The rallying dogecoin (DOGE) could grow to be a “true” payment token, and to be widely accepted by retailers – but for its price to grow, three relevant conditions need to be met, according to El Lee, the Co-Founder and Chief Operating Officer (COO) of the Singapore-headquartered Onchain Custodian (ONC), a provider of institutional-grade digital asset custody services.
This week, the price of DOGE doubled, almost reaching USD 0.7. From this level, it would need to jump by more than 40% to hit USD 1 – not an impossible task as it jumped 50% in one day earlier this week. Also this week, its market capitalization surpassed USD 80bn, making DOGE the fourth-largest cryptoasset by this measure. To compare, the third-largest cryptoasset, binance coin (BNB), almost reached USD 100bn this week, while BTC is still above USD 1trn.
However, for the price to increase even further, the strong community and the legitimacy provided by celebrity endorsements are not enough. It has to “improve in all fields,” Lee told Cryptonews.com, listing three points that would “really drive up the price”:
- increasing the overall market capitalization of crypto asset as a space;
- general adoption and use cases: celebrities, brands, and major companies wanting to be associated with it, and Lee says some of these will start to include DOGE in their payment systems;
- even more endorsement, for example, partially paying workers in DOGE.
“And those kind of use cases would effectively drive the price up, but we’re not talking about USD 1 […] I think it would probably push the price even higher than that,” said Lee, a former investment banker who previously held roles at CIMB Group and JPMorgan Chase.
According to him, the meteoric price rise has prompted wealthy individuals to make inquiries about a cryptocurrency that was previously not even on their radar.
“In recent weeks, we have definitely seen an uptick in inquiries from our clients (who include high net worth individuals, family offices, large funds, and others) about adding dogecoin to their holdings. I am positive about the prospects of Dogecoin because of 1) positive image, 2) celebrity endorsement, 3) healthy adoption and 4) strong community,” the COO said.
The younger affluent individuals (mid 20s-40s) are more opened to DOGE, as they associate themselves with revolution and connection to thought leaders like Elon Musk, while the slightly older affluent group (mid-40s onwards) “are staying away or on the fence about dogecoin,” he added. They can neither see the inflation hedge characteristics like BTC, nor the utility of Ethereum that powers dapps and [non-fungible tokens] NFTs. Most of them bought into crypto with an appreciation for Bitcoin and Ethereum.”
At this point in time, said Lee, DOGE is “caught on a cult-like community support.” Notably, despite starting out as a joke, it has a number of “very strong characters” – celebrities – endorsing it, tweeting about it, and discussing it on social media. “It’s going to be this kind of characters who will be able to push forward the use of dogecoin,” said Lee.
And these celebrities talking about using DOGE to make purchases or enabling discounts when the coin is used, drives up its value, because people estimate that there will be a stronger demand.
Furthermore, there is a couple of emotional impacts on buyers in play. Firstly, it’s cheaper to own one dogecoin than one bitcoin.
Secondly, DOGE is seen as a fun, cool coin, and its dog symbol is cute, recognizable, and impactful. The image implies warmth and loyalty, and even if people don’t immediately recognize the name – as they do with bitcoin – they will associate it with the image of the meme dog. This immediate association and recognition is highly relevant, according to Lee.
A payment token
However, this cute Shiba Inu might bite its speculators.
- “In my personal view, all coins are susceptible to some form of manipulation,” said Lee. “It’s just a question of how big the player has to be in order to manipulate the price.”
According to him, the right regulations might help prevent this.
Furthermore, while today DOGE is viewed as a fun payment token, there’s nothing to prove this won’t change in the future, stressed Lee. If it were to hypothetically evolve to become the second coin by market capitalization, “it may become a sort of good proof of value at that point in time.” And as the market capitalization grows, it becomes harder and harder to manipulate the coin’s price.
In either case, Lee doesn’t see the interest in the coin “coming down anytime soon” and “absolutely think[s]” retail will start accepting DOGE and it could be a true payment token, if it wouldn’t be so volatile.
People are today accepting that BTC is an investable asset class, and what is needed is “something more mainstream, that works really fast.” This is where DOGE comes in, possessing elements that make it work as a payment token versus coins like bitcoin, litecoin (LTC), or bitcoin cash (BCH), for example – setting it apart as one of the major players. For example, Dogecoin’s block time is 1 minute, as opposed to Litecoin’s 2.5 minutes or Bitcoin’s 10 minute, so it is faster than both.
As reported, in April, major crypto payment processor BitPay said that the share of BTC in their payments reached the lowest level, as altcoins such as DOGE, are gaining traction.
Also, state-owned Latvian air carrier airBaltic added DOGE support in March. The Dallas Mavericks are now accepting dogecoin too.
“We have chosen to do so because sometimes in business you have to do things that are fun, engaging and hopefully generate a lot of PR,” Dallas Mavericks owner, Mark Cuban, said in March.
The question of support and demand
ONC itself hasn’t integrated DOGE into its platform yet.
“Our original strategy was to start integrating from top 20 downwards [but] dogecoin suddenly jumped to […] the top 10. It caught us by surprise as well, how fast the market cap just exploded. So we’re readjusting,” the COO said.
He added that likely in the next half of this year, there’ll be some changes in the tokens to be listed on the platform.
Onboarding a token is “a stringent process,” Lee said, and the management team has to believe that the token would enjoy continuous support and user/client demand. And because one of the elements of the process is checking with the insurer that the token is covered, “I don’t actually see a major risk so long we can clear the onboarding process for Dogecoin,” he added.
In either case, according to him, over the next five years, “a bunch of new tokens” will arrive on the scene, with bitcoin and dogecoin becoming ‘old’ coins, but “there will always be a place for guys like bitcoin, dogecoin, ethereum” – the users will likely change, but there will be various uses for the coins.