• Everyone’s favorite meme coin Dogecoin (DOGE-USD) has become somewhat of an afterthought.
• The irony of Dogecoin is that it could be one of the most relevant cryptos.
• Ultimately, DOGE is a decentralized casino.

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Arguably few assets have encountered as sharp a role reversal as the meme-favorite cryptocurrency Dogecoin (DOGE-USD). Long a cult classic among hardcore crypto fans, DOGE went mainstream last year, in no small part due to Tesla (NASDAQ:TSLA) CEO Elon Musk and his seemingly nonstop marketing campaign. However, 2022 has rendered the meme coin almost like an afterthought, leaving investors confused as to its potential.

The current woes surrounding Dogecoin is illustrated more clearly when stacked up against other speculative digital assets like Ethereum Classic (ETC-USD). On a year-to-date basis through the wee hours of March 31, ETC is up a blistering 41%. In contrast, Dogecoin is down nearly 18%. To be fair, over the past month, DOGE is up 9% but there’s some way to go before it can spark last year’s magic.

Still, it might not be completely wise to toss Dogecoin from consideration. No, I’m not about to suggest that it’s a stable long-term investment. It’s a meme coin that’s subject to extreme volatility. However, with the available cryptos count reaching almost 19,000, it’s worth reminding ourselves why decentralized assets command market value in the first place.

A quick analysis of DOGE could provide substantial insights.

Dogecoin and the Tokenomics Factor

Peruse the crypto space long enough and you’ll come across what I have consistently termed magic blockchain words. You go to a crypto project’s website and you’re immediately inundated with fancy terminology such as decentralization, distributed protocols, off-chain oracles, open-source sharding (which sounds like a medical problem) and more decentralization.

You don’t know what the bleepity-blip is going on. But you do know that whatever is going on, it’s fast, discreet and scalable. Then you start tweeting to anyone who will listen about the scalability of said Web 3.0 blockchain application stack that’s seriously sharding out some distributed decentralization and stuff.

That’s an example of magic blockchain words. I hope you understood what I said above because I sure as heck don’t.

It’s okay to not understand the granularity of the blockchain because in all honesty, probably very few do. But what’s not okay is to pour in billions of dollars collectively into an asset without understanding its tokenomics.

What’s tokenomics, you ask? Well, it’s a lot like Abenomics but instead of attempting to address longstanding Japanese deflation, tokenomics are the set of forces that help determine the supply and demand dynamics of a particular crypto.

Now, the dirty little secret is that virtually all decentralized blockchain architectures are inherently utilitarian: they facilitate trustless, borderless transactional mechanisms. And because so many cryptos exist — again, almost 19K of them — it’s difficult to say one blockchain is more useful than the other.

There has to be something else to distinguish say Dogecoin from its rivals and that’s where branding comes into play.

DOGE is About the Sizzle, Not the Steak

While Dogecoin may have originated as a joke — and its community seems rather lighthearted — the underlying system itself is no joke. Like any other blockchain, it does blockchain things: decentralization, distribution, scalability, whatever.

In some ways, the blockchain is like concrete and plywood. A lot of first-time crypto buyers believe the blockchain is the end to the means. It’s actually a means to an end. Stated differently, you can build residential units with concrete and plywood to help solve the housing crisis. But these materials themselves aren’t going to do anything.

Further, let’s say you build a home with the above materials. What would be the value of said home? Ah, here’s where tokenomics comes into the picture. If you built the home in rural West Virginia, it’ll go for a modest amount I suppose. But if you built it in southern California, it might go for a million bucks, irrespective of the quality.

That’s tokenomics. It’s the blockchain equivalent of choosing to build in nice, high-income neighborhoods rather than somewhere not so nice. And Dogecoin is sort of like a rundown house but in Santa Monica. You know somebody is going to buy that because it’s Santa freaking Monica.

Not an Endorsement, Just an Explanation

As someone who long ago made a random bet on Dogecoin, I don’t want you to think that I’m endorsing DOGE. I am not. It’s a risky crypto venture. What crypto venture isn’t risky?

However, some of you might be wondering why Dogecoin is getting the attention it has, all $19.2 billion worth as of this writing. Well, it likely has to do with tokenomics. DOGE has superior tokenomics or in analog terms superior branding.

While it would be nice if Dogecoin was distinctly practical, utilitarianism is no guarantee of market value. If that were the case, we Americans wouldn’t buy the junk we do on a daily basis now, would we?

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