Bitcoin adherents are nothing if not incredibly self-serious. Whether they embrace the digital currency/commodity for its decentralized ethos, its purported democratization of wealth, or its promise to completely upend “fiat” currency; bitcoin believers are united in their fervent, religious-like devotion to furthering its cause, a cause deserving of the utmost respect.
But being based in the internet and all, nothing can be taken too seriously for too long without someone popping up to lampoon it. But in this case, the satirist is becoming more popular than the subject.
Enter the Dogecoin
In the case of bitcoin, the satirist in question was a copycat currency called “dogecoin,” a name taken from the whimsical meme doge. Dogecoin functions exactly like bitcoin, but its users treat dogecoin with levity and are thus decidedly freer with their digital coin. Its adherents consistently toss “doge” around in tips to each other for just about anything, seemingly mocking the worthlessness of their investment.
But as the practice picked up popularity something curious happened: even though doge usage started as a joke, since being launched just three months ago doge has taken off, and now records 800 transactions an hour on its Blockchain. That makes it the world’s second-most popular cryptocurrency…after bitcoin. And at current rates, its transaction rates will surpass those of the subject it mocks, making doge, despite its best intentions, the world’s most functional cryptocurrency.
Much Cryptocurrency, Very Internet, So Value, Wow
Doge started as a viral joke that merely takes the same picture of a surprised looking Shiba Inu dog with text written in dogespeak, a sort of Pig Latin-like joke language that appends the descriptors “much,” “very,” and “so” to adjectives and nouns in nonsensical fashion and often punctuating its optimistic statements with “WOW.”
It’s a lighthearted, fun little meme and a perfect vehicle for a satire of the grave severity of bitcoin evangelists. Dogecoin inventors Billy Markus and Jackson Palmer used the doge as the nascent mascot for dogecoin, and launched it in December, expecting nothing to happen.
But whether it's spent ironically or not, capital is capital. And as more people bought dogecoin as a joke, its real value increased. And its usage increased. And it gained more widespread acceptance.
In short, it was taking on all the aspects necessary to be classified a functional currency.
It’s the Inflation, Stupid
So dogecoin started as a parody but has found itself becoming a serious value storage vehicle. But while dogecoin mimics bitcoin in most respects, it differs in one key respect: built-in inflation. And it that regards, dogecoin has a far more legitimate shot at functioning as a real currency and not a commodity.
Bitcoins are fixed in amount, with 12 million of the 21 million that will ever exist currently in the system and no more possible to exist after 2140. Bitcoins get exponentially harder to mine as more come into existence, meaning the only incentive to expend more resources to mine more bitcoins is if they continually increase in value. It’s a classic deflationary asset and thus prone to hoarding.
Dogecoin, on the other hand, encourages the opposite. After reaching 100 billion doge, the supply will increase annually at roughly 5 billion a year. That is, dogecoin will steadily inflate.
That’s bad news for hoarders and speculators, but, obviously, good news for anybody who wants to see an actually functional cryptocurrency. As James Angel, a finance professor at Georgetown University, told Ars Technica concerning basic economics: “In order for a currency to survive, it’s got to be useful. One of the problems we learned with gold standard was that it’s too inflexible—it takes too long for gold miners to dig it up out of the ground. Having a nice, steady, predictable money supply is actually a good thing.”
All Coins are Equal, But Some are More Equal than Others
Of course, dogecoin doesn’t fix the other problems associated with decentralized currency. The lack of authorities that adjust money supply based on real-life economic changes still will leave sizable gaps in its ability to function effectively as a currency.
But a central authority in digital currency would represent a full-on, Animal Farm-like transition away from its former anarchistic appeal, a “new boss, same as the old boss” situation with centralized bankers making decisions based on traditional economic theory.
Much betrayal of ideals. Very return to past. So failure of digital revolution. Wow.
But for the time being, dogecoin is riding a growth wave of popularity, edging out other self-serious “altcoins” in the process. Doge’s usefulness might have started as a means for anonymous internet users to send each other near-worthless digital tips. But that’s still a use. And as long as inflation encourages people to use the joke, dogecoin will continue to gain popularity.
And, satire or no, people will have to take it seriously.