Robinhood (NASDAQ:HOOD), the newly public brokerage firm and app, reported that Dogecoin (CCC:DOGE-USD) was a hit with millennials. In fact, revenue accounted for more than half of its Q2 sales according to CNBC, and over 62% of that came from trading in Dogecoin.
Since millennials make up a huge portion of the client base of Robinhood, expect to see Dogecoin continue to move higher if this keeps up.
As I pointed out in my last article, Dogecoin is also likely to rise along with the general rebound in both Bitcoin (CCC:BTC-USD) and Ethereum (CCC:ETH-USD). But having a major brokerage firm like this helping the cryptocurrency will put some extra wind behind it.
Actually, cryptocurrencies took up $233 million of the brokerage firm’s $451 million in transaction-based revenue or 51.6%. However, its total revenue, including net interest and other was $565.3 million. So, of crypto was 41.2% of its total revenue. Nevertheless, this is still a huge portion.
On page 106 of the company’s 10-Q, filed on Aug. 18, Robinhood reported that it supports 7 different cryptos for trading. This is where it said that 62% of its transaction-based revenue was attributable to transactions in Dogecoin, compared to 34% in Q1.
So what is the appeal of Dogecoin to millennials?
A People’s Currency
There could be several reasons why Dogecoin is so popular. But it probably doesn’t hurt that Elon Musk, a sort of rich hero to millennials, especially code and software developers, still seems to be behind the crypto.
For example, recently Decrypt online magazine reported on Aug. 17 that a new Dogecoin Foundation has established a new advisory board and a “renewed” Foundation. The “renewed” Foundation, apparently is not yet a legal entity, according to Dogecoin. Its new advisory board includes Ethereum co-founder Vitalik Buterin and Elon Musk representative Jared Birchall.
According to a statement or what Decrypt calls a “manifesto” by this new Foundation, the new group of developers working on Dogecoin wants to make it a currency for the people. Moreover, the group is seeking money from sponsors to develop a three-year budget in order to hire more developers to achieve this aim.
One gets the impression reading this manifesto or statement that the developers working on code for Dogecoin are a bit disjointed and a hodgepodge group. It seems they want some structure and funding commensurate with Dogecoin’s huge market capitalization.
As of Friday, Aug. 20, Coinmarketcap reports that it is the 7th largest crypto with a $41.3 billion market capitalization. The fact that it is this high without a real f0rmal developer group behind it is nothing short of amazing. Of course, that could be part of its appeal to millennials — a sort of underdog (pardon the doge pun).
What to Do With Dogecoin
This new Foundation wants to make Dogecoin a viable payment method, with Elon Musk’s help. That seems to be its main appeal to millennials, especially those trading it at Robinhood.
In the off chance that this informal and contrarian effort could succeed, investors should consider taking at least a “toe hold” stake in the crypto. That is what I have done, and I suspect I may average into it further. The reason I had was that if it takes off, it could easily reach a tipping point of universality, and I want to be part of that.
Is that a rational investing thesis? Probably not, but that is probably part of Dogecoin’s appeal — its transformation from what was once a joke into a viable currency, a people’s currency.
Keep in mind, as this obviously implies, that this is a highly speculative investment. You should not put a large portion of your investment portfolio in it for that reason.
On the date of publication, Mark R. Hake held a long position in Bitcoin (BTC-USD), Dogecoin (DOGE-USD), and Ethereum (ETH-USD), but not in any other security mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.