The Breakdown - Is Dogecoin at $0.58 a Triumph or an FU to the Crypto Industry?

Episode Date: May 5, 2021

NLW asked his Twitter followers about what the success of dogecoin meant to the crypto industry. He got an extremely diverse set of takes. Some see it as a triumph of crypto’s uncontrollability. Some see it as a triumph of the underlying bitcoin tech working on a forked chain that hasn’t had much maintenance in years.  Others see it as a damning indictment of the market as a whole; something that shows what a joke the whole industry is.  Which is it? Can it be both? -- 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

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 nexus.io, neared.org, and genesis trading, and produced and distributed by CoinDes. What's going on, guys? It is Tuesday, May 4th, and today we have an interesting debate. We are officially in a different part of this bull market. Bitcoin is down about 4% over the last 24 hours to the mid-55,000s. ETH continues its March currently at $3,400, 10% up in the last 24 hours. Now, it has seemed a bit like it was finally ETH's turn to dominate the conversation.

Questions like, is there a shift in institutional fund flows to ETH? How far on a journey to becoming a macro asset is it? How is it shifting the narrative of the crypto industry as a whole? All of these seemed like the things that we would. would be talking about right now. But no. Sorry, Ethereum, you don't get to have these conversations. At least not today. Because once again, stealing everyone's thunder is the Shiba Inu themselves Doge coin. Doge is up like 45% in the last 24 hours. It's currently sitting at like 58 cents. Of course, people are trying to point to reasons for this. Yesterday, the Oakland Athletics

announced that they were selling tickets for an upcoming series with the Blue Jays 4100, and then quickly completed the novelty transaction. Another more plausible to me explanation has to do with the token getting more accessible. Eitoro on Monday announced support for Doge, citing significant demand among their 20 million global users, and this morning Gemini also announced that it will support Doge. There's also the hype leading up to Elon Musk's appearance on SNL this weekend. He did tweet out the Doge father, SNL May 8th. Now, I recently did an episode that I called Crypto's War of the Roses, and it went through the seven factions that I believe make up this bull market. Doge I listed as a force unto itself, fully of but also outside of the rest of the

market. This morning, as I watched the price of Doge soar to nearly 60 cents a coin, I asked the only question that I could think of on Twitter. Is Doge a triumph of, or a fuck you to the crypto industry. And man, did you guys have feelings? So what I'm going to try to do is organize the answers into a few different categories and add some thoughts along the way. Let's talk about those of you who felt it was a triumph first. One set of arguments for this had to do with the idea of Doge as a gateway drug. It's a fun, accessible way into a crypto industry that tends to be pretty complex and inaccessible. In other words, Bitcoin promising sound money and censorship resistance requires an understanding of what those things mean and why they're different than today's

alternative. Another category of answers here in this triumph idea is that Doge represents uncontrollability and freedom. A lot of you out there, even those who don't love Doge itself, think that it demonstrates free will. This is an asset that started as a joke that just continues to propagate. It shows in that way the uncontrollability of the crypto world. Here's how Rory Murray Murray put it. Quote, I think it's a triumph. It's a triumph of the absolute inability for anyone to control a narrative, which is an inherently crypto attribute and strength, despite it have seemingly turned on its masters. That's the whole point. One very different triumph take that I really liked from Nathan Rudman had to do with the code and the stability of the tech that underlies Bitcoin.

Rudman wrote, Means that a code not maintained for two years, itself a copy of a copy of 2011 Bitcoin, is still running and secured. It shows the extreme security of BTC. Rain is Wetter had another Bitcoin connection as well in their triumph answer. In a world where digital gold exists,

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and prime brokerage business lines. Visit genesistrading.com today to learn more. Some of you guys saw Doge as just a rag on other worse alt coins. Shimon Lazaroff tweeted, just flipped XRP, and is of comparable merit in mind. opinion. Now, there were some of you that saw it as a triumph, but in its FU, not to crypto, but to the traditional system. In this version of the story, people have lived inside a financial paradigm that seemed not to be designed for them, where everything related to money is out of their control. Was in attendance at tweeted, it's an FU to the wondrous illogicality of money

itself, highlighting it in day glow colors. And in that world where you have no control over money, why not throw it back in the faces of those who do with something as absurd as this? Over the weekend, Twitter user Ede tweeted, fuck it, let's just try the dog money. And there is a lot of that energy going around. But let's shift now to those of you who said it's an FU to the crypto industry. I think that the core of this response is the idea that the success of a joke makes everything else seem like a joke as well.

Bloomberg's Joe Wisenthal has argued loudly, and through his own Twitter joking that it lays bare what crypto in his estimation is. Not some crazy challenger to fiat dominance, but instead just novel financial networks that people get rich on on speculation. Some others pointed out that it plays into hands of critics like comedian Bill Maher, who had his whole rant this weekend. Many extended this to the idea that Doge actually could introduce a legitimacy crisis. And the idea here is that if this Mimi joke thing massively outperforms other quote-unquote real assets, it undermines the legitimacy of the performance of everything else. It lends more credence to those who say that all of crypto is just casino games.

