Inflation and Influencers: How Investors Can Send Dogecoin to $10

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So much wow. When Billy Markus created Dogecoin (CCC:DOGE-USD) in 2013, he did so as a joke. DOGE’s mining reward system was so ludicrously structured that no one could possibly have taken it seriously; at the start, miners could earn anywhere from zero to 1 billion coins for completing a single block.

Dogecoin Cryptocurrency

Source: Orpheus FX / Shutterstock.com

But Dogecoin holders have had the last laugh. Today, the cryptocurrency is worth almost $10 billion and has one of the most dedicated followings of any tradable security. Lucky investors could have turned a $1,000 initial stake into nearly $1 million.

Core to this success was a 2014 technical change that developers quietly made, although celebrity endorsements helped. At block 145,000 – the coin switched from its random mining reward to a consistent payout; miners now earn just 10,000 DOGE per reward. That move capped today’s inflation at 5.256 billion coins per year and removes the joke that initially made the cryptocurrency unusable.

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Renewed interest in Dogecoin’s development could spark even more changes. If its inflation trajectory changes again, DOGE at $10 might become a reality.

Why Are DOGE Prices Stuck Around 6 Cents?

Cryptocurrencies typically fall into three groups:

Inflationary: a supply that goes up indefinitely (i.e., Dogecoin)

Deflationary: a limited supply (i.e., Bitcoin)

Pegged: a supply that changes to match USD or another underlying asset (i.e., Tether)

Today, Dogecoin lives life as an inflationary coin. Much like fiat currencies, more gets minted every day. And just like its government-backed counterparts, Doge’s upside remains limited because buyers know they can always acquire more later. (For a real-world example, consider that the EUR/USD exchange rate of 1.2 is virtually the same as in 1999). In other words, when your currency adds 4% supply every year, it will eventually find a price equilibrium with other 4% growth currencies.

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Meanwhile, Bitcoin (CCC:BTC-USD) and fellow limited-supply coins can often see their value rise astronomically. Much like Picassos, vintage wines and 1868-collectible stamps, their limited availability means each minted piece becomes more valuable with each passing day.

DOGE Price to $1? Or $10?

Even without inflationary changes, the price could still hit $1. The cryptocurrency has 130 billion coins outstanding; a $1 price-per-coin will still leave it 55% the size of Ethereum (CCC:ETH-USD), the world’s second-largest crypto. And because only the marginal trade matters in asset pricing, even a few major account owners could theoretically send values soaring.

With some luck, the coin might even stay at $1. With renewed interest in the Shiba-Inu-fronted coin, developers have since jumped back into its code repository, proposing crucial usability and speed improvements. Developers have pushed major changes before – DigiByte and Litecoin (CCC:LTC-USD) snippets features prominently in Dogecoin’s source code. More may be on the way.

Inflation will also become a minor issue over time – the outcome of a flat reward divided by a growing capital base. By 2040, Dogecoin’s inflation rate would have dropped to just 2.4%, or roughly the same as U.S. dollars today. By 2060, it would be 1.6%, making it deflationary relative to dollars.

dogecoin supply and inflation

Source: Author Calculations

However, sending Dogecoin to $10 will require an even more significant change: a switch to a deflationary system sooner than 2060.

Dogecoin’s 10,000 Rule

Currently, miners earn 10,000 DOGE per block, which happens about once per minute. That puts a $10 price target firmly out of reach; no matter how many people buy Dogecoin, its ever-growing supply makes price gains an uphill battle. A $10 price means Dogecoin needs to surpass Bitcoin in market capitalization and stay there.

But in open-source cryptocurrencies, no rule is permanent. With enough core contributors voting for change, even projects as large as Ethereum can alter its fundamental building blocks to keep up with newer coins.

Today, Dogecoin finds itself at the same crossroads. Its codebase is rapidly aging, and newer coins like Cardano (CCC:ADA-USD) and Polkadot (CCC:DOT-USD) are nipping at its heels. Even Bitcoin looks vulnerable to third-generation coins that can perform transactions far faster and cheaper.

