Elon Musk, the legendary tech entrepreneur, futurist and visionary, has been a bit of an enigma in the cryptocurrency world. More specifically, his continued support for Dogecoin, a cryptocurrency that started out as a joke, has left some scratching their heads.
Given that there are already more than 4,000 cryptocurrencies on the market, many are asking: why Dogecoin (DOGE) exactly?
Let’s take a look.
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What is Dogecoin and why has its value been rising?
Dogecoin is a cryptocurrency that started as a joke in 2013. It was created on the back of the popularity of the ‘doge meme’ at the time.
The meme involved an image of a Shiba Inu dog which could be accompanied by captions or text meant to symbolise the inner monologue of the dog. The coin was created as a ‘fun’ version of Bitcoin.
Since its origins as a joke, the ‘Doge’ has grown to become one of the world’s fastest-growing cryptocurrencies.
Its value has increased by more than 11,000% in 2021 alone. The coin has hit a high of more than $0.70 (£0.50) from lows of $0.0023 (£0.0016) back in summer 2020.
This is due in large part to Elon Musk. He has been one of the most vocal supporters of the meme coin, referring to himself as the ‘Dogefather’ and the digital token as the ‘future of cryptocurrency’.
Why is Elon Musk backing Dogecoin?
Musk has tweeted about Dogecoin frequently this year, causing its value to skyrocket.
Recently, he announced that Tesla would no longer be accepting Bitcoin as a form of payment due to environmental concerns and proposed Dogecoin as a potential replacement.
Many have questioned Musk’s continued support for a meme coin when there are other cryptocurrencies that are potentially more efficient, faster, have lower fees and are more environmentally friendly.
The tech guru recently took to Twitter to joke about why he’s backing Dogecoin. When responding to a user query, he said that Dogecoin “has dogs and memes, whereas others do not”.
According to Forbes, his joking, combined with his February statements that his Dogecoin-related comments should not be taken seriously, has cast doubt on how much attention people should pay to his frequent market-moving Dogecoin posts.
But it hasn’t all been a joke. Musk indeed appears to be taking a more serious interest in Dogecoin, particularly its development.
His joke response to why he was supporting Dogecoin over other cryptocurrencies came right after he issued a call to developers to submit ideas for Dogecoin’s upgrades and improvements.
Earlier, he had also announced that he was working with Doge’s developers to “improve system transaction efficiency”.
Does this mean that the ‘Doge’ is here to stay?
It’s hard to say.
Despite Musk’s support, Dogecoin is still part of a notoriously volatile cryptocurrency market. Dogecoin’s value, for example, has plummeted in a few short weeks. From its highs of more than $0.70, it’s currently trading at $0.3378 (£0.24).
Simply put, no one truly knows what will happen to Dogecoin in the future and whether it’s here to stay.
As with any other cryptocurrency, those looking to invest in the ‘Doge’ should do their homework and only invest what they can afford to lose.
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