I am surprised at how many really smart people I know believe that cryptocurrencies will replace the dollar, the euro, etc, as money in the future. I don’t believe that is ever going to happen. Cryptocurrencies are far too volatile to ever be accepted as money, and no government is going to make them legal tender. Consider Dogecoin, the cryptocurrency most in the news right now.
According to Coinbase: “Dogecoin is a cryptocurrency that was created as a joke – its name is a reference to a popular internet meme. It shares many features with Litecoin, However, unlike Litecoin, there is no hard cap on the number of Dogecoins that can be produced.”
The Wall Street Journal described Dogecoin this way last week: “Dogecoin is a cryptocurrency that started as a joke in 2013. It is a satirical homage to bitcoin, designed to serve no real purpose other than generating a few laughs. It is named after an internet meme centered around the image of a Shiba Inu dog with bad spelling habits – thus “doge” instead of “dog.”
From the time Dogecoin was created in 2013 until a few months ago, a Dogecoin sold for a fraction of one cent, and it wasn’t going anywhere. Then Elon Musk threw the Doge a bone. Musk started hyping Doge, and the price rocketed to over 50 cents, a 20,000% gain in less than 6 months. The market cap of Dogecoin (the price per Dogecoin multiplied by the number of them in circulation) is over $60 billion (as of the date I am writing this.) That is more than the market cap of either General Motors or Coca Cola. Dogecoin was created as a joke, and there is no limit on how many of them can be created. Yet, speculators (I refuse to call them investors) are buying Dogecoin as though they imagined that Dogecoin is worth more than the Bank of New York, Walgreens, Ford, or the Coca Cola Company! This is nuts. I think this has to end badly.