Economy

Madness: ‘meme coin’ dogecoin surges 25,000 percent in value

You read that right: 25,000 percent. If you had invested 1,000 euros six months ago, you would now own 250,000 euros worth of dogecoins. If you had put 1000 euros in a savings account six months ago, you still had 1000 euros.

It’s useless

The fact that the dogecoin is shooting up so fast is special. A crypto currency like bitcoin already has quite a few practical applications, so you can at least pay with it in more and more places. In addition, the maximum number of bitcoins that can be made is limited, causing scarcity. And ethereum, the platform of crypto currency ether, can be used for all kinds of financial applications.

This is not the case with the dogecoin. There can be an infinite number of them in circulation and you can hardly settle with them. The coin was once conceived as a fun alternative to traditional crypto coins, without any vision. And it’s named after an internet meme of a dog who ‘thinks’ words spelled moderately.

EUR 75.6 billion

Good reasons not to value it too much, you might think, but apparently many people think otherwise. Admittedly, 1 dogecoin is still pretty much worthless. The exchange rate today stands at 70 cents. But a few months ago that was still 0.2 cents.

Small amounts, but all dogecoins together are worth a good 92 billion dollars (75.6 billion euros) anyway. This makes it the fourth crypto coin in the world.

Elon musk

The big question is why the currency has appreciated so dramatically. And the answer seems mainly: because it is possible. The price explosion is attributed, among others, to Elon Musk, who occasionally tweets about dogecoin and says he is a fan.

Also, according to CNBC, the corona support that almost all Americans have received from the government in recent months would have contributed. As a result, many young Americans suddenly have money to spend.

But there doesn’t seem to be any real underlying reason. The price increase is strongly reminiscent of Gamestop, a poorly performing game store chain in the US. Private investors huddled each other on internet forums in January to buy the shares en masse. As a result, the exchange rate rose from $ 20 to nearly $ 500 in no time.

One of the reasons for embarking on this massive buy was to harass professional investors who were speculating on a price drop. But in the end, it was also just a way to get rich quick for many people.

Ends in tears

The GameStop saga can also be a valuable lesson for people now trying their luck in dogecoin, as for many private investors, of course, that ended in tears. Eventually, the price collapsed again when people wanted to take their profits en masse, with large losses as a result.

Dogecoin creator Jackson Palmer was already completely done with his own currency and the entire crypto community in 2015. “The world of cryptocurrency is increasingly feeling like a group of white libertines hanging out and hoping to get rich with half-baked ideas that often come to nothing,” he said in an interview with Coindesk.

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