myself in the space; but, buying Bitcoin would have simply been too expensive. Instead, I bought a small bag of DOGE.
Memes — the essence of modern-day humor — are hard to “get.” Especially to those who didn’t grow up in the Internet Age, the post-ironic, hyper-niche world of meme culture seems incoherent and dreadfully unfunny. But, were it not for the existence of memes, people wouldn’t have made millions of dollars trading crypto. Indeed, meme-investment Dogecoin was my — and many other investors’ — first experience in the digital asset space. And, like it or not, it is one of the most important assets to exist in this decade.
Musk and Memes Go to the Moon
Most people would consider DOGE a failure. Trading at just 7 cents a coin, it’s not “on the moon” as fanatics might have expected. It doesn’t have a centralized foundation like its layer-1 peers, its network doesn’t host a bunch of dapps or have a flashy proof-of-stake system to make it run cheap and sleek. Then again, neither does Bitcoin.
On paper, Dogecoin is exactly the same project as Bitcoin. They are two assets — coins — built on layer-1 networks to facilitate peer-to-peer transactions. In all actuality, they weren’t built for the same purpose. I knew that Dogecoin was a joke, and jokes are cheap, so Dogecoin was where I bet my dollars.
Beyond its price, what sets Dogecoin apart from Bitcoin is its clientele. The asset’s association with the likes of Elon Musk stirred up a frenzy that might never be seen again.
Celebrities and brands alike latched onto Dogecoin with fervor. Through these associations, people also gained their first peek at non-fungible tokens (NFTs) and learned how crypto could be a substitute for government-regulated fiat. Interested investors also had little trouble finding DOGE, as compared to other cryptos. It was one of just a few crypto assets trading on Robinhood (NASDAQ:HOOD). The fact that buyers didn’t need to create a wallet or sign up for a crypto exchange certainly contributed to the price storm.
Dogecoin caught fire. Interest led to entrance as billions of dollars flowed into the project, put there by many who had never even heard of the blockchain before that first week of April 2021. I was one of those people. When I bought into Dogecoin, it was trading at about 5 cents. A few weeks before, it was only a penny. And who could resist four-fold gains? Certainly not me.
I bought my DOGE because I heard that a friend’s brother had invested in DOGE back in 2020, and it was paying off. He put maybe $100 into the asset and forgot about it. This wasn’t a person who checked Robinhood with religious fervor like the meme stock traders of that time. But he was falling on hard times. He went to check his account and sell off some assets, and was stunned to see that the DOGE holdings made $100 into several thousand. Never before had I heard of this measure of success this close to my social circle.
His story wasn’t unique, and he was by far not the person who made the most off of DOGE at this time. Indeed, hundreds of folks have become millionaires off of the currency. The meme was slowly morphing. At first, it was all in good fun, with Elon Musk and Mark Cuban pumping the coin and holders seeing how high it could go. Yet, there was tearing at the seams, prices were topping out, investors were getting in too late, and the celebrity hype wasn’t working like it had been. There were signs on the horizon that Dogecoin wouldn’t hold out much longer.
As for me, I never made money on the coin. While I had bought it early on, I sold my measly bag fairly quickly. I couldn’t own the assets I covered for work and, wanting to continue chronicling the DOGE saga and crypto as a whole, I had to sell out.
The unlucky legions of investors caught holding the bag got to experience the hard lesson of investing in speculative assets. Like I said, Dogecoin wasn’t out to change the world. It was brought to life to mock the very thing it became. So, when the hype train ran out of steam on an incline, it fell back down to (almost) where it started.
The volatility piqued my interest. Mark Cuban was trying to make something serious of Dogecoin when his NBA team started accepting the coin as payment for tickets and merch. A whole wave of businesses with DOGE-HODLing owners took on the coin as payment in hopes their investments would take off. Businesses even sprang up, themed around the currency. Apps like Flexa provided workarounds where one could shop at big-box stores and pay with DOGE indirectly.
Morbid curiosity led me to pitch the InvestorPlace editors a story in which I lived on Dogecoin for a week. I provided a list of retailers and ways I could potentially swing it. The goal was to see if, even in a world constructed by the sheer willpower of Cuban, Musk and the Doge Army, Dogecoin could actually thrive as a means of exchange. I figured that with the price fluctuations, the stipend I would use wouldn’t last a day. Luckily, for my health, this idea was shot down.
This surge and plummet in Dogecoin prices would inadvertently change the face of crypto forever. If it wasn’t on regular investors’ radars before, it certainly was now. $100 in DOGE just months before was now worth thousands. Suddenly, the joke currency had become many peoples’ first exposure to digital assets.
And yes, it might be hard to believe, but almost everything that has happened in crypto since then can be traced in some way to Dogecoin. If investors didn’t have the low-stakes buy in to crypto that they did with DOGE, there’s no doubt that there would’ve been fewer people piling into Bitcoin to drive its prices up. There would be fewer clients on exchanges like Binance. In fact, it was DOGE which investors were flooding into when the global crypto market cap surpassed $1 trillion for the first time ever.
More importantly than the investment gains, though, is that people learned through Dogecoin the possibilities of a world beyond the euro and the U.S. dollar. Millions of people understood what cryptocurrencies were trying to accomplish, and flooded into decentralized finance (DeFi) networks like Ethereum (ETH-USD).
A new problem emerged in the wake of Dogecoin’s rise. Developers were trying to replicate the speculative model. Some hoped to pick up the pieces by reorganizing the community and trying to build upon it. Shiba Inu (SHIB-USD) is one such project. Others hoped that the low effort required to make a copycat token could lead to easy money, and scammed the thousands of green crypto investors now in the space.
While Dogecoin introduced lots of people to cryptocurrency, it has also made way for scams totaling billions in losses. Jackson Palmer, one of Dogecoin’s co-founders, dropped out of the project long ago and left social media in 2019. But in the wake of Dogecoin’s success, he resurfaced to criticize his project’s role in creating a vicious cycle of rug-pulls.
Dogecoin’s Time to Bow Out Gracefully
The two years following “Dogecoin Mania” have given me lots of time to reflect on DOGE. I’ve come to the conclusion that it’s perhaps the single most important crypto asset. And yet, I don’t think it ever needs to come back into the spotlight again.
The asset has proven to be key for the growth of the crypto industry. It was in the right place at the right time with its Robinhood listing. The pandemic-era monetary policy that leant itself to speculative investing contributed to this perfect storm. Crypto’s ascent into the mainstream wouldn’t have happened without DOGE.
But do we need to leave the door open for projects like Dogecoin? DOGE and the thousands of tokens it inspired don’t offer practicality. And as I have learned since 2021, when a project brings out the fervor of investors, it creates more harm than good. Dogecoin has served the purpose it was given with that run in 2021: Crypto is now successfully in the mainstream.
As for me, I’ll never buy DOGE again. If I invest in cryptocurrencies in the future, I’ll be focusing on assets with real-world utility. And I would encourage other investors to do the same.
On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.
The post I Bought Dogecoin for 5 Cents. Here’s Why I’m Never Buying Again. appeared first on InvestorPlace.
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