Elon Musk and Dogecoin, What’s Going on Here?

MikeE

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You’ve heard of Elon Musk, you may or may not have heard of Dogecoin. Musk has sent the cryptocurrency investing world on fire with a series of tweets aimed at Dogecoin resulting in substantial growth of the cryptocurrency. So, what is Dogecoin? and why is Elon Musk tweeting about it?

You see, it all started as a joke, and now “that joke” has risen in value by 696% this month, and a staggering 2,096% this year alone. That Joke? Is Dogecoin, the meme cryptocurrency that started as fun, and is now quite literally making kids millionaires. But, don’t just toss your 401k into this speculative coin just yet.

What is Cryptocurrency?

When many think of the term cryptocurrency, they may think of hacker kids on skateboards trying to play with “magic internet money” or maybe you immediately think of Bitcoin, the more well-known “father” of all cryptocurrencies. However, for some, they have no idea what cryptocurrency is, let alone what a Dogecoin is.

As described by Nerdwallet.com, “A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography to secure online transactions. Much of the interest in these unregulated currencies is to trade for profit, with speculators at times driving prices skyward.”

Back in 2008, a whitepaper was discovered titled “Bitcoin: A Peer-To-Peer Electronic Cash System”. In reading the whitepaper (which can be found here) Satoshi Nakamoto described that cryptocurrency as “an electronic payment system based on cryptographic proof instead of trust.” That ‘cryptographic proof” is documented on a system called the Blockchain.

What is a Blockchain?

A blockchain is an open, distributed ledger that records transactions in code. In practice, it’s a little like a world-wide, internet-based checkbook that’s distributed across tons of users’ computers around the world. These transactions are documented with “blocks” that are linked together on a sort of custody “chain” of previous cryptocurrency transactions.

Blockchain technology essentially keeps transactional records of all transactions and records them on a decentralized ledger that cannot be altered by any one entity, thus making the transaction based on a factual cryptographic “proof” rather than trust like most modern transactions are as any one person can generally alter most other records of the transaction.

The popularity of cryptocurrency started back in May 2010 when the first Bitcoin real-world transaction took place by a programmer named Laszlo Hanyecz, who purchased two Dominos Pizzas with 10,000 Bitcoins when at the time, those 10,000 Bitcoins equaled $30. For perspective on growth, those same 10,000 Bitcoins would be worth 370 Million Dollars. I hope the pizza was good, Laszlo.

While Bitcoin remains the uncrowned king of the cryptocurrency world, the blockchain technology value puts developers into a frenzy to develop their own cryptocurrency token using the power of the blockchain in hundreds of other assets aimed at providing other services. Each of these created a new coin that is valued on cryptocurrency exchanges and invested in by speculative investors who think cryptocurrency is the future of not just financial transitions, but blockchain will document many other aspects of our lives.

Whether or not blockchain technology will take over or if Bitcoin will assume duties as the new digital dollar remains to be seen, however, it hasn’t stopped young investors from raking in tons of cash along the way in market fluctuations.

Cryptocurrency is Making Lots Of Millionaires

As mentioned earlier, those 10,000 Bitcoins used to buy a $30 Pizza are now worth 370 Million Dollars. While shocking, it’s not the only case of the commodities rocket-like rise making people millions of dollars.

When Erik Finman was 12 years old, he took a $1,000 gift from his grandmother and purchased Bitcoin with it. By 18 years old, he was an 8-Figure Millionaire. There was also the story of the young silicon valley developer whose interest in Bitcoin in 2010 prompted him to make a $3,000 investment that yielded him $25 Million Dollars by 2017.

Stories like these go on for a while, and when heard by others prompts interest in Bitcoin and the speculation grows, leading to a wild investment ride that has both made people millionaires and others lose their entire 401k.

Bitcoin experienced a meteoric-like rise in the fall of 2017 taking the price of 1 Bitcoin from roughly $3,800 in September 2017 to $17,700 in December 2017. Rises like this caught the interest of everyone from the small-town USA to the wolves on Wall Street. One man saw this rise and in that fall put his entire retirement savings of $120,000 into Bitcoin, 4 months later it was almost completely gone as the price of Bitcoin fell sharply to correct the explosive growth.

What Is A Dogecoin?

While the other cryptocurrencies have a purpose, Dogecoin was created as a joke, and has since become what is described as a peer-to-peer electronic payment system inspired by the popular 2013 meme of the Shiba Inu dog. It was a fork of Luckycoin, which itself was a fork of Litecoin. While Bitcoin has a limited number of coins, there is no limit to the number of Dogecoins which can be created. It is used for microtransactions as well as tips on articles. It was created by programmer Billy Markus and Jackson Palmer and initially released on December 6, 2013. Dogecoin can be traded by interested consumers on the popular trading app Robinhood.

Why Elon Musk?

It’s not quite known why Elon Musk has such an affection for Dogecoin, but by looking at his Twitter feed you can quickly see the world’s richest man and owner of Tesla and SpaceX has an interest in cryptocurrency. Musk pinned a poll to the top of his Twitter feed asking a simple question: What is the future currency of Earth? One answer option to select reads “All other crypto combined” and the other option reads “Dogecoin to the moon!”. As of today, that poll has 2,432,725 replies with an overwhelming win for Dogecoin with 71.3% of the readers betting on Dogecoin.

On February 4th 2021, Musk tweeted “No highs, no lows, only Doge”. Since that tweet, the dogecoin price has increased by over 300%. While it's currently a mystery as to why Musk has inserted himself into the King Doge position, fans and investors are not arguing as once Musks sends a tweet regarding Dogecoin, the price always has a jump.

Dogecoin Moving Forward

Seeing that cryptocurrency is so young and speculative, investing in it is a gamble. However, nothing ventured, nothing gained, right? If you are thinking of jumping on the Dogecoin rocket “to the moon”, please, only invest what you can afford to lose. If you win, you win! But if you lose, you were prepared (and you still have a retirement).

It’s not clear why Elon is such a fan of the coin or cryptocurrency at all. However, one can speculate that it is attributed to Musk’s forward-thinking approach to life and seeing beyond current conditions. Musk lives in the future and it appears in his world, the future of cash is as you guessed it, Dogecoin.

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I’m a Colorado resident who lives at the base of the Rockies. From truck camping to backcountry exploring, if it’s outdoors, you can find me there! Check out Offgridessential.com for more outdoor content. Instagram: Offgridessential Twitter: @OGeseential Facebook: offgridessential

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