While Coinbase captured the headlines with its market debut, the frenzy around digital tokens is taking its zaniest turn yet via the price of a token actually created as a joke!
Dogecoin, boosted by the likes of Elon Musk and Mark Cuban, rallied roughly 180 per cent last Friday, reaching a market value of more than $48 billion. It’s now up 18,000 per cent from a year ago, when it traded for $0.002 and was worth about $250 million!
Doge’s surge is part of the rise of “Altcoins”, a term for all the digital tokens that have sprung up imitating Bitcoin. Like most of them, its use case is limited, making it a tool for speculators and raising concern that a bubble is inflating in the crypto world now worth more than $2.25 trillion.
Interest in crypto is on the rise again after companies such as Tesla, PayPal and Square started enabling transactions in Bitcoin on their systems, and Wall Street firms like Morgan Stanley began providing access to the tokens for some of their wealthiest clients. All along, crypto diehards, who say that blockchain technology will rewire the financial community, have been plugging crypto, while profiting in the process.
The canine themed Dogecoin was actually created as a joke by software engineers Billy Markus and Jackson Palmer in 2013. Musk sparked a rally in it earlier this year when he posted a photo of a faux magazine “Dogue” featuring a dog in a red sweater.
However, there are still many skeptics that aren’t buying the hype, believing the token doesn’t really have a purpose. The doubters often refer to the dot com boom and bust days of the late ‘90s, where investors knew something big was going on and were chasing it recklessly hard, leading to a bubble. In retrospect, for every Amazon.com, there were 10 pets.com that went bankrupt. Is Dogecoin the pets.com of the cryptocurrency era?
With little to back up the case for buying cryptocurrencies, the likelihood of them cratering remains high, leaving novice traders who jumped in on the hype, vulnerable to steep losses. Yet, Altcoin popularity is hard to ignore! While Bitcoin is worth more than $1 trillion, the total market cap of the token universe now exceeds $2.25 trillion, according to CoinGecko, which tracks more than 6,700 coins.
Believe it or not, Bitcoin’s dominance in the crypto world has declined 28 per cent since the beginning of the year, according to Tradingview. The waning influence started to accelerate this month and Bitcoin now accounts for less than 54 per cent of the crypto market capitalization. The lowest level in nearly two years! On the other hand, tokens with shaky to no fundamentals are on the rise. Cardano and Polkadot, both in the top 10 cryptocurrencies by market cap, have surged this year, even with relatively few users.
So, with all this hype and speculation buzzing around the Altcoin crypto market, what is potentially a more prudent way to participate in the rapidly emerging blockchain technology sector?
Investing in Blockchain
Blockchain is the record-keeping technology behind cryptocurrency. It is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system.
A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT).
Unlike the use of cryptocurrencies as a standalone investment, the broader blockchain technology marketplace generally entails less volatility and provides investors a more streamlined exposure to cryptocurrency and other emerging blockchain platforms that often securely cut out the expense of a middleman, while benefitting consumers.
The ‘Demand Blockchain’ portfolio is designed as a comprehensive investment solution. It has exposure to over 50 companies that are actively involved in the development and utilization of blockchain technologies including Coinbase. Along with a significant allocation to the blockchain industry, we ensure that your portfolio is also globally diversified, which helps reduce volatility in the event of blockchain sector underperformance.
Are you interested in investing in the evolution of blockchain technology as part of a diversified investment strategy? If so, we are here to help! Open an account here or schedule a Zoom conference with one of our advisors today.
This report is a publication of Demand Wealth. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change.