Reader Comment
The fact that dogecoin was set up as a joke has no relevance at all to its being used as money. If people can buy and sell using it then it works even if there is a dog on the face.
The advantage for dogecoin is that its cheap. Bitcoin like Berkshire Hathaway stock is so expensive that only a rich person can buy it directly.
Bitcoin is the same way. Dogecoin on the other hand could be used to buy a beer in a bar.
Cryptos are Sliceable
I agree with the first paragraph above.
But given that Bitcoin and crypto in general are extremely sliceable (as are gold grams), points two and three are incorrect.
Buy a Beer in a Bar
Assuming a bar accepts cryptos, who would use cryptos to buy a beer?
The obvious drawback to the idea is few would want to use it in transactions.
For starters, people buy dogecoin to speculate. Buying a pizza and speculation demands are vastly different.
Second, there is a tax consequence to every purchase and purchases would be need to be tracked by someone. The IRS could and probably would force companies to track and report such transaction if they ever became significant.
Regardless, there is still a legal responsibility on the part of the buyer no matter who tracks the purchases.
Who wants to mess with that?
Third, does the recipient merchant want to hold Dogecoin?
Likely not, so it would have to setup a method to instantly convert Dogecoin back to US dollars. At what cost, and who pays it?
Fourth, it is still not clear what regulations may be coming that will hamper all such activity.
Buyer and Merchant Restraints
In short, there are restraints on both the buyer side and the merchant recipient side to ever believe cryptos will be routinely accepted and used in transactions.
Q: Might some proponent of cryptos accept Dogecoin?
A: Yes, expect it. But so what?
Recall that Bitcoin was supposed to be used in routine transactions.
It never did and evidence suggests it won’t.
That Dogecoin is “cheaper” on a per coin basis will not do much for its usage in transactions even if the transaction friction cost vs Bitcoin is reduced to zero.
Bitcoin and Altcoins are speculation plays that simply do not mix well with buying a beer.
Dogecoin Started as a Joke
On May 6, I commented Dogecoin, Created as a Joke, is the Epitome of Greater Fool Mania
My reader is correct, at least for now, that the joke is irrelevant.
In the long term, and I suspect even in the intermediate term (within two years) Dogecoin will return to dust.
I have been wrong about cryptos before so speculate at will.
Transaction Headwinds
As a transaction device Bitcoin never succeeded. Dogecoin has the same issues, assuming it survives.
Tax consequences, reporting issues, and speculation usage make enormous headwinds.
There is little reason to believe Dogecoin can succeed on this front if none of the other cryptos could.
In case you missed it, also see Elon Musk Advocates a Carbon Tax, Praises Dogecoin, Pans Bitcoin
Mish
It is understandable that many Americans feel left behind. More and more are expressing their discontent. They are right to do so.
I have not in the past, and do not now, understand the rampant mania about crypto.I get the desire for anonymous transactions. For that it may be useful.However, the idea of a floating value that can go up or down is something I do not understand. I have a few problems with it.1. It has created rampant mania of the greater fool that will end badly, damaging the adoption of using crypto as a medium of exchange in the short term. 2. Anyone can make a new cryptocurrency. That and that alone makes a floating cryptocurrency beyond speculative for investment purposes. If the value were fixed, there would be more value in its usefulness, rather than investment. As an investment, it will never last.