“Should I Buy Dogecoin?”
Posted April 23, 2021
"In a world without gold, we might have been heroes.”
-Edward "Blackbeard" Thatch
“Wow! Blood in the streets! Should I buy Dogecoin?”
I caught the text in the morning.
Sent at 2:30 AM
Nothing good is ever purchased after midnight. But at least he had the mind to get a second opinion.
“Probably not,” was my reply as I rubbed the sleep out of my eyes. “But follow your bliss.”
What?! Why did I say that? Don’t say that. He’ll do it.
“On second thought,” I quickly typed out, “No. If you’re asking me what I would do… personally, I would not.”
“Why?” he asked.
This might take a minute.
I called him.
“First of all,” I said, “don’t you sleep? Second of all, Dogecoin is a [expletive deleted]. And I have a theory.”
Doge is a Distraction
Dogecoin, the world’s favorite “joke token,” briefly hit a market cap of $50 billion before the crypto market tanked.
That’s bigger than Ford.
That’s bigger than Kraft.
That’s bigger than Your Hometown Deli in Paulsboro, New Jersey.
You laugh. I cry.
I laugh. You cry.
We both laugh to keep from crying.
We both get why it’s happening: The inevitable result of funny money clown world economics. A flood of anxious dollars sloshing around blindly, looking for somewhere to go.
But Dogecoin is one of the worst pit stops. Worse, I think Dogecoin is a distraction. Before I get to what I mean by that, let’s dig into what Dogecoin is exactly.
Why Dogecoin is Beyond a Joke
Dogecoin is a “fork” (a copy) of “Luckycoin” (which, it turns out, wasn’t that lucky).
Luckycoin was a fork of Litecoin.
Litecoin is a fork of bitcoin.
(Litecoin, by the way, is what I would consider a “Silver Goose.” It has a fairly interesting thing going for it long-term. More on that later.)
Here’s what you need to know about Dogecoin:
1.] In February 2014, Dogecoin “co-founder” Jackson Palmer removed the Dogecoin’s supply cap, which previously stood at 100 billion coins. He wanted to encourage the use of the coin for tipping and dissuade people from holding it.
“YES,” I said on the phone, getting riled up. “THAT’S RIGHT. CURRENTLY, DOGECOIN HAS AN INFINITE SUPPLY.”
2.] At the current mining rate, 10,000 new dogecoins are released in block rewards every minute. That works out to roughly 14.4 million new dogecoins entering circulation every single day, or 5.2 billion per year.
“IF YOU’RE BUYING DOGECOIN, YOU’RE PAYING MINERS $2,500 (AT 0.25 PER DOGECOIN) PER MINUTE TO CREATE A COIN THAT HAS AN INFINITE SUPPLY. DUMB.”
3.] No developers care about fixing any of these problems. Palmer walked away from it in 2015 due to the increasingly “toxic” crypto industry.
“THIS IS BAD, BAD, NOT GOOD.”
“So,” he asked, “why is Elon Musk pumping it?”
“Glad you asked.”
Elon Musk Doesn’t Care About Dogecoin
If you think Elon Musk cares about Dogecoin… I’ve got some prime beachfront property on Mars for sale I just think you’re going to adore.
(And, yes, I also accept Bitcoin.)
You know what Elon is interested in? Silver.
When the self-described “degenerate gamblers” of Reddit’s wallstreetbets turned their attention away from Gamestop, and, for a moment, toward the silver markets….
Especially the physical silver market…
Elon started pumping Doge like there was no tomorrow. And Dogecoin started to flyyyyyy. Attention diverted.
But it makes sense that Musk would be terrified of a massive run on silver.
Silver is technology’s electrolytes.
(It’s got what technology craves!)
And Elon needs a lot of it.
My wild theory: Dogecoin, I suspect, was a clever distraction to keep the Gamestoppers from flooding into physical silver, biding Musk some time.
“Again,” I said on the phone, “this is just a theory. The point is, in the end, I believe Dogecoin is a horrible bet. And silver is a good one. My opinion.”
“Gotcha. OK. Thanks for that. Makes sense.”
[Breath of relief]
“I think I’m still going to buy just a little. Just in case it runs again.”
[Ed. note: Long before crypto, I was a silver bug. Still am. In fact, I wrote for a popular silver blog back in 2010-11. IMHO, silver has never looked more bullish than it does in 2021. But while the fools rush into the paper silver (like $SLV)… the wise are backing up the truck the physical… wherever they can get it. I haven’t seen any better place to load up than from our friends at Hard Assets Alliance. (Obligatory disclosure: Because we like the platform and the company’s founding principles, we are part of the “Alliance” and have owned a stake for years. Meaning, we benefit from any increase in trading activity on the platform.) Be honest. Did buying Dogecoin cross your mind? Click here instead.]
Managing editor, Laissez Faire Today
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