‘Funny money’ looking a little more serious
It started as a joke, but dogecoin’s continuing surge is getting harder to laugh at
David Halpert keeps stacks of old notebooks in his office. Like any good editor, he’s left them strewn across his North York apartment, collecting dust in heaps and stockpiled like they’re sacred religious texts.
Most contain scribbling on colloquial matters — outlines for his bimonthly trade magazine, Cannabis Prospect, or daily to-do lists. Rarely does he touch them.
Four months ago, though, the 36year-old publisher found himself flipping through the yellowed pages for hours, scouring his notes in search of a 12-digit code that would unlock thousands of dollars.
He’d bought $90 worth of dogecoin more than three years before, in December 2017, through a Canadian trading app used to buy and sell cryptocurrency. A single unit of the nascent tender was then worth $0.0007, making Halpert the proud owner of about 128,000 dogecoin.
“I bought it on a lark,” he recalled. If one day the value went up, his purchase would pay off. And if it didn’t, well, life would continue.
He wrote the password in a notebook and promptly forgot about the purchase. He replaced his phone with an upgrade and forgot to re-download the app that stored the cryptocurrency.
Only in February was he was reminded of the dogecoins, around the time of a sudden surge in frenzied investor activity, when the currency’s price rose more than 1,600 per cent as bored retail investors poured their money into cryptocurrency.
As of early May, Halpert’s investment in Dogecoin had grown to more than $6,000. When Tesla’s Elon Musk hosted “Saturday Night Live” this past weekend, joking that the currency would surge “to the moon,” the value of Halpert’s investment grew again.
The currency was, and still is, a joke. But it’s a joke that has scored early investors thousands of dollars in profits as celebrities like Musk, rapper Snoop Dogg and rocker Gene Simmons ironically tout the currency as the way of the future.
“It’s kind of incredible what’s been happening lately,” said Halpert. “I wanted something worth less than a penny, just for fun. I didn’t see this coming.”
Like most things cryptocurrency, Dogecoin’s utility isn’t immediately obvious. Most explanations are painfully complex at best and utterly impenetrable at worst.
“What’s Dogecoin?” comedian Michael Che asks Musk on a recent episode of “Saturday Night Live.”
Well, Musk begins, it’s a cryptocurrency that has a circulating supply of 117 billion coins, of which 113 billion have already been minted. “It’s an unstoppable financial vehicle that’s going to take over the world,” he adds.
“Got it,” replies Che. “So what’s Dogecoin?”
His point is evident: Musk is speaking gibberish.
But many understand him. The financial oddity dates to 2013, when the coin was created by two software engineers to poke fun at the wild speculation surrounding cryptocurrencies like bitcoin and Ethereum. Anything can be a cryptocurrency, the founding fathers reckoned, so why not a digital coin adorned with the face of an adorable shiba inu?
The joke landed. Slowly but surely, bitcoin investors purchased small increments of dogecoin as a tacit endorsement of crypto’s wacky universe.
At first, Dogecoin owners used the tokens to tip each other in online forums, but its popularity snowballed into bigger, albeit obscure, causes. In 2014, fundraisers created a dogecoin tip jar to successfully send Jamaica’s two-man bobsled team to the Sochi Olympics, after the athletes said they didn’t have the funds to afford it.
The coin “was made as a joke to make fun of cryptocurrencies, but fate loves irony,” Musk said on the audio app Clubhouse in February.
“The most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.”
The coin now joins ranks with other financial trends borne of the internet — NFTs, GameStop, “stonks” and rocket ship emojis. Some analysts have dubbed this the “boredom economy,” where young retail investors with stimulus cheques and savings in hand can afford to spend haphazardly.
Halpert was an early believer in cryptocurrency, reckoning that bitcoin and Ethereum had the potential to develop into mainstream forms of exchange.
He bought $1,000 worth of Ethereum in 2017, as the currency’s popularity grew, and decided to stash some extra money into one of the hundreds of alternative cryptocurrencies out there. Dogecoin was the only name he recognized, he said, so he created a “digital wallet,” used to store varying forms of crypto, and bought $90 worth of it.
“I figured that, if it paid off, it would pay off big,” he said.
But the bubble is bound to burst eventually, says Andreas Park, a professor of finance at the University of Toronto, whose research focuses on cryptocurrency.
“Dogecoin doesn’t have any inherent value, so I find it hard to imagine that there isn’t going to be a moment where it crashes and people lose a lot of money,” Park said.
The coin has increased 12,000 per cent in value since January, prompted largely by speculative frenzy and Musk’s viral musings.
On Tuesday, the coin reversed part of its earlier gains after Musk asked his 53.9 million followers in a tweet whether Tesla should accept dogecoin as a form of payment. It slumped briefly over the weekend after Musk jokingly called the currency a “hustle” on “Saturday Night Live,” but recovered its losses again on Monday amid renewed optimism it could be used as a method of payment.
Calgary-based Geometric Energy on Monday said it had paid Musk’s SpaceX project in dogecoin to launch a minisatellite, as part of a lunar voyage planned for 2022.
Both bitcoin and dogecoin had fallen again by Thursday, when Musk reversed course on accepting bitcoin for purchases of Tesla vehicles due to climate concerns.
“Nothing is stopping anyone from accepting dogecoin as payment,” said Park. “If there’s a market for it, then you can use it. Would I recommend investing in it? No. But you can make a case for it.”
Halpert says he’s holding onto his investments for now.
“I don’t need the money right away, and I can see it increasing in value as cryptocurrency becomes more popular,” he said. “A few years ago, people didn’t think bitcoin would get this popular either.”