The course of this cryptomony, caused by a cannular in 2013, exploded between April and June 2021. But finding one's interest in the long term is difficult.
Between its Shiba Inu dog head logo, its lively community and the media interest given to it by Elon Musk (Tesla), dogecoin has a lot to surprise. Conceived as a joke in response to the proliferation of cryptocurrencies in the early 2010s, it now delights high-volatility enthusiasts. Going from five cents in early April to more than 70 cents at its peak on May 8, its price evolution, which fell to 18 cents on June 23, has attracted all eyes.
With reason? "The dogecoin has no interest and unfortunately has not disappeared," tackles Manuel Valente, director of the crypto broker Coinhouse, from the outset. Beyond its media exposure, dogecoin would have no use: neither for its function as a crypto asset, nor for its blockchain. But its high valuation ($23.6 billion on June 23) and the attention it's getting still raise questions about its potential. In a May 14 tweet, Tesla's eccentric CEO even assured that he was working with the blockchain's developers to improve its functioning.
In the wake of this, the exchange platform Coinbase Pro and the neobank Revolut decided to reference the cryptocurrency. What to bring more confusion about the interest of dogecoin.
Speculation rather than investment
For long-term investment, dogecoin faces a major challenge. Of the assets in circulation, 28% are held by a single person, whose identity is obviously not known because of the anonymization of transactions on the blockchain. If this individual decided to sell his assets, the price would collapse through a domino effect. "For a fund to want to invest in dogecoin, it needs to be assured that no one will bring the price down by 25% because they own a large share," summarizes Quentin de Beauchesne, moderator of the CryptoFR community.
So dogecoin is not a reliable enough security for value investing enthusiasts, but its high volatility attracts the most speculative minds. Founder of the cryptocurrency investment company JustMining, Owen Simonin reminds us that "fantasy or not, it's worth money." Until when? Impossible to anticipate the evolution of its price, very strongly driven by the life of the Dogecoin community. It has 2.1 million members on the discussion site Reddit, placing it between Ethereum (1 million) and Bitcoin (3 million).
A fragile means of transaction
If the blockchain is mediatized under the angle of speculation, it remains technically a functional instrument to carry out transactions. It remains to be seen whether consumers will use it to make purchases. In the absence of central control bodies, it is the users who decide on the uses in the world of cryptocurrencies: "If tomorrow 90% of customers want to pay with it, I will accept it," exclaims Owen Simonin. As long as I can exchange it for dollars, it's fine."
What about today? Little chance that dogecoin will become a credible tool for paying for purchases. At least on paper, it doesn't seem as suitable as its big brother bitcoin. "The basis of bitcoin is payment, it's indestructible with ethereum. We need to find a slightly different use case to make its place," analyzes Quentin de Beauchesne. Bitcoin does indeed have a technical advantage over dogecoin, which is mainly due to the quality of its development. The Lightning network of its blockchain allows transactions to be carried out instantly, without limit and with negligible costs of around 0.000007 euros according to Coinhouse.
Still, despite their technical appeal, both bitcoin and dogecoin have inherent drawbacks. "Dogecoin cannot have a place in transactions. If we want to make purchases, we're going to use stablecoins," assures Manuel Valente. These cryptocurrencies, whose price is stable, would remain the best compromise to ensure exchanges without variation in amount between peers.
Bitcoin in less good
Since blockchain is not limited to the function of cryptocurrency, Dogecoin could very well support other projects, like smart contracts. But on that score, it's not a dream come true either. "In itself, it's a fork (a variant of another blockchain, ed. note) of Bitcoin, but not as good. It is a Bitcoin that is not up to date in terms of code," says Quentin de Beauchesne. Even if Elon Musk would invest funds for the development of Dogecoin, "we would have to start from scratch" for Owen Simonin. And Manuel Valente continues: "It would be an absurdity. If Musk has money to invest in the crypto world, there's Ethereum 2, there's plenty to do. Not a techno from 2013." End of joke.
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