News

Actions

Explainer: What is Dogecoin and why is it becoming popular?

dogecoin.jpg
Posted at 3:41 PM, Feb 08, 2021
and last updated 2021-02-08 16:02:23-05

Thanks to mentions from social media influencers and celebrities, a cryptocurrency based on a meme of a dog called Dogecoin has seen a surge recently.

What is Dogecoin?

Dogecoin is a digital currency created in 2013, partially as a joke. It was started as a satire about the proliferation of cryptocurrency at the time, and uses the “doge” internet meme that was popular online. The dog, a Shiba Inu, always has a surprised look on its face.

Is it used for anything?

Creators of Dogecoin say the currency has been used for online purchases, donations and larger crowd-funding efforts like funding the 2014 Jamaican Olympic bobsled team and providing clean water for parts of the world.

As a cryptocurrency, it can be transferred between parties online securely, and functions like a token: people exchange government-issued currency (dollars, pounds, yen, etc.) for cryptocurrency. Cryptocurrency, and its price fluctuations, are not regulated by any government. Many people invest in cryptocurrency, similar to stocks or precious metals, and watch the value fluctuate.

What is going on with it now?

The price for Dogecoin is up by more than 1,600% so far in 2021, according to CoinMarketCap, and up more than 600% since Jan. 28 alone. The surge boosted its market value to more than $10 billion at one point on Monday.

CoinMarketCap tracks cryptocurrencies, their price, market cap, volume and circulating supply.

Why is this happening?

Stock traders, possibly frustrated by the attention and restrictions placed on trading GameStop stock, switched to investing in cryptocurrencies in the last week or so.

Dogecoin appears to be leading the pack of digital currency getting an influx of investment, thanks in part to celebrity cheerleading from Tesla’s Elon Musk, the rapper Snoop Dogg and the rocker Gene Simmons of Kiss.

Musk has been a fan of Dogecoin for years, regularly joking about it on social media, according to Forbes.

Billionaire investor Mark Cuban tweeted "If I had to choose between buying a lottery ticket and dogecoin, I would buy dogecoin,” which helped boost awareness and sales of the cryptocurrency.

Cuban later tweeted he bought a “few dollars worth for my son” as a way to watch price movements, and give him an education.