Who Let The DOGE Out?

When investing in cryptocurrency, the fundamentals seem very important. How then can a coin that was meant to be a meme remain so popular it has a market cap over a $1 Billion (as of this writing)? That is a lot of value for something that has no distinct utility or feature, yet has captured a large share of the market. It is certainly FOMO for noobs. Meme coins were meant to be just for fun, and that is the image many have of Dogecoin. Yet there are some things about Dogecoin that are actually fundamentally what cryptocurrency should be all about.

First and foremost, this is not financial advice. This is for reference and informational purposes only. Cryptocurrency is very volatile and there are risks to consider when investing. This is not a direct promotion of Dogecoin, the cryptocurrency or investing in a digital asset. Instead this is a look into why it is popular and how it fits in the current cryptocurrency landscape. With that said, what is all the fuss about Dogecoin?

What Is DOGE Coin?

A meme coin is a cryptocurrency that is not meant to be taken seriously. It does not serve any purpose other than for exchanging and trading. It can be used as a form of payment for tipping or just a way to exchange value over a blockchain. It doesn’t have the core principal of being a store of value like Bitcoin, or an application development platform like Ethereum. First released in December 6, 2013, Dogecoin was just meant to be a simple P2P (Peer-to-Peer) electronic payment software like Bitcoin. The cryptocurrency got its name from the popular Doge meme which features a Shiba Inu dog as the logo. DOGE is the listing name used for the digital asset.

DOGE, while not anything sophisticated, did not initially have any sort of application other than P2P. It is based on open source software from the cryptocurrency Luckycoin and Litecoin. DOGE uses the scrypt algorithm with a PoW(Proof-of-Work) consensus mechanism. There are 127 billion coins in total supply with a 1 minute block time. The block reward for miners is 10,000 DOGE per block produced. Unlike other cryptocurrency, Dogecoin’s founders (Billy Markus and Jackson Palmer) have not continued promoting or even associating with DOGE. They have pretty much been on the sidelines, but DOGE has flourished in part due to its community.

Pump And Dump

While Dogecoin seems like a fun and trendy cryptocurrency that is nice to have, it is also notorious for pump and dump schemes. This has been encouraged in large part by users from Reddit, social influencers and public personalities that include Elon Musk. All it takes is a tweet from a well known personality, and DOGE prices on the market surge. These pumps do not seem to follow any sort of fundamentals other than the encouragement of influencers.

DOGE became a TikTok trend in July 2020, promoted by fans of the popular social media app. It began going viral as users began to spread the word through the platform. This was a push to pump up the price of DOGE and it worked. DOGE volume spiked by 683% after TikTok user urged a buying spree pump. Another surge occurred when Elon Musk tweeted in support of the cryptocurrency. That led to the value of DOGE to surge from $0.003 to $0.005. What do you think happens with all the viral videos on TikTok and tweets from Musk? It creates attention, and people will either Google search Dogecoin to learn more or ask someone they know about it. This type of news is not something you would expect on mainstream media.

These pumps are usually followed by dumps, as can be observed from the latest that occurred in 2021. This was a result of the Gamestop Short Squeeze in which retail investors were temporarily shut off from buying stocks for Gamestop. This led to users urging a pump for DOGE because at least they can buy it freely without any restrictions. It was more about making a statement to the establishment by some, but more people probably did it in order to make gains. That was exactly what happened and then came the dump. During this time (January 28, 2021) DOGE surged by 1,100% to an ATH of $0.082 but would dump a few days later.

In these pumps, many were motivated to see the price surge. However, once it reaches the highs it is really hard to control people from taking profits. After all, DOGE does not really have the same value for HODLing as BTC. You can hold thousands of DOGE in your bag, which really does not seem to be worth much. When prices surge it becomes valuable for converting to fiat, like winning money from a casino. Unfortunately this does not end well for noobs who probably got into the pump craze with no idea what was about to happen. They probably expected that their investment was going to go up, but not realizing that when others cash in the prices go back down and they can lose their initial investment.

