The Breakdown - Dogecoin: The Emperor of All Shitcoins and the Master of Memes

Episode Date: April 17, 2021

Dogecoin is on a tear. And it’s causing many mainstream media outlets to call “bubble.” On this episode, NLW breaks down DOGE as: Valueless memecoin Internet culture incarnate Dada-esque protest to a broken system  Much wow.  -- Earn up to 12% APY on Bitcoin, Ethereum, USD, EUR, GBP, Stablecoins & more. Get started at nexo.io -- Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW   The Breakdown is produced and distributed by CoinDesk.com

I call Doge the emperor of all shit coins in the title to this show because it doesn't even pretend to be based on something. There is no argument for some differentiated consensus algorithm, no pretense of a government system that makes it more durable, no smart contracts to develop the future of finance, and no promise of yield generation in a zero-yield world. Just pure, unadulterated absurdity. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexo.io and produced and distributed by CoinDess.

What's going on, guys? It is Friday, April 16th, and I can't believe I'm doing this, but here we are with a show about Dogecoin. Bull markets, I suppose, make fools of us all. In point of fact, this isn't really a show about Dogecoin so much as a show about what Doge represents, and what it tells us not only about crypto, but about the internet and the conflict of generations. But first, let's discuss why we're talking about Dogecoin. In a bull market, sometimes numbers go up in a way that no matter what you think about an asset, you have to ask why. Or at least, if you don't ask why, others will. Let's take a quick survey of headlines about Doge from just this morning. CNBC says Dogecoin spikes 400% in a week, stoking future.

of a cryptocurrency bubble. CNN says Dogecoin price soars more than 100% to new record after Elon Musk tweets. Business Insider. Dogecoin price rally extends to 520% over past week on Musk tweet, Coinbase. Newsweek says exclusive Dogecoin investor becomes millionaire after putting life savings into meme crypto. Ben Zinga writes investors in disbelief as Doge becomes top five crypto with $47 billion market cap. And then there's USA Today. Not a joke anymore, Dogecoin surges above 30 cents. You know what? Let's throw some tweets in here too. From Masari's Ryan Selkiss, 99.9% of crypto founders just looked at the Dogecoin price and quit today. From FinTwit All-Star Nick Majuli. If you had put each of the three US stimulus checks into Dogecoin, it would be worth over $300,000 right now. So clearly you get the picture

that something is going crazy with the Dogecoin price. But let's put some actual numbers around it. And for reference, Dogecoin spiked all the way up to 45 cents earlier. When I'm recording this right now, it's around 39 cents. That means Doge is up 40% or so in the last 12 hours, 195% in the last day, 533% in the last week, 575% in the last month, and an insane 14,747% in the last three months. So what the actual fuck is going on? First, I'll refer to a tweet from Chow Wang who wrote Defy Summer, Bitcoin Autumn, NFT Winter, Shitcoin Spring. The point is that there has been a lot of wonkiness going on with random 2017 vintage crap going up 40%, 50%, even 100%. So part of this is clearly just bubbly trader games. Second, there's been the emergence of a fierce movement on TikTok to get Doge to

$1 that I first started following back last summer. In fact, when it started, folks I know at Robin Hood said they saw a distinct spike in Doge all the way back then. Third and most obvious to all has been the relentless unceasing promotion of Doge by the meme lord himself, Elon Musk. Last night, for example, he tweeted Doge barking to the moon. Whatever the combination of reasons, we're now in the weird territory where an ironic thing, a meme, a joke, starts to be taken seriously by some, and in so doing, creates some danger. Slim Jim, yes, the meat company that makes you think of Macho Man Randy Savage, called out Doge on the ConAgra earnings call this month. Apparently, Slim Jim saw its follower count increased by 160% after it started meming Doge content. It got 35 million

impressions in 25 days. When CoinDesk published a story about this, Doge nearly doubled. Okay, so what's really, really going on then? Because it's clearly something. I did a survey on Twitter this morning where I asked people to vote what Doge is. One, preposterous, valueless meme shitcoin. Two, hilarious internet culture. Three, absurdist Dadaesque Middle Finger to Boomers in traditional finance. Four, all of the above. At the time of recording, preposterous valueless meme shitcoin has 16.3% of the votes. Internet culture has 11% of the votes. Middle finger has 12.9. of the votes, and all of the above have a whopping 59.8% of the votes. But let's go through each of these to understand how different people view what can only be called a cultural phenomenon. Let's start

