The financial markets have always been known for their flexible structure and openness to external factors. Every incident can have an impact on the prices and it has been well-accepted by the market and its actors in the past. However, the understanding of the financial market has evolved something else, especially in the last two months. After the Gamestop madness, we have experienced whole another major move, the rise of Dogecoin. It looks like a joke at first sight, but believe us- it is something more and maybe this is the future of the market.
What Is Dogecoin?
Dogecoin was launched in 2013 as an altcoin based on the then-popular “doge” meme with a picture of a Shiba Inu dog. Dogecoin was not an innovative cryptocurrency at first — it was altering the original structure of Bitcoin and bringing nothing new to the table. What differs it from Bitcoin is its abundant supply. While Bitcoin is predicted to reach the number of 21 million at most, there is no maximum number for Dogecoin. There are 100 billion Dogecoin in existence and an average of 5 billion is expected to be added every year.
So, here comes the questions: How can a currency have any value if there is an unlimited supply of it and how did the price of a Dogecoin go up by more than 800 percent in 24 hours on 29 January?
Those Were The “Meme” Days
The answer to the questions above is not simple, but there is a concept you may have never heard before: playful infrastructures. The concept was mentioned first by crypto-ethnographer Ellie Rennie and it simply refers to a cultural phenomenon turning into a financial phenomenon.
Dogecoin is more of a cultural bubble rather than a financial bubble. Its price will be fluctuating as sharply as its popularity on the internet will. In the modern world, people are shifting towards a more post-materialist mindset day by day. When Elon Musk had tweeted a fake Vogue magazine cover in the name of “Dogue”, other people started to buy Dogecoin, since they wanted to become a part of the joke and enjoy this collective experience. Many of them did not consider making a huge profit over Dogecoin while buying it but still ended up with a considerable gain at the end of the day.
All the classical economical theories have assumed that the individual is rational and only cares about profit and believe us that these days are over. People trade not only for making more money but also for enjoying the moment and feeling better by participating in the community. The situation was not different with the Gamestop madness and it is clear that we will see a lot more cases similar to these two.
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