DOGE Is In Theory What Cryptocurrency Should Be

While many would berate and laugh DOGE off as just a meme coin used for fun, it actually does have fundamental features of a cryptocurrency. People will be surprised that Dogecoin is capable of many things that modern banking systems cannot do. Dogecoin takes the innovations from blockchain technology and applies it to a community driven environment. Despite not having a platform of its own, what matters is that it provides the basic needs for cryptocurrency which is the direct and decentralized P2P transfer of value. There are also no barriers to purchase it that require proof of documentation, like with other financial assets.

Transactions in DOGE are cryptographically secured, which is important in cryptocurrency. Dogecoin uses a blockchain to allow two people to exchange or trade without knowing each other personally and without requiring permission from a third party to conduct a transaction. Today before we can purchase an item with a credit card, it actually requires permission from the issuer of the card. They can stop a transaction any time they want since it is under their control. This can happen to certain individuals who credit institutions may want to limit or target for any reason.

Dogecoin is highly decentralized after all. It is not controlled by any one entity or organization. Its founders cannot even shut it down and it is open source and available to everyone. There are no constraints to access the source code which users can do with as they wish. No one is going to stop you from buying or selling DOGE, because there are is no censorship against a user. Instead you have a permissionless and trustless system like Bitcoin that is peer to peer at best. Many do not realize that you can also use DOGE to transfer money across borders, but of course when you convert it to fiat it is your responsibility to meet KYC requirements from digital exchanges.

Banks take days or longer to settle payments. With Dogecoin it can be done much faster and at a lower cost as well. There are no middle men or third party to pay when conducting a transaction between two users. If Bob wanted to tip Alice with DOGE, he can do so directly to Alice’s digital wallet with no one to prevent the transaction or require arbiters to facilitate it. The Dogecoin blockchain network provides a neutral service users need to transfer value. So during any pump and dump, the blockchain is still being used to record all transactions in a transparent and immutable manner.

Takeaways And Closing Thoughts

Dogecoin is for the most part the simplest blockchain decentralized app for cryptocurrency. What started out as something just for fun, turns out to have a large following. What this did is foster a community of individuals that brings power to the people. We can see how much that is the case when influencers and public figures join in to participate in pushing the price of DOGE higher. Through social media and the Internet, information spreads faster and coordination becomes easier as the network provides the necessary infrastructure to allow that. Just be careful though when you participate, things can quickly change if you commit more than what you are willing to lose during pumps. It is not a good idea to invest life savings, pay checks or even mortgage a house just for DOGE. Think rationally and it should be fine.

DOGE as a digital asset is not actually worthless like so many penny stocks. It is cheap, but due to its popularity is gaining the attention of the mainstream. Many digital exchanges (e.g. Binanc) and wallets (e.g. Exodus) do support DOGE, which is why it can be purchased by many people. Developers of the Flare blockchain have announced their support for DOGE, which could introduce smart contracts to Dogecoin users. There is also interest in the gaming community to use DOGE, for online gambling, tips and purchasing game items (e.g. badges, powers, etc.). Ren has provided a path for DOGE into DeFi with their renDOGE token. This can bring more applications for DOGE when it comes to liquidity for cryptocurrency lending, payments and trading.

The interest in Dogecoin is going to help sustain the digital asset as something of value to users. This keeps the momentum of holding the coin for longer terms. What Dogecoin showed is that through a coordinated effort by a decentralized community, the market can drive the prices. That is what free market laissez-faire economics should be all about. People are free to enter and leave the market at their own will. When DOGE is surging there is no one group or individual who can stop people from buying it, like what Robinhood did with Gamestop (the reasons are due to how the current financial system works). DOGE is not to be treated as a sure bet financial instrument by any means though, it is a risk that must still be evaluated. With these new possibilities and opportunities coming to Dogecoin, who is to say it is worthless and only for pump and dumps.

Disclaimer: This is not financial advice. The content shared is for informational purposes only. Please do your own research always before investing in cryptocurrency.