with this idea of Doge as a preposterous, valueless meme shit coin. This is the view that this coin is an archetype of the BS that people who come into crypto get seduced by. It's effectively crypto's equivalent of a penny stock. In this view, it's not just a crappy thing on its own term, it's an active distraction from other better things. You certainly saw this point of view from some bitcoins who were conflicted around the time of Tesla's Bitcoin purchase. They were thrilled that Elon put $1.5 billion of Bitcoin on the books and started allowing Bitcoin for purchasing vehicles, but also at the same time argued that his relentless shilling of Doge was going to cause less sophisticated investors to get hurt. I mentioned when we talked about it then that I have a hard time

believing that people actually view this as real investing advice, but here we are. The point is that there is some amount of acrimony from those in the crypto community, both Bitcoiners and beyond, I will say, for a thing that sucks up so much discussion time and has almost nothing to do with the revolution that people see in Bitcoin or other aspects of the industry. Certainly, you have to give at least a little credence to this view when you've got a dozen publications actively speculating about whether the industry is now in a bubble because of it. Dave Portnoy cut to the heart of this on his Davey day trader global today. If you're parabolic guy or your pomp or all these other people, isn't this kind of, it's great.

But isn't it embarrassing to a level? Like, I wish I had Dogecorn. I wish I had Bitcoin. I wish I had all these other coins. They're just magic pills. They're just magic. This is betting. This is just Bernie Madoff dead.

But he's smiling. Are the crypto people? This is crypto, right? Gogecoin is crypto. though. It's a coin. It's fake. It's imaginary. You literally can't use it for anything. It's just buy it and get out before it crashes, right? Elon tweets about it. Fush, rocket ship. Dog, the never-ending story with the nothing coming over. That's all it is. I have no problem with it. It's not easy to buy. I look to buy it. You can buy it on block fully. It's at 39 cents.

Buy it, it goes to a buck, goes to whatever. There's no value. This is just bed it. So tell me these grand stories, these grandiose stories about redistribution of wealth and the system and there's a limited, it's just magic beans. That's all this is. This is just a pyramid scheme except as coins. That's just the pie piper. People who own it telling you how great it is.

So the price goes up and you get involved in the Madoff scheme and hopefully you don't get left, holding the bad. Now, I think this is perhaps the best critique of Doge, that by its very existence and performance, it delegitimates the claims of massive disruption of Bitcoin, Defi, and other parts of the industry. What's more, there's another small critique that I find valid, which is the penny stock effect. New entrance into this market often choose not to buy Bitcoin when they come into crypto because it looks expensive, and they like the idea of owning more of something else. In other words, why buy one-fifteenth of a Bitcoin when you can buy 500 instead of that thing that

you've seen Elon talking about? Ultimately, however, I believe that, one, Bitcoin is fighting much bigger battles than those with other crypto assets and the less time we spend on those battles and the more time we spend focused on the bigger prizes, the better. And two, frankly, I just don't have the energy to be the keeper of what people buy and what they don't. I'll try to educate all day long about what I think is best, but making moralistic arguments that people can't spend their money on something is just not something I have energy to do. In fact, part of why I came to this space is that I don't really like anyone telling me what I can and can't do with my money, or my life for that matter. So I'm not really interested in being a hypocrite on that front.

Still, even if one thinks people should be allowed to do whatever the hell they want, you have to take seriously the critique that this thing is diminishing the rest of the industry if only because of the nature of the media coverage around it. Looking for the best way to unlock your crypto's liquidity? Nexo.io is a good exactly what you need. Borrow against your digital assets at just 5.9% APR. Earned passive income with yields of up to 12% and swap between more than 75 market pairs with the instant Nexo exchange. Try the Nexo Wallet app to get the whole 360 degrees of crypto banking. Get started at nexo.io. Let's take another view now. Hilarious internet culture. Doge to me is the internet

incarnate. It took a mildly popular meme from 2013. and turned it into a coin mostly designed to make fun of crypto people, and then grew an entire life of its own in a story that just keeps growing and adding weirder and weirder chapters. Here's an example of one weird chapter. In January 2014, Dogecoin users raised over 30,000 in Dogecoin to fund the Jamaican bobsled team's trip to the Sochi Olympics. Yes, the Jamaican bobsled team was a real thing.

It wasn't just a part of the movie. They raised 26.5 doge coins then worth 33,000. By the way, those would be currently worth around 9. million. Over the course of years, Dogecoin lost its founders who rage quit the whole crypto industry, which makes sense because they were never really in it to begin with and always had a not even try to hide it contempt for everything else that was around here. In a weird way, Jackson Palmer, the founder, abandoning Dogecoin, allowed Doge to fully come to its mature form as something that is truly fueled by absurdity, irony, and content. Dogecoin is owned purely by the

memsters who lay claim to it, both with their content and, of course, with their purchases. It is in that way one of the first pure experiments we've seen in overlaying monetary value on top of a meme. But now let's come to my third option for what Doge is, as I phrased it in that poll, an absurdist Dada-esque middle finger to boomers in traditional finance. Now we're speaking of memes, but memes tend not to just be cute pictures. They very often, at least the viral ones, have a sense of sarcasm, of irony, even of cynicism and critique. They are ways to express dissatisfaction, simply, resonantly, and virally.

