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What’s the deal with Dogecoin?
Breaking down Elon Musks fan favorite, decentralized OG memecoin
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Do y’all see the DOGE pump?!?! Lol ok we don’t really care about the pump as much we should, but Elon’s full time shilling makes us wonder…
Is $DOGE the gateway to adoption?
One of the Jonas bro’s tweeted it the other day too
What kinda meme world do we live in? Welp. Super bowl Sunday gotta go, enjoy this post detailing all things Doge.
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What’s the deal with Dogecoin?
What originally started as a joke in 2013 has quickly taken the world by storm. At its inception, Dogecoin served to poke fun at all the hype surrounding cryptocurrency at the time. With no ceiling on the number of coins that can be produced, coupled with the lack of groundbreaking technology, Dogecoin’s only use case seemed to be rooted in memes.
But sure enough, the joke slowly amassed a loyal following and by 2017, due to the cryptocurrency bubble, the value of $DOGE saw a bump.
Flash forward to 2021 and the Shiba bearing memecoin can be seen everywhere. From news headlines, celebrity tweets, billboards and more, people just cannot get enough of Dogecoin.
So why did this happen, and how does GameStop come into play in this?
To see where the story begins, look no further than to r/Wallstreetsbets, a popular subreddit where a tribe of individual and amateur investors come together to share investing ideas.
In late January 2020, a group of amateur traders decided to stick it to hedge funds who were short-selling GameStop stock betting that it would plummet. The amateur traders used the power of social media to rally like-minded individuals and encouraged them to buy GameStop stock in order to drive the price up.
The plan worked. Too well. Melvin Capital, squeezed by its bets against GameStop, lost 53% in January.
Thanks to the coordinated efforts of amataeur investors, GameStop’s market value shot up from $2 billion to $24 billion in only a few days. Additionally, GameStop stock increased over 1700% percent since December. This caused the short-selling hedge funds to lose out on their trades and led to a wild chain of events.
Robinhood, the popular trading platform, ended up restricting purchases of GameStop stock. This caused the brokerage to come under fire by redditors, amateur investors, and politicians alike who agreed that this move helped protect larger entities while disadvantaging individual investors. This has since led to Robinhood getting bombed with negative reviews across multiple app stores.
Vlad Tenev, CEO of Robinhood is now expected to testify before the FSC on February 18 because his decision to restrict trades may have been influenced by hedge funds. Citadel, one of the hedge funds negatively affected by the GameStock price pump was discovered to be Robinhood’s largest market-making partner. This has led many to speculate that Citadel may have pressured Tenev to limit the trading of stocks on Robinhood in order to protect the hedge fund.
Regardless of whatever the reasoning Robinhood had to pause trading, one can assume that these actions will most likely lead to a large group of people losing their trust in their platform. Most people likely won’t want to continue using a platform that barrs them from trading because it negatively impacts their business partners.
How did this lead to Dogecoin blowing up?
Now, to get back to the meat and potatoes of this article…
The GameStop fiasco showed the world what the combined strength of an online community can do. Now, consider the loyal Dogecoin following we mentioned earlier.
So it wasn’t very long before a similar movement broke out in the online world with r/Wallstreetbets coordinating efforts to now pump Dogecoin.
The mission was simple. Get Dogecoin... TO THE MOON!
This plan quickly gained momentum with even the likes of Elon Musk joining in.
“Dogecoin was made as a joke to make fun of cryptocurrencies, but fate loves irony. The most ironic outcome would be that Dogecoin becomes the currency of Earth in the future”
While it may be unlikely for Dogecoin to actually become the future Earth’s currency (This is partially do to the difficulty with assigning Dogecoin a systemic value), one cannot deny that pumping the value of Dogecoin is inherently fun.
This sense of community and shared drive to do the unthinkable is what ultimately led to Dogecoin’s price surge. Thanks to the power of memes and friendship, we have a powerful cultural phenomenon unlike anything else we’ve witnessed in current times.
Why is this relevant to DeFi at all?
Robinhood blocking its users from trading reveals an unfortunate truth in the traditional system of centralized finance. With a central source, events like these can happen, but it’s important to remember that we ultimately have the power to choose how we handle our finances.
The GameStop Fiasco and the rise of Dogecoin have only added fuel to the DeFi fire. We will without a doubt see a rise in the DeFi space throughout the coming months as traditional finance users begin to lose faith in the current system.
Who wants to be part of a system where platforms can easily block their users from trading when they feel threatened?
The truth is that no system is perfect, but DeFi offers freedoms that are hard to come by in traditional finance.
With that being said, who would have thought that GameStop and Dogecoin would be the face of the 2021 DeFi movement?
You know what they say…not your keys, not your coins ;)
⚠️ DISCLAIMER: Investing into cryptocurrency and DeFi platforms comes with inherent risk including technical risk, human error, platform failure and more. At certain points throughout this post, we might get commission for promoting certain projects, if this is the case we will always make sure it is clear. We are strictly an educational content platform, nothing we offer is financial advice. We are not professionals or licensed advisors.
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