So far, Dogecoin’s grassroots-based approach has helped the cryptocurrency avoid obsolescence; people buy the coin for fun and profits, not usability. But unless larger stakeholders also step up, these efforts can only go so far.

The Dogecoin Whale

Ordinarily, prominent crypto stakeholders will help fund code and business development. The Cardano Network, for instance, has three official organizations to manage standardization, technology and developer support. Together, they share around billions in funding. Ripple Labs has a similarly large budget for promoting XRP (CCC:XRP-USD).

Meanwhile, DOGE relies on 200 part-time coders and a legion of online fans for support. Many look like core contributor Ross Nicoll – working for free to maintain an ever-growing system. It’s why much of its code gets lifted from other coins: there are simply not enough resources to develop proprietary code. Others are like the thousands of social media followers on Dogecoin; many constantly hound the developers to cap the currency’s supply.

If investors want to send Dogecoin prices to $10, far more is needed than buying the coin and posting tweets. It needs a benefactor to help fund improvements.

Already, the coin has some big-name backers. On Thursday, Elon Musk promised to literally send the coin to the moon on a SpaceX rocket. He could make an even bigger impact by starting a “Dogecoin Foundation” to fund development and promote adoption among startups and enterprises. So far he’s avoided that, blaming the “Dogecoin Whale“. Regular investors can help by contributing, rather than hounding developers.

Dogecoin to $10 is more than a dream – it’s a possibility that’s just around the corner if the community one day bands together.

On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing.

Elon Musk says he’s going to put Dogecoin on ‘the literal moon’

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It might be April Fools' Day for a few more hours, but this is no joke.

SpaceX CEO Elon Musk tweeted on Thursday (April 1) he would put “a literal Dogecoin” (pronounced “dohj coin”) on the “literal moon.”

SpaceX is going to put a literal Dogecoin on the literal moonApril 1, 2021 See more

Although some questioned whether Musk was joking in light of it being April Fools' Day and his reputation for making off-the-cuff remarks, others, including CNBC space reporter Michael Sheetz, suggested Musk could very well be telling the truth.

“I know it’s April Fool’s but I don’t for a second question that he means this,” Sheetz tweeted, to which Musk replied: “After all, SpaceX’s first payload to orbit & back was a wheel of cheese.” (SpaceX did in fact deliver a wheel of cheese to orbit in 2010, during a test flight of its Dragon cargo spaceship.)

After all, SpaceX’s first payload to orbit & back was a wheel of cheese …April 1, 2021 See more

The self-proclaimed “techno-king of Tesla,” Musk, 49, is an ardent supporter of cryptocurrencies, including Dogecoin and bitcoin. In February, Tesla announced that it had purchased $1.5 billion worth of bitcoin. One month later, Musk said Tesla would accept it as payment for its vehicles.

You can now buy a Tesla with BitcoinMarch 24, 2021 See more

SpaceX has not yet made a similar announcement.

Musk also famously launched his own cherry-red Tesla Roadster into space with the first test flight of SpaceX’s Falcon Heavy rocket, in February 2018. The Roadster has since passed by Mars and is still orbiting the sun.

Related: SpaceX founder Elon Musk is now the richest person in the world

Dogecoin, which originally started as a joke, was created in 2013 by software engineers Billy Markus and Jackson Palmer. The cryptocurrency, which uses a Shiba Inu as a mascot, is “an open source peer-to-peer digital currency, favored by Shiba Inus worldwide,” a description on Dogecoin.com states.

The cryptocurrency can be obtained in several different ways: purchased, traded on an exchange or “mined.”

This is not the first time Musk has mentioned Dogecoin’s presence on the moon. In February, Musk tweeted a meme of a Shiba Inu in a spacesuit on the moon holding a Dogecoin flag.

Literally pic.twitter.com/XBAUqiVsPHFebruary 24, 2021 See more

The price of Dogecoin skyrocketed following Musk’s tweet, as its value rose nearly 30% to $0.70 just minutes after Musk’s proclamation.

It’s unclear if Musk was serious about sending Dogecoin to the moon, but the company could potentially make that happen, given its lunar exploration plans.

