- Crypto currency is so funny
- The punchline sucked, though
- Behind the japes there could be something very substantive
- Loads of new idea-generating data
It started with laughs but ended in tears.
As April drew to a close, rapper comedian Remy dropped his latest YouTube video: an utterly hilarious rap about a straight-laced saver putting everything into “Dog Money”. Dog Money refers to a joke cryptocurrency called dogecoin. But while the coin may have been invented to poke fun, the price action has been serious, with gains of 15,000 per cent in 2021!
There were more big crypto laughs to come. Last weekend, Tesla’s “Technoking”, Elon Musk, who has recently anointed himself with the tongue-in-cheek moniker “The Dogefather”, took to the airwaves on the massively popular US comedy show Saturday Night Live. Dogecoin rallied hard on expectations that Musk would use his appearance to pump the coin #ToTheMoon. However, Musk’s Dogefather skit ended with him admitting that “...it’s a hustle”.
Remy’s commitment to Dog Money, as opposed to comedy, also looks questionable. In his similarly hilarious December 2017 “Bitcoin Billionaire” rap, his protagonist’s coin-mining server fuses and he's left destitute and begging, “I’d settle for a dogecoin I’m so desperate.”
It’s fair to say, for recent dogecoin investors, the punchline fell flat from this atypical showing of investment-related humour. Dog Money fell by about a third versus fiat money when Saturday Night Live aired.
But why is crypto creating such fevered excitement that it has spawned hilarity?
A certain brand of bunker-building libertarianism can probably take credit for initially catapulting crypto onto speculators’ radars in 2017. Indeed, it’s unlikely to be a coincidence that Remy’s videos appear on ReasonTV, the YouTube channel of a libertarian publication. If you think the authorities are out to collapse the value of the currency they issue and rely on (through incompetence or sinister intent), what could be sweeter than an entirely virtual, secure store of value that no one else can (in theory) get at.
It seems likely this investment case was what took cryptocurrency beyond the attention of cybergeeks and traders of illicit goods. From there rampant speculation seems to have literally seen things descend into farce.
However, there is a very substantive reason for excitement about crypto, which is becoming easy to lose sight of. It is proof of principle for block-chain technology. A super-volatile currency with no legal standing may not be everyone’s idea of a knock-out use case. However, it demonstrates that block chain's decentralised ledger system works.
Decentralised ledgers have the potential to unlock huge amounts of hidden economic value. For example, filecoin hopes to allow computer owners to share unused storage and thereby massively expand cloud-storage capacity. Similar ideas exist around exploiting excess energy produced by small scale solar panel installations. Closer to home for this column, publishers could be disintermediated with rewards to writers flowing directly from a decentralised ledger.
If the theory can become reality, block chain could disrupt many industries and unlock huge amounts of value. It’s the value it unlocks that appears the most likely support for the pricing of the means of exchange. However, no one seems near to releasing this potential yet.
In the meantime we have crypto currencies like dogecoin. There are grounds to think much of what crypto is valuing is the joy of speculation along with a bit of libertarian paranoia. As those who have followed financial markets for a while know, speculative joy is often fleeting. What’s more, the punchline normally falls very flat, just as happened this week for Dog Money “newbs”.