Dogecoin ironically predicting where prices of SUCCESSFUL cryptocurrencies will go (to die)

in #money6 years ago (edited)

Dogecoin teaches us transactional success for Bitcoin will equal a lower & less volatile price for bitcoin, which will extract all the HODLers and make them sell out.
Zillion articles already written about what Dogecoin is, it's history, and why it is or isn't a great "investment"; we aim to skip most of that and get right to the point about what Dogecoin is to you...

Everyone knows by now Dogecoin was introduced as a Bitcoin "satire" (some say "joke" but we think that takes it too lightly, and some say "teaching cryptocurrency" but we think that gives it too much credit) in late 2013, the same time the "Doge" meme (misspelled word for dog) had reached it's peak. But what people do NOT realize, is that Doge meme was really only popular within the confines of the tech geek world-- aka Sillycon Valley. The tech bros have their own brand of humor, and "Doge" was sorta like that show Silicon Valley, it hit them right where they live, in the cubicles making and passing "TPS Reports".

(Office Space, the movie, was probably the earliest Hollywood capitalized on tech bro culture)

But the meme and the fun-idea of a satire cryptocurrency that actually worked (albeit deliberately massacred the central appeal of bitcoin which is the 21 million cap on number of bitcoins), were what inspired something real which happened after its introduction: TRANSACTIONAL RELEVANCY. Sure, in the early days Dogecoins were worthless, as you'd need a massive amount of them to convert them into something actually valuable like fiat currency (the dollar). but inside the confines of tech-bro culture, Dogecoins were actually useful bc they were a cooler version of "thumbs up" (or the alternative verbiage form: "thumbs upping"). No better way to be an alpha tech-bro than to "tip" people with Dogecoin, it was practically a way of showing off. Outside of tech circles? Dogecoin meant nothing, even when bitcoin was sorta rising out of the dust.

This is the REAL important parts of Dogecoin, this tipping culture. Why? Dogecoin was and maybe always will be the crypto with the most transactions used as actual transactions and not investment decisions. You see, everything from bitcoin to poopcoin has historically been used as a money-making hot potato. Perfect example, of course, being Charles Lee selling all his Litecoin at the very top of the market, but how many lattes or rolls of toilet paper did Charles Lee buy with Litecoin? The answer is easy, no matter how many he bought or how many times he actually "transacted" with Litecoin, he'll probably never do a bigger dollar-amount of transactions as he did when passing his Litecoin hot-potato to the next available sucker. Charity- Shmarity, Charles Lee left someone else who believed in him, holding the bag.

Dogecoin is different, in that only in the very peak of the madness (2017, and especially November and December 2017) was it even remotely considered an investment. Dogecoin being considered as an actual investment crypto, is practically how we can tell with perfect Monday-Morning-QB vision that all of crypto was in trouble. When jokes become serious, there might be a "tipping" point ahead (pun intended).

So what to do with Dogecoin? OBSERVE, LEARN. The teaching value of Dogecoin is valid, it's showing us what will happen to crypto-currencies which actually DO transact more than they become speculative playthings. Steem and Bitcoin would do well to observe. What do we mean? PRICE ACTION. Dogecoin has always been slow to react to bullish market, always been resistant to those big moves the cryptos which are 99.99% investment potatoes have on a regular basis. Why? Because Dogecoin's actually transactional use, has always meant there might be accumulation by people who aren't looking to "invest", they are just accumulating these things. Maybe they are really good writers on Reddit, maybe they are on other sites where Dogecoin is a form of tipping, but bottom line, they probably weren't ASKING to be paid in Dogecoin, they just were. What happens when an entity falls into a cryptocurrency? two things, either you HODL or you exchange those cryptos for something transactional-- like? FIAT, the USD. Take Steem for instance, how many sites do you know who'll take Steem as payment? It's so bad, that even cryptos who market or are built with Steem in mind don't even let you exchange Steem. We just saw an example the other day, Bookie. They operate in bitcoin only.
So if you're a good writer on Steem, what do you do with all that Steem? Sure, some HODL, but many others exchange that Steem for something else, whether it be bitcoin or US Dollars (ultimately, bc bitcoin has it's OWN problems gaining traction in the transactional world). Notice the pattern, Steem and Dogecoin are created, they ARE used transactionally more than other cryptos, and therefore they have lower volatility. Why? BC they are cryptos which are likely to be "cashed out", and cashing out means SELLING.

Before we come to the good stuff, some facts about Dogecoin....

Important Dogecoin facts:

100 billion coins circulated by 2015, so if Dogecoin is 10 cents USD, it's market value would be $10 billion, 1 cent = $1 billion, and 1/10th of a US cent = $100 million.

5.2 billion coins printed every year, roughly, so 5% dilution in 2016/2017. This never ends, so infinite Dogecoins would be created with time! This aspect itself gives rise to a future article, the differences in scarcity of the US Dollar, bitcoin, and Dogecoin-- and why they are each different in VERY important ways.

