If you’re bearish about Dogecoin (CCC:DOGE-USD) like I am, all of the recent news that has served to pull it downward is welcomed.
Welcoming the drop in prices isn’t about being able to say I told you so. Rather, it should be welcomed because it is partially a signal that the markets demand that Dogecoin begin to prove that it has utility.
Dogecoin’s lack of utility isn’t the most prominent catalyst serving to pull it downward. There are more salient catalysts affecting the entire crypto market.
Those problems include environmental concerns over mining, the lingering threat of regulations from authorities like the SEC, and China’s renewed tough stance to name a few.
Less Philosophy, More Utility
But the truth remains that DOGE can’t be propped up indefinitely unless developers create utility for it.
I’m not against cryptocurrency as long as a given project has utility and can create value, why should anyone be against it?
I still love the idea of democratizing finance, but as time moves on it is becoming apparent that crypto simply has to provide use cases. Then show how it creates profit, then take on bigger goals like the democratization of finance.
My thought is that even aside from the broader issues affecting crypto at large, Dogecoin’s lack of utility is its greatest enemy moving forward.
There is news on that front, though.
DogeLabs to the Rescue?
DogeLabs is an independent blockchain research lab and startup accelerator that is trying to leverage the liquidity within the network to develop applications on its blockchain.
On June 18 the company announced it was working on a solution. The hope is to build a Dogecoin-to-Ethereum (CCC:ETH-USD) bridge.
Perhaps it will amount to something tangible. In that case DOGE would then meet that criteria I called for above.
It would then be able to provide returns through ETH staking. At least in that case Dogecoin would be usable for providing real monetary returns on mined ETH.
That would be a massive step up from its current utility of buying, holding and hoping that it reaches the moon based on nothing.
At the same time, the language in DogeLabs’ statement is telling. Basically DogeLabs is exploring the idea of building a bridge between DOGE and ETH.
It really seems like this is simply a press release which hopes to attract attention off of Vitalik Buterin’s recent comments. The Ethereum founder stated that such a bridge would be great and that it could lead to DOGE being tradeable with low transaction fees and high speed through such a bridge.
In my opinion, this is the type of loose hope that has brought Dogecoin to where it currently is. The company is also looking to address the issue of inflation inherent in Dogecoin.
Inflationary Forces and Dogecoin
Many investors worry that America’s propensity to print away its problems may have come to a head during the pandemic. Inflation may very well be on the way. Many of the same investors point to cryptocurrency as the solution to those same inflationary issues.
But Dogecoin is not the altcoin to invest in if inflationary forces are your concern. According to a CNBC article, “every minute of every day, 10,000 more dogecoin are issued. That equates to nearly 15 million doge per day or over 5 billion doge per year.”
DogeLabs wants to build a DOGE burn wallet which could – by some entirely undefined mechanism – offset Dogecoin’s inherent inflationary forces.
From where I’m standing it simply looks like more of the same wishy-washy hopium as it relates to Dogecoin. It’s no more worthy of your investment money now than it was before.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
