Can Dogecoin Be the Internet’s Currency of Choice?

Advertisement

Dogecoin - Can Dogecoin Be the Internet’s Currency of Choice?

Source: Shutterstock

Can Dogecoin (DOGE-USD) rise above the competitive muck and become the decentralized currency of the internet? This was perhaps an utterly ridiculous thought a few years ago when DOGE barely registered as a blip on the radar. But now, it is an inquiry that serious folks — such as Robinhood (NASDAQ:HOOD) Chief Executive Officer Vlad Tenev — are actively pondering.

On the surface, the answer would appear to be a quick — and possibly harsh — no. Yes, Dogecoin commands a rabid fanbase, ready to defend the canine-inspired meme-coin’s honor at the slightest of provocation. However, DOGE is also a cryptocurrency that originally came to life as a joke. Thus, mainstream investors will likely laugh off the proposition.

However, as every high school football coach says, it is not where you start, but where you finish that matters. Regarding Dogecoin, it benefits from a smaller nominal scale. What I mean is that many folks may be unwilling to part with more reputable higher-priced cryptos because such assets have become stores of value; as in digital gold. Psychologically, you’d rather spend your silver and copper instead.

Plus, cyberattacks represent a real concern. If you designate a crypto as a spending device, it’s simply more comfortable to have something like Dogecoin in a very hot wallet as opposed to exposing the core cryptos ranked in the top five by market capitalization.

Nevertheless, the one headwind that will likely prevent the idea of Dogecoin becoming the internet currency of the future is energy consumption. According to a January 2022 post from Digiconomist.net, the “average amount of energy consumed per processed transaction is close to 600 kWh. This is equal to […] more than 9 fully charged standard Tesla Model 3 batteries.”

Also, the post noted that the “carbon footprint of a single Dogecoin transaction is exceeding 280 kilograms of CO2, making it equivalent to the carbon footprint of roughly 624,000 VISA transactions.” Unfortunately, if the alternative is less sustainable than the current methodology, it’s improbable — without significant structural changes — that DOGE is the future of money. It’s an interesting thought, though, and one that deserves consideration despite Dogecoin’s questionable origin story.

On the date of publication, Josh Enomoto held a LONG position in DOGE. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/can-dogecoin-be-internet-currency-of-choice/.

©2024 InvestorPlace Media, LLC