Can Elon Musk Make Dogecoin a Winner in 2022?

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The cryptocurrency Dogecoin ( DOGE -2.86% ) and its Shiba Inu mascot captivated buyers at first of 2021, sending its worth hovering to almost $0.74 — a large return, contemplating the value of Dogecoin at one level in 2019 was only a fraction of a penny. Alongside for the journey has been tech wizard and Tesla founder Elon Musk, who counts Dogecoin as one in all three cryptocurrencies he owns.

Tweets from Musk have despatched Dogecoin flying, and the SpaceX founder has vowed to assist enhance the community. However with the value of Dogecoin now again all the way down to round $0.17, can Musk nonetheless flip Dogecoin right into a winner?

Working to develop Dogecoin

Like many different cryptocurrencies, Dogecoin is a digital forex that runs on a decentralized community. Through the community, customers can transmit cash immediately to 1 one other anyplace on this planet so long as they’ve web. Two builders began the cryptocurrency as a joke in 2013. Musk mentioned he obtained concerned in Dogecoin particularly as a result of he noticed that most of the production-line staff at Tesla owned it.

Picture supply: Getty Photos.

Musk has reportedly been working with the Dogecoin builders since 2019 and even supplied to assist fund additional growth of the community, to which the founders declined. However the builders have heeded Musk’s recommendation to try to improve transactions per second (TPS) on Dogecoin’s community and make the community extra energy-efficient. That has develop into a giant situation for crypto networks like Bitcoin as a result of miners use an amazing quantity of laptop energy to unravel cryptographic puzzles to earn new tokens.

In actual fact, media retailers just lately confirmed that Dogecoin plans to transition the community from the proof-of-work mining idea that includes utilizing large quantities of laptop energy to a proof-of-stake (PoS) idea. In PoS, house owners of the cryptocurrency stake their tokens to develop into validators on the community and approve transactions to create new blocks and tokens.

Musk additionally doesn’t appear to be shedding any curiosity in Dogecoin — regardless of its decline in current months — and has used his affect to make it extra usable for commerce. In January, Tesla introduced it could settle for Dogecoin for purchases of some merchandise, sending Dogecoin’s worth up some 15% following the information.

Can Dogecoin develop into a giant winner?

Whereas I’ve no intention of disputing Musk, it is exhausting for me, presently, to see Dogecoin changing into a winner. For one, I do not see something notably distinctive that units Dogecoin other than the 1000’s of different cryptocurrencies on the market.

There may be nothing thrilling concerning the community from a performance perspective. Whereas it could possibly course of extra TPS than Bitcoin, many different cryptocurrencies can course of many, many extra TPS. Moreover, Dogecoin does not have sensible contract capabilities like Ethereum, so programmers cannot use it to create decentralized purposes, or dApps. Whereas the community is transitioning over to a PoS idea, I believe this can be a step that almost all blockchain networks will ultimately undertake due to how energy-intensive mining has develop into.

Dogecoin additionally doesn’t have good supply-and-demand dynamics from an investor standpoint. There are greater than 133 billion tokens in existence, and that quantity is ready to extend by 5 billion a 12 months, that means there isn’t any hope of this token being seen as a hedge towards inflation.

Lastly, the massive factor I believe Dogecoin had going for it was that it actually used the ability of promoting, memes, and its Shiba Inu mascot to construct a enjoyable neighborhood. The Dogecoin neighborhood is not gone, however different tokens — like Shiba Inu, which seemingly started as a knockoff of Dogecoin — have adopted an analogous technique and brought a few of that advertising and marketing momentum, for my part.

Dogecoin nonetheless may be right here to remain

The excellent news for Dogecoin buyers is that I do not suppose the token goes away. Dogecoin nonetheless has greater than a $22 billion market cap and the continued backing of Musk, who’s a celebrity within the tech world. It additionally appears fairly nicely established within the crypto world, so I think about it should proceed to maneuver up and down with the broader crypto market. In a method, Musk has already succeeded in making Dogecoin a winner. However as for one more insane run just like the token went on in early 2021, I believe these days are over.

This text represents the opinion of the author, who might disagree with the “official” advice place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis – even one in all our personal – helps us all suppose critically about investing and make choices that assist us develop into smarter, happier, and richer.

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