Dogecoin's rise reflects the facility of collective belief and a looking for a more ideal form of crypto.

Nothing says 2021 like dogecoin, a dog-themed cryptocurrency that has recently skyrocketed in value, thanks partially to the support of Elon Musk and other celebrities. For a time it had been the 10th largest cryptocurrency. Dogecoin finished 2020 at but half a penny per DOGE, according to CoinDesk’s dogecoin price level. It now trades at or above 5 cents, putting its year-to-date returns at around 1,000%.

Dogecoin should be taken seriously Otherwise, the joke’s on us

It may be tempting to write down this off as a speculative frenzy or simply a fluke, but that might be missing the larger picture. we should always note dogecoin’s rise, if only because it reflects a number of the key tensions of this moment in time.

Here are just a couple of things that dogecoin mania says about the world we live in now.

There is a thin line between absurdity and seriousness

Dogecoin is literally named after a dog and is represented by a Shiba Inu. The rapper Snoop Dogg recently rebranded himself as Snoop Doge. If this all sounds ridiculous, it’s because it's. Dogecoin’s creators fully intended it for it to be a joke, and absurdity is baked into its very design.

Today, some of the more serious people in the not-always-serious crypto industry are annoyed by dogecoin’s prominence. they have spent years trying to convince people that cryptocurrency has real technology behind it, even if nobody outside of the industry had the slightest idea how it worked. And now, finally, the world is listening. Almost a day there seems to be another name trying to get in on the action. PayPal. Tesla. Mastercard. Harvard. Morgan Stanley. America’s oldest bank (BNY Mellon). The list goes on, and bitcoin’s price has responded accordingly, passing $50,000 in the week.

But now, you've got this punchline of a coin taking over a number of the spotlight that bitcoin worked so hard to get. What quiet message does that send to the non-crypto world?

It sends a message that we should always already know: What once seemed absurd to many can become deadly serious. Before 2016, much of the world saw Donald Trump as an outrageous reality television star who had no chance of winning the U.S. presidency. They saw him as a joke, and lots of stills do. But he still held the foremost powerful position in the world for four full years.

This is obviously not an ideal comparison, and therefore the point isn’t to liken dogecoin to Trump. It’s simply to mention that dogecoin “joked” its way to a roughly $7 billion market cap, and that’s real money. It also means if DOGE mania bursts, some people are getting to face some very real losses.

People want decentralization, but it remains out of reach

The idea of collective belief is at the guts of money, and thus of crypto culture. Without a shared belief in its value, fiat currency would be little more than paper and metal. But while central governments can print money and have an effect on the price, bitcoin is supposed to be independent of that system. Bitcoin’s price, to place it simply, is determined by the amount that people are willing to buy it. in the early days, that was only a few cents. Now, it’s reached over $50,000.

Dogecoin represents a perfect of what cryptocurrency was supposed to be. it's truly weird and lives outside of the economic system. Its founders have effectively left the scene, leaving it to community rule. Big banks want nothing to do with it. It seems safe to mention that it'll be a while before we see a serious headline featuring both Goldman Sachs and dogecoin.

Bitcoin has clearly grown up, and is gaining the respect of more traditional players. That’s good for mainstream adoption, and perhaps for the industry as a whole. But bitcoin’s maturation has also come with a degree of centralization – outsized influence is enjoyed by big investors (known as whales), also as certain mining pools and exchanges.

Musk is a well-known fan of bitcoin and has suggested that dogecoin should become the “people’s crypto” – i.e., a democratic form of money. This taps into the zeitgeist we saw in the GameStop frenzy, which was an assertion of strength by retail investors over big hedge funds. But is GameStop, as entertaining because it may are to observe, really going to alter the balance of power in the financial world?

The democratization of finance is hard to achieve. So it should come as little surprise that Dogecoin isn’t that decentralized in any case. Musk recently acknowledged that Dogecoin’s wealth is just too concentrated. This claim was backed by Coin Metrics, which noted that the highest 100 DOGE addresses hold 68% of its total supply, compared to 13.7% for bitcoin. Put another way, the top 1% of DOGE addresses have 94% of the total supply.

Musk has tried to deal with this problem by urging big DOGE holders to sell, even offering to pay money for them to void their accounts. But it’s hard to escape the irony here. An unfathomably rich man pumped DOGE’s price then complained about a concentration of power, which he offered to fix himself.

Dogecoin should be taken seriously, if not literally. Its rise is highlighting tensions that aren’t going away anytime soon. we should always concentrate to them. Otherwise, the joke’s on us.

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