Dogecoin surged 96% in the past week, Coinmarketcap data show, a move largely seen as the epitome of a speculative frenzy spurred by massive stimulus spending and social-media chatter. Over the same period, Bitcoin has risen 4%.
While outsiders might paint both with the broad stroke of newfangled excesses, critics in the know see fundamental distinctions.
Whereas Bitcoin was the pioneer for distributed ledger technology, Dogecoin grew out of that. There’s also little coding activity on the latter, a sign of stagnation to critics. Unlike Bitcoin, supply isn’t finite, and there are still relatively few Dogecoin transactions, a symptom of its essentially speculative nature.
“There are question marks around the general status of the software around Dogecoin,” said Konstantin Richter, chief executive officer and founder at Blockdaemon, a blockchain infrastructure provider. “It’ll catch up. If Doge is super valuable and people can make money building applications on it, they will.”
There are some cases where perhaps the buzz can inspire practical use. Mark Cuban, the billionaire owner of the Dallas Mavericks and Dogecoin booster, said at the Ethereal Summit on Thursday the basketball team has sold more merchandise denominated in the token than it did for years in Bitcoin.
For crypto faithfuls, it can be hard to champion one but dismiss the other. After all, it’s difficult to tell if digital assets such as Ethereum or Uniswap that do have use cases are growing for technological reasons, ideological ones or simply because a deluge of cash has flooded the nascent industry.
In any case, the very pointlessness of Dogecoin is no matter for some funds—as long as there’s volatility. At YRD Capital, a fund that allocates to algorithmic strategies, co-founder Yuval Reisman says its traders recently jumped on board to profit from the gap between Dogecoin’s spot rate and futures.
For Carter at Coin Metrics, now four years into his crypto career with some 137,200 Twitter followers, the rebel has become the establishment. He observed that Dogecoin has appealed largely to younger people who trade on Robinhood, follow TikTok rather than Twitter and find Bitcoin old-fashioned. He also reckons it’s won new fans because its low unit price—61 cents—makes it seem less intimidating than Bitcoin at $56,298, even though day traders can buy just a fraction of the latter.
Recalling the Dogecoin he still owns somewhere, Carter stresses that Bitcoin loyalists like him feel no regret about ignoring the puppy.
“You have to make peace with the fact that nonsense is going to go up all the time,” he said. “That’s not my concern. My concern is making Bitcoin as robust and functional as possible.”
—With assistance from Joanna Ossinger and Sam Potter.
This article was provided by Bloomberg News.