Nic Carter’s first foray into digital currencies was mining Dogecoin in his university dorm room back in 2013.
Created as a joke with the Shiba Inu dog breed as its logo, the meme-inspired token seemed more fun than Bitcoin and its community of diehards.
The 28-year-old now runs a crypto data provider that counts Goldman Sachs Group Inc. among its investors. He’s lost access to a trove of Dogecoin that has surged roughly 200,000% since the token’s inception. But like many industry pros, these days he has little affection for the coin—and has lost no sleep over his trapped profits.
“There’s this parallel industry of people that are just interested in running glorified bucket shops,” said Carter, co-founder of Coin Metrics based in Boston. “For most of us, we’re in this for ideological reasons. It doesn’t really affect us.”
The Dogecoin frenzy is reaching fever pitch as Elon Musk prepares to host Saturday Night Live with speculation he’s poised to talk up his beloved token. Coinbase Global Inc., the largest U.S. digital-asset exchange, plunged to a record low Thursday partly because it doesn’t offer enough speculative coins like Dogecoin. Robinhood, a trading app that offers the token, reclaimed the top spot on Apple’s U.S. App Store.
While its meteoric rise mirrors that of Bitcoin, crypto purists like Carter fear it’s a distraction from their grand project of deploying blockchain technology to revolutionize modern finance with everything from decentralized currencies to tokenized art. For those trying to lure big money into the industry with old-school risk controls, the memecoin doesn’t help institutions take crypto seriously while being far too risky for portfolios.
At BKCoin Capital, a $60 million quant fund, founding principal Kevin Kang says Dogecoin is off-limits.
“This could well be a ‘sell-the-news’ event where large holders sell before his appearance on SNL, leaving retail investors with the losses,” he wrote in an email, referring to Musk. “There’s nothing beyond this speculative asset—there are no developers on it, and we’ve not seen ‘smart money’ or institutional investors allocating.”
Bitwise Asset Management didn’t include the token in a a $1.1 billion index fund tracking the 10 largest cryptocurrencies even though it’s now the world’s fourth largest worth $79 billion.
Before Gemini—a crypto firm founded by the Winklevoss twins—announced Tuesday that it would support the coin, none of Bitwise’s custodians would touch the token. That meant the firm couldn’t be confident its holdings were safe for its more conservative clients.
“There are concerns that its spectacular rise suggests that the market is somehow overheated,” said Matt Hougan, an expert in exchange-traded funds who’s now chief investment officer at Bitwise. “To the extent that some quarter of the internet community wants Dogecoin to exist and will use it among themselves, I think that’s beautiful. But I don’t think it threatens the institutional global scale of Bitcoin.”