So let's look at Doge in that light. Dan Price is a CEO of a Seattle-based company who became famous for cutting his pay dramatically so that he could make sure all his workers made at least $70,000. He was lampooned as a socialist for doing so, but since then, his company has tripled their revenue and his employees are thriving. Anyway, he tweeted recently, What's the problem with young people today? Just bootstrap like I did.

1970 in today's dollars. Average college debt, $7,170. Average grad starting pay, $63,100. Now, average college debt, $30,000. Average grad starting pay, $53,900. $1970 in today's dollars, median house, $120,000. Median rent, $760 a month. Now, median house, $275,000.

Median rent, $1,100 a month. But to get a job with good pay, you're in areas where homes cost $5,000. to 750K, with rent at 1,500 to 2000. This is the context for all millennials and all of Gen Z. This is what's driving people to Bitcoin. This is what's driving people to the internet. This is simply the base level reality for an entire generation, the first American generation in a very long time that is almost guaranteed to be worse off than their parents were. So let's come back to Doge then. You see the constant lecturing of millennials and zoomers by boomers about the things that they can do to be better with money.

Here's how you say, stop having coffee out, stop eating avocado toast. Of course, the only reasonable response to this sort of commentary is to thrust both middle fingers soaring into the sky at the incredible hubris and lack of self-awareness that that message is being delivered with.

And that, my friends, is at least a part of what Doge does. Oh, you're worried that markets are out of whack because PE ratios are all weird and valuations are too high? Well, some respond by looking at the underlying conditions that got us here. The end of a long-term debt cycle, a unique experiment in expansionary monetary policy, the push of everyone farther out on the risk curve, and then they buy Bitcoin. Others say, well, I'm going to liquidate my 401k and put it all in a dog meme coin because screw you and your advice, that's why. I called Doge the emperor of all shit coins in the title to this show because it doesn't even pretend to be based

on something. There is no argument for some differentiated consensus algorithm, no pretense of a government system that makes it more durable, no smart contracts to develop the future of finance, and no promise of yield generation in a zero-yield world. Just pure, unadulterated absurdity. That absurdity is its strength. Bitcoin's fuck-you-to-the-system is a totally different design created to correct the problems of the old system, and plug in game theoretical economic incentives that ally unexpected actors who don't have to like or even know one another to make the system function. Doge coins fuck you to the system is here's a friggin' dog coin, based on a mean people didn't even really care about then, minting millionaires because it would be hilarious if it did.

Doge, in other words, is a giant troll. The more it's worth, the bigger the troll is. What's more, people get Doge when they don't get Bitcoin. It's hard to understand sound money in a non-inflating money supply and blockchains and whatever. It's not hard, on the other hand, to understand why it's, It's hilarious that a dog coin is making boomers who keep selling us a bill of goods uncomfortable. But still, as we wrap, I do need to come back to what's bad about it. I've given you the romantic, revolutionary view of Doge, which I would love to be true.

And for some people it is, but there's more to it than that. And ultimately, most of the people who are shilling Doge on TikTok aren't renegades. They're hucksters who want to dump their bags on you and it's high enough. Doge, for as hilarious as it is, ultimately has no basis for value other than the joke. Once the joke wears out, it's just back to being something people thought was funny once. What's more, I think it's impossible not to be a little concerned about that pornoit critique we were discussing, the potentially diminishing effect to other things happening here. And what's more, the absolute bevy of unsophisticated money it might attract.

The number one thing I don't want to see is a ton of people ape into it get burned out and reject the whole industry on spec. I lived through that story once and would happily avoid it again if we could. But love it or hate it, Doge is an end. inescapable part of this industry, and moreover, an inescapable part of internet culture. Much fucking wow. Anyways, guys, I promise I won't talk about Doge again, but there you go. I hope you're having a great Friday and getting ready for a wonderful weekend.

I'll be back tomorrow with the weekly recap and obviously Longreed Sunday on Sunday, where you know we had to do some response to the absolute onslaught of stupid environmental critique. So get ready for that. But until tomorrow, guys, be safe and take care of each other. Peace. We're witnessing the greatest paradigm shift in finance in modern history. Join thousands of newsmakers and influencers talking the future of money at Consensus by CoinDesk. A live virtual experience of leaders, change makers, virtual reality meetups,

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