Collectable Dogecoin (DOGE) could become a “true” payment token and be widely accepted by merchants – but for its price to rise, three relevant conditions must be met, according to Elle Lee, co-founder and COO ( COO) of the central custodian Onchain Singapore-based (ONC), an institutional-grade digital asset custody service provider.
This week, the price of DOGE doubled, almost reaching 0.7 USD. From this level, it will need to jump more than 40% to reach USD 1 – not an impossible task as it jumped 50% in one day earlier this week. Also this week, its market capitalization surpassed $80 billion, making DOGE the fourth largest crypto asset by that measure. In comparison, the third largest crypto-active coin, Binary Coin (BNB), nearly hit $100 billion this week, while BTC is still over $1 trillion.
However, to further increase the price, the strong community and legitimacy provided by celebrity endorsements are not enough. It needs to "improve in all areas," Lee told the Cryptonews.com , listing three points that would "really raise the price":
- increasing the total market capitalization of crypto assets as a space;
- common adoption and use cases: celebrities, brands and large companies who want to be associated with it, and Lee says some of them will start incorporating DOGE into their payment systems;
- even more approval, for example, part-paying DOGE workers.
"And those use cases would drive the price up effectively, but we're not talking about $1 [...] I think it would probably drive the price up even higher than that," said Lee, a former investment banker who previously held roles at CIMB Group and JPMorgan Chase .
"Cult-like" support
According to him, the meteoric rise in prices has prompted rich people to inquire about a cryptocurrency that was not even on their radar before.
“OVER THE RECENT WEEKS WE HAVE DEFINITELY SEEN AN INCREASE IN REQUESTS FROM OUR CLIENTS (WHICH INCLUDE HIGH NET WORTH INDIVIDUALS, FAMILY OFFICES, LARGE FUNDS AND OTHERS) TO ADD DOGECOIN TO THEIR HOLDINGS. I AM POSITIVE ABOUT DOGECOIN'S PROSPECTS BECAUSE OF 1) POSITIVE IMAGE, 2) CELEBRITY ENDORSEMENT, 3) HEALTHY ADOPTION AND 4) STRONG COMMUNITY,” STATED THE COO.
Younger affluent people (mid-20s to 40s) are more open to DOGE because they associate it with revolution and a connection to thought leaders like Elon Musk, while slightly older affluent groups ( from the mid-40s onwards) "stay away or fence for dogecoin," he added. They can neither see the inflation hedging features like BTC nor the utility of Ethereum powering dapps and [indispensable tokens] NFTs. Most of them bought cryptocurrency thanks to Bitcoin and Ethereum. "
At this point, Lee said, DOGE is "captured by a cult-like community support." Remarkably, although it started as a joke, it has a number of "very strong characters" - celebrities who support it, write about it and discuss it on social media. "These types of heroes will be able to push the use of dogecoin forward," Lee said.
And those celebrities who talk about using DOGE for purchases or allowing discounts when the coin is used increase its value because people appreciate that there will be stronger demand.
In addition, there are several emotional effects on buyers at play. First, it is cheaper to own one dogecoin than one bitcoin.
Second, DOGE is seen as a fun, cool coin, and the dog symbol is cute, recognizable and impactful. The image suggests 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 dog meme. This immediate association and recognition is of great importance, according to Lee.
Payment token
However, this cute Shiba Inu can bite his punters.
- "In my opinion, all coins are susceptible to some form of manipulation," Lee said. "It's just a question of how big the player has to be to manipulate the price."
According to him, the right regulations can help prevent this.
Also, while DOGE is seen as a fun payment token today, there's nothing to prove that won't change in the future, Lee stressed. If it hypothetically evolves to become the second coin by market capitalization, "that could become something of a good proof of value at this point in time." And as the market cap grows, it becomes increasingly difficult to manipulate the coin's price.
Either way, Lee doesn't see interest in the coin "going down any time soon" and "absolutely think[s]" retail will start accepting DOGE and it could be a true payment token if it weren't so volatile.
Today, people accept that BTC is an investment class asset and "something more mainstream that works really fast" is needed. This is where DOGE comes in, having elements that make it work as a payment token against coins like Bitcoin, Litecoin (LTC) or Bitcoin Cash (BCH), for example – defining it 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 minutes, so it's faster than both.
As reported, in April the major crypto payment processor BitPay stated that the share of BTC in their payments has reached an all-time low as altcoins such as DOGE gain more and more popularity.
Also the state-owned Latvian airline airBaltic added DOGE support in March. IN Dallas Mavericks now accept dogecoin too.
"We decided to do it 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 issue of support and demand
ONC itself has not yet integrated DOGE into its platform.
“OUR INITIAL STRATEGY WAS TO START INTEGRATING FROM THE TOP 20 DOWN [BUT] DOGECOIN SUDDENLY JUMPED TO […] THE TOP 10. IT ALSO SURPRISED US HOW FAST THE MARKET CAP EXPLODED. SO WE'RE REBUILDING," SAID THE CHIEF OPERATING OFFICER.
He added that probably in the next half of this year, there will be some changes to the tokens that will be listed on the platform.
Incorporating a token is a “rigorous process,” Lee said, and the management team must believe the token will enjoy continued support and user/customer demand. And since one of the elements of the process is checking with the insurer that the token is covered, "I don't really see much risk as long as we can clear the Dogecoin onboarding process," he added.
In both cases, he said, in 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 room for guys like bitcoin, dogecoin, ethereum" - users they will probably change, but there will be different uses for the coins.
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