Elon Musk is known as The Dogefather, and while some are hoping a mention of Dogecoin during his “Saturday Night Live” appearance tomorrow will send the meme-based cryptocurrency soaring to new heights, others think it’s more likely to signal the beginning of the end of Doge’s incredible run.
The state of Doge: The price of Dogecoin is up 12,000 per cent since the beginning of the year. At its all-time high, it was worth more than Capital One, BP and General Motors, and it’s now the fourth most valuable cryptocurrency. Someone who invested all three of their U.S. stimulus cheques in Dogecoin would have made over US$500,000.
Is Dogecoin a good investment?: This is a fundamentally ridiculous question. What is “good?” What is an “investment?” The answer depends on how you define your first principles.
The case in favour: If you started off with three U.S. stimulus cheques, and you ended up with half a million dollars, that’s a good investment—presuming you can cash out while the price remains high. Let’s add “what is money?” and “what is an asset?” to that list of first principles—questions that used to mainly be asked by university students after a couple of bong hits and are now debated daily in the financial press, thanks to the rise of meme stocks and cryptocurrencies. “At some point, something is just real,” Sam Bankman-Fried, the Hong Kong-based CEO of the FTX crypto exchange, told Bloomberg. “If Dogecoin is stupid and valueless, it shouldn’t be worth [US]$90 billion.”
The case against: Dogecoin is a joke—literally. Whatever you think about Bitcoin and Ethereum, they’re serious projects, with serious developers maintaining them, and communities who take them dead seriously, often to the point of religious fervour. Dogecoin has a neglected codebase and an army of people on social media trying to get it to hit 69 cents on 4/20.
Is the party about to end?: The stratospheric rise of cryptocurrencies—Dogecoin in particular—is attracting attention from regulators and central banks. On Thursday, Bank of England governor Andrew Bailey said people should buy them “only if you’re prepared to lose all your money.” Gary Gensler, head of the U.S. Securities and Exchange Commission, told CNBC that cryptocurrency investors need more protection. Just like the collapse of the cryptocurrency exchange Quadriga led to a push for more oversight of the industry in Canada, a collapse in the price of Dogecoin may herald a broader reckoning for the sector. And if Musk’s turn at sketch comedy this weekend helps push the currency to even less sustainable heights, that reckoning may be at hand
