Dogecoin — a cryptocurrency started in 2013 as an internet parody — has risen in value in tandem with the virtual currencies Bitcoin and Ethereum this week.
Dogecoin's value has risen dramatically this week, adding about $19.9 billion in the last 24 hours and now estimated at $34 billion, according to CoinGecko, a market data platform. Dogecoin is based on the "Doge" meme and began as a "fun" alternative to Bitcoin.
The digital token was worth 28 cents in the United States on Friday, more than double its value the day before. It's a top-10 crypto token that's seen a 300 percent increase in seven days.
What is Dogecoin and how does it work?
According to CNBC, software engineers Billy Markus and Jackson Palmer invented the digital token in 2013 as a quicker but “fun” alternative to Bitcoin. It began as a satire on the plethora of fraudulent crypto coins that had sprung up at the time, and it gets its name and logo from a Shiba Inu meme that went viral several years ago.
Unlike Bitcoins, which have a cumulative limit of 21 million (which is expected to be surpassed by 2040), Dogecoins have no such limit, and there are currently more than 100 billion in circulation.
So, what's behind Dogecoin's popularity?
The key explanation for Dogecoin's meteoric rise is the same thing that has driven the value of Bitcoin and Ethereum: Coinbase's, the most common virtual currency exchange in the United States, listing this week.
Why are some people concerned?
Some investors are concerned that Dogecoin's rise will lead to a bubble, because traders don't see the digital token as having any real value and are just trading to profit while the price rises.
Since cryptocurrencies lack inherent value, such as land or gold, they are considered extremely volatile and can collapse as quickly as they grow, according to experts. This makes them vulnerable to sudden scares as well as exploitation by small groups who often possess large amounts of the virtual currency in circulation.
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