In 2013, Jackson Palmer, an Australian computer programer, created a “tongue-in-cheek” cryptocurrency called Dogecoin. Last weekend, his joke currency reached a $2 billion market cap, much to his surprise and concern. At Motherboard, Palmer explains why real cryptocurrency adherents should be worried about all the money pouring into the sector. He argues that “2017 marked the year that cryptocurrency stopped being about technologically innovative peer-to-peer cash and instead essentially became a new, unregulated penny stock market.” Here’s an excerpt from the piece:
Dogecoin’s valuation is the result of market mania that has resulted in inexperienced investors buying up low-priced assets on a whim, hoping that they will follow Bitcoin’s meteoric trajectory. This irrational enthusiasm, coupled with large players manipulating largely unregulated markets, has resulted in a weekly cycle of rallies and crashes across just about every crypto asset. While the Dogecoin community on Reddit has seen a recent uptick in participation, the majority of new discussion seems to fixate on the USD price and speculation as to when it will rally once again.
It’s great to see mainstream excitement about cryptocurrency, but the continued focus on price and potential to “get rich quick” distracts from the laudable goals that projects like Bitcoin set out with. Even more importantly, the underlying technology is still facing technical challenges related to scaling that need to be addressed. At the time of writing, it costs an average of of $30 to send any amount of money using the Bitcoin network. At the same time, a token that touts itself as “the blockchain solution for the global dental industry” has just surpassed a $1 billion market cap. Something isn’t right here.
Image via cryptoexchang.com.