The TRUTH About $1 Dogecoin

What's up you guys, it's Graham here. So I'll admit, I never thought I would be making this video, but here we are, talking about one of the biggest meme investments of 2021: Dogecoin. Which is so far this year gone up 1500% in price, from 0.005 cents all the way to seven cents at the time I'm making this video, fueled by viral tweets, internet memes, and lots of comments with rocket emojis in them.

Even though this entire currency started off as a bit of a gag, the recent price movement is making everyone question that maybe this is something we should start to pay close attention to and that perhaps it's going to be much more than just a meme from 2013. Although I want to be clear, I was not planning to make a video on this, but simply due to the sheer amount of comments asking for me to talk about it—literally in the thousands—so I'm gonna do it.

I have no idea how many of those comments were just a joke, but in the spirit of Dogecoin, even if it is a joke, I'm gonna take it serious and talk about exactly what it is, why it's gone up so much in price, and whether or not it's a viable investment. Because last year, I bought a few hundred thousand Dogecoins on a spur of the moment whim as a bit of a joke. So if you want to know whether or not I still have those, back when they were a fraction of a penny, keep watching and I'll answer it.

But first, I want to share a quick thank you from our video sponsor today: the like button! That's right, this video does not have a sponsor, so if you wouldn't mind supporting the channel just by smashing that like button, it would help me out a ton and would help out the YouTube algorithm in deciding whether or not to recommend this video to other people who can also smash the like button. So thank you guys so much for doing that, and with that said, let's start here: welcome to Dogecoin!

I'll admit I didn't really know too much about the history of this until I started looking into it, and wow, it's actually really interesting. The whole thing started off as somewhat of a joke in 2013 when Jackson Palmer, a product manager at Adobe, began making light of the whole cryptocurrency craze by posting about his own non-existent cryptocurrency venture, Dogecoin. At the time, it was nothing more than a satirical joke based around the Doge meme featuring Shiba Inu with Comic Sans thoughts popping up.

But to Jackson's surprise, those Dogecoin tweets actually began gaining some popularity on Twitter, and after some positive feedback, he was quoted as saying, “One night after work, I sat down with a beer, I had too much time on my hands, and I bought dogecoin.com. Then I photoshopped the logo onto the coin and put it up there.” Not too much later, it was picked up on Reddit where it caught the attention of Bill Marcus, a software engineer at IBM, who reached out for permission to actually go and build out the software and turn Dogecoin into a fully functional working cryptocurrency.

The infrastructure was fairly simple, and not even a month later, it was launched in December of 2013. Two weeks later, the value jumped up 300% through a combination of viral press and timing around China forbidding the trading of Bitcoin, and Dogecoin began growing functionally. However, it did have some real-world uses. Reddit began allowing its users to tip each other in Dogecoin, and mobile video games allowed small in-app purchases.

But all thanks to the virality of meme culture, in 2014, the trading volume of Dogecoin surpassed every other cryptocurrency, including Bitcoin. Since then, the following around Dogecoin has continued to grow, and in 2018, Robinhood began allowing Dogecoin to be bought and sold for free on their platform, giving it significantly more exposure. It was even further popularized when Elon Musk began tweeting about it, causing the price to skyrocket within minutes. Today it has a market cap of almost 10 billion dollars and is trading at a price of around five to eight cents—all from something that started less than eight years ago as a complete joke.

So now the big question is: does it actually have any value, and is it a good investment? Well, that's a difficult question to answer because despite all of its success, it was never really meant to have much intrinsic value. That's because it's derived from the open-source project Litecoin, which means there's no limit to how many coins could be produced within the system. This is very much the opposite of Bitcoin, which is limited to 21 million Bitcoins in existence, and that's it.

But with Dogecoin right now, there's over 128 billion coins in supply and rising by the day. Each year, the supply of Dogecoins can increase by as much as 5 billion, which is meant to encourage people to actively use and spend it as a currency; otherwise, over time the value of a Dogecoin might decrease as more of them enter circulation. As of now, for anyone curious, this represents an inflation rate of about four percent per year.

However, as more coins are mined over time, that 5 billion amount will represent a smaller and smaller difference compared to the total number of coins in circulation. So theoretically, within a few hundred years, it could end up being a fairly stable currency with very mild inflation just because the number of new coins in circulation is going to be predictable year by year.

Now, I would say functionally, in terms of how it's designed, it's very much like the U.S. currency that we use day to day. Like the dollar only has value because the U.S. government guarantees that a hundred dollar bill will buy you a hundred dollars worth of goods. But as more U.S. dollars are printed and the cost of materials begins to rise, the same 100 you have starts buying you less and less.

Anyway, as far as Dogecoin as an investment, it just depends who you ask. The founders who created Dogecoin in the first place are totally perplexed by its popularity, like the co-founder Jackson Palmer, who left the Dogecoin team in 2015, was quoted as saying in an interview, “With no immediate plans for development, it looks like the coin will slowly become stagnant in the future.”