Founder: Billy Markus, of Portland Oregon and Jackson Palmer of Sydney, Australia

Based on... Luckycoin, which is based on Litecoin, which was built using themes from bitcoin

Blocktime: 1 minute (Litecoin = 2 min, bitcoin = 10 min)
Introduced: Dec 6, 2013
Hash type: Scrypt-based
current block reward = 10,000 Dogecoins

BE CAREFUL WHAT YOU WISH FOR:

Bitcoiners will always be trying to tell you how bitcoin will become THEE currency online, or how when Lightning Network begins to get used, it'll take market share from the dollar in transactions. This may or may not happen, but if it DOES happen the result will be the opposite of what all the talking heads (including Mr Charles Lee) THINK is going to happen. If bitcoin gets used transitionally, it will push the value of bitcoin DOWN, not up. Dogecoin has showed us this, but we'll paint it via a more base-nuts scenario....

Barnes & Noble announces they accept bitcoin as payment at their stores, and you can come in with your phone or favorite crypto-keychain and pay for books in their stores on their Lightning-Network optimized cash registers. GREAT NEWS!! It is great news, for bitcoin the currency, but it's terrible news for Bitcoin's PRICE vs fiat currency. Why?
Customer A goes on Coinbase with $1,000 and buys bitcoin, he then HODLs. The USD he uses are now freely trading, but his bitcoin are ferreted away hoping for higher prices. This takes bitcoin out of circulation, and makes it more rare. Bitcoin-as-investment stage of life, is GREAT for bitcoin price! Eh HEM, 2011-2017. But Customer B goes on Coinbase's San Fran ATM, and gets himself $1,000 in bitcoin and then heads to Barnes & Noble to buy books. And buy books he does, $1,000 worth. The bitcoin now rest with Barnes & Noble. Barnes and Noble when they get foriegn currency, typically either exchange that back into the currency of record they use to issue their quarterly reports to the SEC-- the US dollar-- or they buy derivatives that hedge out the currency risk. Either way, BKS must SELL their bitcoin. What's the net effect of Customer A? Positive on bitcoin price. What's the net effect of Customer B. Neutral. But what about Customer C? Customer C is unique in that HE bought bitcoin at 10 cents per bitcoin back in 2009? Customer C has been HODL-ling for a decade now, he's looking to actually GET something for his bitcoin. By now (say 2019), you can pay for HOUSES with bitcoin, so Customer C is VERY excited he can take something he got for free or at 1 penny per bitcoin when he was mining it before it was popular, and now buy MANSIONS with it. But the seller does the same thing BKS does, they need to monetize the bitcoin so they can pay their hospital bills in retirement, they sell the bitcoin for US dollars (which they BUY). So this STRENGTHENS the dollar, and weakens bitcoin price. Overall, a massive negative.

CONCLUSION:

When bitcoin becomes transactional, like Dogecoin has always sorta been (except in the very extremes of crypto-currency speculation) and Steem also mimics, the bitcoin price will go DOWN. Everyone hopes Satoshi lost his bitcoin, bc if he ever actually spent any, the price would go massively down.

AGAIN, BE CAREFUL WHAT YOU WISH FOR: Steemians, Bitcoiners, and Doggies. Transactions traction is your road to the poorhouse if you're a HODL-er. You need to be cheering for bitcoin to NOT be adopted at restaurants and bars and BKS, when the media, Charles Lee, and everyone else is wrongly telling you that transactional success is a good thing!

PS: We know "transactional" isn't an accepted word... YET. Did YOU know that if you invent a word and write it or speak it in a public place, and enough OTHER people begin to use it-- even if it takes years-- that made-up word will eventually enter the dictionary? This is the story of Entymology, and how "normalcy" became a word-- because enough dopes said it, it finally gained acceptance. Along those same lines, FYI:
"HODL" = Hold on for Dear Life (as in, hold onto your crypto-coins regardless of price action).

Keep your eyes open, Steemians! Best of Luck!

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Coins mentioned in post:

CoinPrice (USD)📈 24h📉 7d
ATMATMChain0.003$5.1%6.15%
BTCBitcoin6860.940$2.07%-7.78%
DOGEDogecoin0.003$10.62%2.33%
LTCLitecoin114.222$-0.13%-13.73%
STEEMSteem1.846$2.12%-9.87%

Quite honestly, all cryptos are used as a way to sell into other things like food, rent, other assets, or more growth. Sure, it's cool to use Bitcoin to pay for things, but there's no use over just using USD unless enough people use it to where the price goes up for those who got in early.

You can buy some Bitcoin for 1000 dollars yeah, but what good is it if the price crashed to half its value in just a month?

Hi @harpooninvestor
Excellent article. I subscribed to your blog.
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Good luck to you!

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