It was Doge’s Day afternoon again Wednesday when Dogecoin (Doge) continued its assault on digital currency market capitalization rankings. The meme currency surpassed XRP (XRP) to become the fourth largest digital currency by implicit market capitalization, after rising to a currency valuation of $ 0.69, a target that was set specifically by traders on social media.
But the latest favorite of digital currency media may not be as healthy as it sounds. Despite all the exaggeration surrounding Dogecoin (and its de facto master Elon Musk), publicly available data suggests that a relatively small number of people are using the blockchain and those who make up an incredibly large portion of its business. general.
Consider that the dollar value of the coins sent through the Dogecoin blockchain on May 4 exceeded $ 58 billion. This figure was 70% higher than the amount transferred to Bitcoin ($ 34 billion) and 260% higher than to Ethereum ($ 16 billion).
Going deeper into the chain data, we see that although Dogecoin moves a value of currencies higher than the world’s two largest digital currencies, it did so with a simple fraction of its transactions.
More than 1.4 million transactions were accounted for yesterday on the Ethereum blockchain, according to data from Bitinfocharts, while in Bitcoin nearly 300,000 were accounted for. Compare that to just 76,000 registered on the Dogecoin blockchain, and an apparent wealth gap is starting to emerge.
In fact, when looking at the average transaction value of Dogecoin on the day in question, it stood at almost double that recorded in Bitcoin. Doge’s average transaction value was $ 800,000, compared to $ 420,000 in BTC. His Ethereum statistics paint an even more terrible picture: Dogecoin’s average transaction value exceeded Ethereum’s by 8,000%, despite processing only 5% of the number of transactions.
Combined with the long-standing reality that a single address contains 28% of all existing currencies, while only 12 account for 67%, it is clear that Dogecoin is not exactly the champion of the people that stakeholders want to make believe in. the public.
A report recently released by Galaxy Digital pointed to the misery regarding Dogecoin’s general lack of authenticity as a veritable digital currency project. Titled “Dogecoin: The Most Honest Sh * tcoin,” the report highlighted the fact that Dogecoin’s Github repository (where developers record blockchain code updates) has not been touched since 2017. A moreover, the number of fully synchronized nodes (computers running copies of the Dogecoin blockchain) is only 26% of the total node count, suggesting that few people are willing to make the effort to stay safe. of the blockchain network.
But even if the ducal house looks like a ghost town, the obvious reality remains that Dogecoin is the best-performing digital asset in the digital currency space. The currency grew by 14,000% since January 1, when it was priced at a fraction of a penny.
Both the credit and the blame for Doge’s seemingly irrational rise have been attributed to the same “Dogefather,” Elon Musk, who had the great pleasure of posting Doge memes to his 52 million followers on Twitter during much of 2021.
However, it should also be noted that the recent peak of the $ 0.69 currency is the same target price set by Reddit traders with the intention of artificially pumping Doge’s valuation. Originally, it was intended to get the price on April 20, a joke in addition to a joke on 4/20. Dogecoin only hit a price of $ 0.420 at the time (boom), but now, just over two weeks later, it has finally achieved its playful goals. The final price that traders chase is a dollar.
If more evidence is needed that markets aren’t always rational, look no further than this year’s GameStop bomb, where the stock price of an almost dead brand rose by more than 9,000%.
“Dogecoin has always been a joke, and the joke becomes more fun,” the Galaxy Digital report stated. The author of the report and head of research for the entire company at Galaxy, Alex Thorn, praised Dogecoin for its unpretentiousness, noting that the currency’s fortune was not tied to the foundation’s announcements. or the promises of the developers and that their sole purpose was to provoke a reaction. .
“Dogecoin’s longevity is assured as long as it’s obvious: people love a good joke,” Thorn concluded.