The circulating supply of Dogecoin is astronomical, which will deter the price of the cryptocurrency from rising any further. While they certainly didn't anticipate any amount of success, they've used the popularity as a way to give back, including a 50,000 dollar donation to raise awareness for Kenya's water crisis. They've also raised 25,000 dollars to get Jamaica's bobsled team to the Olympics when the team qualified.

The creators were even quoted as saying that they don't own any Dogecoin themselves, although a while ago Bill Marcus said he sold all of his Dogecoin to buy a used Honda Civic. As for what he thinks of all of this, he told the Wall Street Journal that the idea of Dogecoin being worth 8 cents is the same as GameStop being worth 325 dollars. It doesn't make sense; it's super absurd! The coin design was absurd, but that may very well be the exact reason why Dogecoin is so popular in the first place.

It was just created by two normal guys just messing around who wanted to create something light-hearted and funny. It wasn't meant to be taken seriously, and because of that, Dogecoin was not intimidating. It was quickly embraced by people who wanted to be in on the joke. The price was enough for people to feel like they're getting a lot of value for the money they put in, and as more people bought in, the price started going up.

Functionally and intrinsically, it's not an investment and nothing more than a lighthearted spin on a normally serious topic. But lately, there's been a big push away from mainstream corporations and big Wall Street institutions, and when you look for a cryptocurrency that people feel comfortable with, Dogecoin is really one of the first to come to mind. Because who doesn't like dogs and just two normal guys messing around on the internet talking about memes?

Oddly enough, this reminds me of one of the situations where the less you try and the less you try to make it an investment, the more it becomes a successful investment. Because it's not what people would expect. Case and point: Will Rogers. Most people don't know this, but he was a firm believer that politics were nonsense and ridiculous. So to prove that point, he created a mock campaign in 1928 to run for president with nothing more than the outlet of the weekly humor magazine Life. His only campaign promise was that if he was elected, he would immediately resign.

Every week from Memorial Day through Election Day, Will Rogers joked around and exaggerated on how pointless the entire election was, but on election day, he actually won, declared victory, and then immediately resigned. But that's really what people liked about him; he didn't try, and it made people comfortable knowing that he didn't need to be president.

I think the same thing could be said about Dogecoin; it wasn't trying to be anything, and because of that, people take to it and like it. But when it comes to the price, I do feel like Dogecoin is so disconnected from reality and functionality that at this point, its entire value is attributed to how often people are talking about it or how often Elon Musk tweets about it or how much someone else is willing to pay to get it.

At this point, all of that is so unpredictable. I do think there is something to be said about the popularity of Dogecoin, and as more people embrace and accept it, the more it's going to stabilize in price. Could it one day reach a dollar? Maybe. Could it go back down to a fraction of a penny? Absolutely. The problem that I see is that people are viewing this as a way to get rich, and absolutely if you time it right, you can make a lot of money.

But that's not a sustainable way to invest, and mark my words: investments like this are entirely dependent around attention. And as we've seen on the internet time and time again, attention is going to change day by day, week by week, and month by month. So if you have money to risk, by all means. But as a serious investment, it would be irresponsible for me to say it is. In order for this to continue growing, its popularity and attention must eventually translate into real-world use cases.

Like if I could start buying real tangible things with Dogecoin, then yes, we could start saying there's some intrinsic value. But if it doesn't, then at the very least, I think it's had a fun positive impact on the market as long as people are not buying in with their life savings to get rich.

Now, somebody else pointed this out, but the fact that all these mega-wealthy people are tweeting about it—like Elon Musk, Snoop Dogg, and Gene Simmons—makes me think this is a real-life Donald Sinclair who makes wild bets behind the scenes depending on what random people do. Like just tweet about the most ridiculous things and then sit back and watch as people scramble over the frenzy of trying to get in and driving up the price.

But really at the end of the day, the creators themselves say that if all we've done with Dogecoin is grow awareness into decentralized currencies such as Bitcoin, then I think we've done a good job. Because for a lot of the people who are using Doge now, it's their first cryptocurrency that they've ever used, and they've started mining.

Now, as far as my own Dogecoin investment, last year on the Iced Coffee Hour podcast, I threw in a thousand dollars as a total joke to buy in. Graham's position is at .0046, but sorry guys, I had paper hands and I sold shortly afterwards because I felt it was too speculative. But don't worry guys, joke's on me because had I just kept it, instead that thousand dollar investment would be worth more like 20,000 dollars today.

Although overall, as much of a fan as I am around good jokes and memes, maybe it's just the boomer in me, but honestly, I just can't justify the price either. Again, that's not to say it can't keep going higher because it's probably only a few good tweets away from hitting 10 cents, but whether or not it could actually stay there long term is another story altogether.

You could certainly make the argument that if mass adoption takes place because of its popularity, then yeah, it might continue going up in price. But if the price is entirely dependent on attention, that's extremely fickle on the internet; it could just as much drop as it could go up. Maybe we look back on this video like 200 years from now, and I look like an idiot.

But I'm gonna take the stance that it's fun, it's light-hearted, I get the appeal, although it's not something that I'm investing in myself. But you know what? I would invest in the like button for the YouTube algorithm because it helps out the channel a ton and it's totally free.

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