Now, the other side of the FU coin had to do with the idea that this was just going to inevitably wreck people. There were a lot of musical chair analogies. There was a lot of they'll learn the hard ways. Will Cole from Unchained Capital said, Dogecoin is not funny. Alt season is not exciting. Blatten affinity scamming should be accompanied by reputation loss. Maximilism is the antidote. Many took this farther and actually said that not only will people get wrecked, but that recklessness will trigger regulation. Lending credence to this is the fact that Jay Powell mentioned Doge by name in his FOMC presser last week, which is definitely the first

time the Fed chair has done so. He described it as an example of froth in the market. Many said they think it provides narrative ammunition in short for crypto industry bannings. Now, of course, I set up this dialectic between triumph on the one hand and F you on the other, but a fair number of you said neither or both. In the neither's, a lot of people said that it really wasn't about crypto, it was about memes. Memes are this new thing, as someone put it, quote, autonomous forms of knowledge causing themselves to be replicated, literal virality. Doge sits as the first meme to propagate its own self-determined financial ecosystem around it, and in so doing is a triumph just of memes, not of crypto per se. Some argue that it's neither because the real lesson here is in unit denomination.

Guru Nakamoto argued that the power of small numbers is really important, i.e. when someone opens their coin-based app, when they see that they can buy a bajillion doge coin for $20, or a bajillionth percent of a Bitcoin, people tend to want the thing that seems more. more solid. I've talked about the perniciousness of this before in the context of things like Safe Moon. Some other of the neither's basically said that even this question gives it too much credit. The Doge is just another shit coin, as one person put it. I understand that position, I totally respect it, but the amount of exposure Dogecoin gets means that it's not true practically in terms of our actual society, even if on some tech level it actually is. Still, I have to say,

I think that probably the most common sentiment was not neither, but both. Incognito called this a glorious contradiction, and this was the sentiment in a lot of places, the idea that at once it could be a triumph in many ways, but also a big FU and others. Indeed, the most liked response to my question, is Dogecoin at 57 cents a triumph or an FU to the crypto industry? Ben Hunt responded simply, yes. This is about as close as I get to an opinion on this. Doge is, as I've said before, the emperor of all shit coins. It is the one devoid of pretense about trying to be anything other than a meme and a dream. It is as decentralized as it gets,

as memes have a very hard time propagating as the centralized messages of some clear power source. But it is ultimately a rather dubious doghouse that this emperor presides over. There is transparently truth to all of the concerns above. It is causing undue regulatory attention. See again, the Powell Presser, and some people are going to get wrecked. There's just no way around it. However, I think it's well that the people for whom this delegitimate Bitcoin were looking for reasons to have their priors confirmed. I don't know any person or institutions seriously engaging with Bitcoin who would say, well, listen, I'm very impressed with how this network of self-sovereign nodes has created an entire financial system replacement on top of a powerful

sound money asset with no traditionally paid developers with near perfect uptime. But because there's a random dog coin that a lot of people like, I think I'll pass on the whole thing. What's more, I think in general that it is a bigger FU to traditional financial institutions than it is to the crypto industry. The rebellion here feels particularly millennial in Gen Z. It's a reaction to those boomers telling them not to eat avocado toast when those same boomers have literally hoarded all of the wealth in the world thanks to historically ideal conditions. Now, there is a raw, unerring sense of being able to not catch up, to not get out of college debt, to not be able to buy a house, to not live the life you intended.

We can debate what part of that is monetary policy versus other forces. We can debate even how legitimate it is, but the sense itself held by so many is undebatably shaping public discourse and markets. In that world, of course people are attracted to get-rich-quick schemes. In that world, of course people are attracted to one that comes with a mascot that seems to undermine in a quintessential way all of the BS spouting from traditional financial experts who have no real remedies for the youth of today. All of that said, all of that narrative making aside, it's probably the case that the next phase of this gets pretty friggin gnarly. I'm a little bit

fatalistic about it. It's just hard for me to see how it doesn't keep attracting money and attention. If everyone could have fun with it and not start gambling their life savings on it, that would be one thing. But people don't exactly have the best track record with that. So you guys will have listened to me enough before that just because that might be the case, I don't think that we should ban it. I don't think we should prevent people from doing whatever they're going to do with their money. And I guess to maybe leave it on a positive note, let's wrap with one more comment from the triumph column from Miguel Quenta, who's written extensively about Bitcoin in developing economies. He writes, definitely a triumph.

Just when everyone thinks they have it all figured out, we're humbled by forces that are beyond our control and comprehension. It just shows we are so, so early and still still still stumbling to harness the power of the Pandora's box unleashed by Bitcoin unto the world. I like that answer. So that's going to be my answer too. Thanks, Miguel. But for now, guys, let me know what you think. Hit me up on Twitter. I'm sure we're going to be debating this forever. Certainly at least a Saturday when Elon Musk is on SNL. But for now, I appreciate you listening. 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

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