In August 2020, Space.com reported that SpaceX’s Starship spacecraft could reach the lunar surface with NASA payloads as soon as 2022. And in February, NASA said it would use SpaceX to provide launch services for parts of its ongoing Gateway project, an upcoming outpost that orbits around the moon.

As Business Insider notes, the physical coins are sold as memorabilia but do not function as currency.

Mark Cuban Thinks Dogecoin ($DOGE) Could Get to $1, but Could It Get to $10?

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On March 6, billionaire investor Mark Cuban said on Twitter that he could see a way for the price of meme cryptocurrency Dogecoin ($DOGE) to reach $1; now, one financial research firm says it is even possible for the price to reach $10.

Cuban is the majority owner of the professional basketball team Dallas Mavericks, as well as one of the “sharks” on the highly popular reality show “Shark Tank” (which is aired on the ABC television network).

Throughout 2021, two billionaires — Elon Musk and Mark Cuban — have helped the Dogecoin price rise over 1100% (from $0.0047 to $0.0568) and its market cap reach $7.3 billion (making DOGE currently the 17th most valuable cryptoasset by market cap) by talking, on numerous occasions, about why they like this cryptoasset.

On February 8, revealed what he had said when a Forbes reported had recently asked him about Dogecoin and whether its popularity with retail investors is a bad thing.

When a Forbes reporter asks me about #dogecoin and whether it’s a bad look for crypto when people are buying it pic.twitter.com/YGs27Vdsxo — Mark Cuban (@mcuban) February 8, 2021

On March 4, crypto payment processor BitPay announced that it had started allowing merchants to accept Dogecoin for payments, and that the Dallas Mavericks would be the first to accept Dogecoin.

Two days later, Cuban delighted Dogecoin holders everywhere when he said that his NBA team had had more than 20,000 orders paid for with Dogecoin and that if they managed to sell another 6.55 billion DOGE worth of merchandise, the Dogecoin price could reach $1.

The @dallasmavs have done more than 20,000 #Dogecoin in transactions, making us the LARGEST #DOGECOIN MERCHANT IN THE WORLD ! We thank all of you and can only say that if we sell another 6,556,000,000 #DOGECOIN worth of Mavs merch, #dogecoin will DEFINITELY HIT $1 !!!🚀🚀🚀 — Mark Cuban (@mcuban) March 6, 2021

Well, on Friday (April 2), independent financial research firm InvestorPlace published an article titled “Inflation and Influencers: How Investors Can Send Dogecoin to $10”.

The report started by saying:

“Even without inflationary changes, the price could still hit $1. The cryptocurrency has 130 billion coins outstanding; a $1 price-per-coin will still leave it 55% the size of Ethereum…, the world’s second-largest crypto. And because only the marginal trade matters in asset pricing, even a few major account owners could theoretically send values soaring.“

It then talked about inflation:

“Inflation will also become a minor issue over time – the outcome of a flat reward divided by a growing capital base. By 2040, Dogecoin’s inflation rate would have dropped to just 2.4%, or roughly the same as U.S. dollars today. By 2060, it would be 1.6%, making it deflationary relative to dollars… However, sending Dogecoin to $10 will require an even more significant change: a switch to a deflationary system sooner than 2060.“

The report then went to explain what was needed to allow the possibility of the Dogecoin price reaching $10 one day:

“If investors want to send Dogecoin prices to $10, far more is needed than buying the coin and posting tweets. It needs a benefactor to help fund improvements.

“Already, the coin has some big-name backers. On Thursday, Elon Musk promised to literally send the coin to the moon on a SpaceX rocket. He could make an even bigger impact by starting a “Dogecoin Foundation” to fund development and promote adoption among startups and enterprises. So far he’s avoided that, blaming the “Dogecoin Whale“. Regular investors can help by contributing, rather than hounding developers.

“Dogecoin to $10 is more than a dream – it’s a possibility that’s just around the corner if the community one day bands together.“

Featured Image by “9685995” via Pixabay.com

The views and opinions expressed by the author, or the people in any of the embedded videos, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.

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