What is Dogecoin? Why rise and fall with Elon Musk?

After Elon Musk made fun of it, the cryptocurrency Dogecoin started its journey to the moon and returned on the weekend Saturday night live It was announced on Monday that his company would accept the money as a legal payment for the mission to the moon.

If that sentence does not mean much to you, then you are not alone. However, please read on for an introductory article about what happened.

First is the first-what is Dogecoin?

Dogecoin was created in 2013 by a pair of software developers working at Adobe and IBM, with the aim of imitating cryptocurrencies such as Bitcoin. Cryptocurrency is a digital currency that can be used to pay for things in the online world. Most of these (including Dogecoin and Bitcoin) are backed by an encrypted digital ledger of transactions (called blockchain).

Named after the Shiba Inu, the dog is Internet memes at the time, Cryptocurrency enthusiasts and online jokes began to exchange Dogecoin for a fraction of a few cents. At the beginning of 2014, the first Dogecoin ever to change ownership was worth $0.001540753. Today, the price of the same Dogecoin is 50 cents, an increase of more than 32,000%.

Technically, Dogecoin exists as a branch of the original blockchain where Bitcoin is located, but it is not as secure as Bitcoin, and like Doge, there is no upper limit on the number of Dogecoins.

Alex Thorn, head of research at Galaxy Digital, a TSX-listed investment management investment company, said: “Dogecoin is different from many other cryptocurrency projects. It does not seek or even pretend that it is not just the most interesting in the world. Currency.” A research report last week.

What is the relationship with Elon Musk?

Strictly speaking, nothing.But musk The man who recently became the richest man in human history, Is a loyal supporter of cryptocurrency. Last year, Musk jumped on the Governor’s Train, mainly joking, but in a few months, his comments on the Governor’s Coin on social media have become more and more credible.

He first mentioned that Dogecoin was released on Twitter in April 2019. When he called it “my favorite cryptocurrency.”

Since then, his hobby has increased.

His electric car company Tesla (Tesla) announced earlier this year that it would accept Bitcoin as payment and hold Bitcoin as an asset, which affected cryptocurrencies in general.

Last quarter, the company revealed that it has Has stored more than $1 billion worth of Bitcoin.

What happened this weekend?

Musk Hosted an NBC comedy show Saturday night live This past weekend, this led to speculation that he might talk about currency when he appeared.

According to data from the cryptocurrency exchange Coinbase, the price of Dogecoin rose to a high of about 73 cents on Thursday.

Watch | Elon Musk teased on Dogecoin in the “Weekend Update” section of SNL:

In a SNL sketch, Musk appeared as a fictitious cryptocurrency expert and was asked to explain what Dogecoin was. After a round of laughter, Musk’s character admitted that the whole thing was “busy.” .

Although Musk’s character stated elsewhere in the same sketch that Dogecoin is “the future of currency” and “an unstoppable financial instrument that will occupy the world”, after the sketch was broadcast, the currency was sold. Out as low as about 40 cents/US dollar.Governor in the early Sunday morning

Edward Moya, a market analyst at the foreign exchange company Oanda, said a large number of governors began to sell quickly.

“Twitter quickly followed many whale alerts, which showed that a large number of Dogecoin bets have been steadily abandoned during this period. [the show],” He says.

So why does Dogecoin “land to the moon” again?

On Monday, when Musk tweeted about his next mission for the space exploration company, the Dogecoin jokes became more serious.

“SpaceX will launch the Doge-1 satellite to the moon next year,” Musk Tweets No need to elaborate.

More details are coming in Media release Provided by Geometric Energy Corporation, a Canadian manufacturing and logistics company. The company said it will launch a 40-kilogram satellite into orbit on a SpaceX rocket. The press release stated that the company will pay for the task in Dogecoin.

Tom Ochinero, Vice President of SpaceX, said: “This mission will prove the use of cryptocurrencies beyond Earth’s orbit and lay the foundation for interplanetary trade.” “We are very happy to launch Doge-1. To the moon!”

CBC News asked Geometric how much Dogecoin they paid for space on the rocket. The inquiry did not return immediately.

After the news of the transaction came out, the price of the cryptocurrency rose on Monday, once breaking through 50 cents. However, later in the day, the Governor offered 46 cents, far below the level before the show was broadcast.

What’s next?

That is the problem of billions of dollars. (Or as Thorn said, named in the style of the meme of the same name, and its name is: “Very currency. Lots of coins.”)

The frenzied trading of Dogecoin has pushed the total value of the cryptocurrency to more than $65 billion. This makes Dogecoin the fifth most valuable cryptocurrency in the world.

It is worth more than the Canadian telecommunications company Telus, grocery chain Loblaws and retail chain Canadian Tire combined.

The sky may indeed be the limit. Musk’s wealth means he has the ability to see what happens to the Governor, no matter what.

But some financial commentators questioned whether Musk is responsible for commenting on cryptocurrencies because he has the right to change their prices.

James Angel, associate professor at Georgetown University’s Macdonald School of Business, said: “I think he’s funny… he can say anything he wants about Dogecoin or cryptocurrency, and he’s fully aware of it. , He’s just talking about things that change prices.” In financial markets and cryptocurrencies.

“Anyone who wants to play Elon Musk’s game should be prepared to lose all money.”

Moya of Oanda said that the appearance of Mosk may represent the peak of Dogecoin’s popularity.

He said: “At best, Dogecoin’s fate may be similar to GameStop, because it has a hardcore retail team, and in the long run, it is still people’s creed.”

Others, like Musk, believe that Dogecoin will continue to exist.

Zhu Chuhan, managing partner of Kenetic Capital, a Hong Kong blockchain venture capital firm, said: “The Governor’s long-term fundamentals are complete. This is a buying opportunity.”

Thorne agreed. He said: “We don’t hope Dogecoin will soon become the most valuable cryptocurrency in the world, but Dogecoin should not be ignored.”

“As long as there is a saying that still exists, it can ensure the life of Dogecoin: people like to make funny jokes.”

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