In the newest chapter of the Reddit vs. Wall Street narrative – and reference to the power of internet message boards and the Wild West spirit of cryptocurrencies – a joke coin is making serious waves.
According to CNBC, that would be Dogecoin, a cryptocurrency that was first conceived as a joke. The cryptocurrency has soared hundreds of percentage points during the last several days. That burst of activity came in response to a Reddit post. It suggests that holders could create a cryptocurrency equivalent to GameStop. Which, of course, has also soared (actually whipsawed) in price during the last several trading days.
Take a step back and beat it over for a moment. Dogecoin was launched in 2013 as a funny mashup of a dog meme and a play on bitcoin, which were both big topics that year. Thus, it is a digital coin bearing a dog logo.
As a result, Dogecoin’s recent cost has ranged between a nickel and seven cents, up from just a penny or two not long ago.
Dogecoin is Similar to Other Cryptos
Dogecoin shares similarities with other cryptocurrencies, including the big dog, bitcoin (pun intended). Specifically, it is worth whatever you or another party is willing to pay for it. However, the price has no fundamental underpinnings. Using it in commerce entails using a LOT of it to pay for, well, anything. According to a Google search, some establishments take Dogecoin. Elon Musk is on board, and with a single tweet, the Tesla founder can propel equities and cryptocurrencies higher than a SpaceX launch.
However, with the constraints come inevitable debates about whether individuals should be permitted to do anything they want with their funds, even if that means gambling indiscriminately. And if cryptos should be allowed to soar and drop uninhibitedly.
The craze has reached the point where Robinhood has limited trading in bitcoin, Dogecoin, and other cryptocurrencies. According to CNBC, the online brokerage stated that it temporarily disabled rapid purchasing power for crypto. This was due to unusual market conditions. The message sent through email to the financial news site. “Customers can continue to purchase cryptocurrency using settled monies. We’ll continue to analyze market trends and maintain contact with our customers.”
It enables consumers to purchase cryptocurrencies using funds already in their accounts – and deposits take days to clear. Limiting transactions allows a “cooling down” time, resulting in more logical price discovery.
Dogecoin’s Ripple Effect
As previously reported in this space, the US Treasury Department’s Financial Enforcement Crimes Network (FinCEN) proposed a set of new guidelines to enhance information-gathering activities at the end of last year. Increased data collection and disclosure operations target non-wire transactions over $10,000 and wire transactions exceeding $3,000. These are the same thresholds for cash activities.
For the time being, the overall theme is to halt unlawful behavior — and efforts to prevent the anonymous murky dealings of some holders may also deter the same people who drive price fluctuations. However, may this make them abandon cryptos? In other words, it’s insanity that encircles the joke coin. Dogecoin has a ripple effect that reverberates through bitcoin (in a way, it’s the tail that wags the dog) as the entire environment is under scrutiny.
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