The Benefits Of The Blockchain To The Cannabis Industry

The cannabis industry can stand to benefit from the features of blockchain technology. This may have some people scratching their heads “How is smoking weed going on a blockchain?” It is not about the activity itself but the business of cannabis supply and transactions. When it comes to verifying the supply chain, the blockchain can provide a service to cannabis dealers that they are getting their supply from legal and authorized sources. This can help reduce discrepancies like fraud while increasing the efficiency of delivery and production.

The legalization of marijuana for medicinal or recreational use in states like California, Colorado and Nevada have led to the rise in retail outlets that sell cannabis derived products. It is no longer just dispensaries that can distribute marijuana legally, but licensed outlets as well. To obtain licenses there are basic legal requirements that must be met and these records could benefit from a DLT (Distributed Ledger Technology). That is not exactly a blockchain, unless it is a system that also issues a digital coin or token. This will allow transactions to be audited from a DLT that incentivizes nodes or computers that participate in consensus to verify transactions and validate blocks in the blockchain.

States where marijuana is legal. (As of June 2019, Source Business Insider)

The idea is unconventional but there are already some businesses in the cannabis industry that are looking into the blockchain. The main benefit the blockchain can provide besides verifying licenses is verifying the supply chain. Things can be obscure when dealing with the supply of marijuana. In the US, most of the supply of marijuana comes from illegal sources that are smuggled into the country. This involves activity which evades law enforcement and keeps a black market thriving. Often times the supply chain is affected by fraud, theft and even unauthorized sources. It can also be tampered with by corrupt businesses to make more money, which is essentially cheating. The solution to stopping this is not up to the blockchain, but it can help verify where the sources are coming from in order to confirm their authenticity.

Marijuana is not just about recreational use. It also has medical benefits which is another market segment that the cannabis industry can tap into. If the supply comes from verified sources, like legal cannabis farms, it helps the industry. At the same time it can help government regulators monitor and audit the supply knowing that there is an immutable and transparent record of its origin and sale from legal businesses. Growers, distributors, retailers and marketers of cannabis products are verified at every step of the “seed-to-shelf” process by a blockchain solution.

The process begins with the growers. These are the businesses that grow the marijuana plants. The growers must meet certain requirements for compliance and are listed in a DLT for retailers who make the purchases at bulk before distribution using what are called smart contracts. The smart contract is a programmable code that states the conditions and logic of the transactions which can execute autonomously. The retailers themselves are held accountable for the sale, and there will be a record of their transaction. The retailers can then sell the cannabis which marketers can promote. We have seen products like brownies, cookies and even beer derived from cannabis. This also creates an industry for paraphernalia, publications and lifestyle products that are centered around cannabis. Those who do the marketing will know who to promote based on verified sources confirmed on the blockchain. This would remove ambiguity as to the legality of the business.

Involving cryptocurrency is essential in a blockchain, but for the cannabis industry while it may be a solution for the producers, perhaps not for the customers. The issue here is that identity is not hidden but pseudonymous in nature since transactions can still be traced back to someone. Some private citizens who use marijuana may not feel comfortable about this. A cannabis coin that is used as a token for purchasing marijuana (medical or recreational) sets up more auditability for regulators to find who and for what reason marijuana is being used. This token is fungible in nature just like fiat cash so it doesn’t have to be tied to any particular identity. It can also be spent in direct peer-to-peer transactions that can be used to exchange items and services other than marijuana products. The transaction will still be recorded on a digital ledger as a digital proof.

With greater visibility due to transparency and higher efficiency due to traceability, businesses in the cannabis industry can benefit from the blockchain. At the moment there are various projects that are exploring this implementation. Startup TruTrace has partnered with Deloitte, the professional services giant. They are working on building a tracking system using a blockchain for “seed-to-sale” of cannabis. Other ways blockchains can help the cannabis industry besides tracking the supply chain includes documenting public information regarding authentic marijuana strains (types of cannabis), verify the amounts of cannabis in edible products sold in grocery or specialty stores with certified labels and also certification of cannabis products as approved by the FDA. Worst case without certified products are fake or dangerous products that could affect the health of customers. There are more issues that one can use blockchains to explore, but a verification system is one way to expand and legitimize the industry.