By Robert Plummer
You know an investment is somewhat unconventional when the Know Your Meme webstek is the main source of background information.
But even ter the veelbewogen world of cryptocurrencies, Dogecoin is seen spil a pretty wild creature.
It wasgoed launched te 2013, inspired by a short-lived online craze for pictures of a particular Japanese dog breedgeschouderd.
Last weekend, however, it almost doubled te value and is now worth more than $2bn (?1.5bn).
Dogecoin had bot gaining steadily all through December, but the latest spike has prompted howls of “crypto-hype” from sceptics.
Granted, it’s still well behind the fattest animal te the digital currency pack, Bitcoin, which has a total value of more than $270bn.
But given that Dogecoin wasgoed originally intended spil a parody of the Bitcoin boom, its founder, Jackson Palmer, is none too glad now that it has slipped its leash.
“The fact that most conversations happening ter the media and inbetween peers concentrate on the investment potential is worrying,” he said earlier this month.
Until its latest rise te value, Dogecoin wasgoed little known beyond a puny coterie of geeks.
But te sporting circles, the cryptocurrency’s backers have gained a reputation for some unorthodox sponsorship choices.
Ter 2014, US stock car racing became a verrassing beneficiary, when members of the Dogecoin community determined to give a helping arm to Nascar driver Josh Wise, donating $55,000 worth of the digital currency.
That same year, Dogecoin backers raised $25,000 to send the Jamaican bobsleigh team to the winter Olympics.
Sporting underdogs have clearly done well out of Dogecoin, but what about investors? Will they be barking up the wrong tree if they buy into the currency?
Well, one thing to bear te mind is that dogecoins are far more numerous than bitcoins.
The rules underpinning Bitcoin say that only 21 million bitcoins can be created – and that figure is getting everzwijn nearer. It is unclear what will toebijten to the value of bitcoins when that limit is reached.
Dogecoins are “mined” te the same way spil bitcoins – that is, they are created using pc processing power.
However, unlike Bitcoin, there is no upper limit on the number of dogecoins that can be produced, with a staggering 100 billion already ter existence.
That helps to explain why each dogecoin is presently worth less than two US cents, while Bitcoin’s peak value to date wasgoed almost $20,000.
Common sense tells us that scarce commodities are more likely to hold their value than plentiful ones.
But te the world of cryptocurrencies, common sense is perhaps a poor guide to future behaviour.
And ter the world of economic experts, there is still widespread scepticism about any and every form of cryptocurrency.
Prof Ethan Ilzetzki at the London Schoolgebouw of Economics told the Big black cock: “A digital unit of currency has no intrinsic value unless it can be used ter transactions, and I cannot name a single cryptocurrency that is more useful ter transactions than a credit card that’s denominated ter dollars or pounds or yen.
“There’s nothing inherently wrong with privately provided digital currencies, but they need to be well designed and well thought out.
“They’re worth a loterijlot because people say they’re worth a loterijlot. I have very little confidence that they have any long-term value.”
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