DOGECOIN, the cryptocurrency set up for a joke, which is now worth $370 millions, has sparked concern among analysts who warn it could burst the bitcoin price bubble.
The parody ‘alt’ coin was created for “s***s and giggles” in 2013, and named after an internet meme featuring a Shiba Inu dog surrounded by incoherent neon text.
But the spoof is now trading at $0.003190 this week, making its market capitalisation (total value of a company’s outstanding shares) standing at $370 millions, according to CoinMarketCap.
Altcoins are peer-to-peer digital tokens that descended from bitcoin. Notable altcoins include steem, ethereum, starts, ark and litecoin.
Altcoins form the body of ‘fast-follow’ technology that pivots on the original design of bitcoin, ironing out the creases and moving digital currencies towards mainstream adoption.
However, a number of key industry analysts remain concerned.
Lewis Tuff, chief platform engineer at Revolut, told Express.co.uk that many of the new market participants pumping money into cryptocurrencies after the bitcoin boom have chosen currencies perceived as “low cost” because holding one whole unit of an altcoin, like the dogecoin, is deemed to be of greater value than a fractional amount of bitcoin or ether.
But this is a poor decision according to Mr Tuff.
He told Express.co.uk:
“The recent surge in dogecoin’s price illustrates the huge demand for cryptocurrencies, but ultimately those altcoins that survive long-term will be the ones that provide utility beyond speculation.”
Joe Pindar, director of digital security firm, Gemalto adds that the big problem is that the creator of dogecoin didn’t understand why it has reached a $2bn valuation in January 2018 when it was created as a joke. But then four days later its valuation doubled.
Mr Pindar told Express.co.uk:
“The cryptocurrency hasn’t been updated in two years, suggesting any investment is based purely on people jumping on what they think is a gravy train. This is called “momentum investing” in the investment world, but this may just be a case of adding to the bubble, before it bursts. Who will have the last laugh is anyone’s guess.”
Thomas Bertani, CEO of Eidoo, says that dogecoin is a great example of how so called ‘altcoins’ need to be researched before investments are poured in.
Mr Bertani said:
“Never invest what you’re not prepared to lose and do your homework before putting money behind anything. If a company is audited by a reputable company it’s a great sign, for example”.
While Richard Asquith, VP at Avalara that buzz around dogecoin is a clear indication that speculators are looking for the next quick bubble in the digital currency market.
“As bitcoin matures, gains made from trading this ‘private currency’ are being recycled into other emerging currencies.
This spike in market capitalisation of Dogecoin in early 2018 will no doubt add to the alarm within Central Banks with regard to money laundering and tax evasion – a concern which has been on the regulatory table since Bitcoin’s inception.”
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