Text/David Gerard; translation/Gong Siliang
Editor's note: In the "altcoin" scenario of the early 2010s, many Bitcoin fans created their own magical internet currencies. Dogecoin, which was originally used for users' self-amusement, was blackmailed by investors and scammers who pursued economic profits, causing a series of chaos. Perhaps, since the day "Dogecoin" was born, it needs to face all the common problems of "alternative coins": how to jump out of the cycle of "raising the price and then trading off"; how to make users vigilant about transactions and avoid taking risks that they cannot bear, which will continue to plague "Dogecoin" users in the future. The "Dogecoin" created for the purpose of fun will eventually escape the fate of being "invested" and "manipulated" along with other "alternative coins". Bitcoin is experiencing another huge price increase, from $19,000 in December 2020 to $48,000 earlier this week. Other cryptocurrencies have followed, one of the strange beneficiaries being Dogecoin, which Tesla CEO Elon Musk has tweeted in the past few weeks. This article's author, David Gerard, is the author of "Attacks on the 50-Foot Blockchain" and the cryptocurrency and blockchain news blog of the same name. This article was originally published in Foreign Policy.
Bitcoin and Litecoin
In the "altcoin" scenario of the early 2010s, many Bitcoin fans created their own magic internet currency so they could get rich for free: copy the Bitcoin software, modify some details, and then launch a new currency that could be exchanged for Bitcoin. Dogecoin (pronounced "doze -coin") is a slightly modified replica of Litecoin, while Litecoin is a slightly modified replica of Bitcoin. Dogecoin first appeared in December 2013, when Bitcoin's first big bubble reached its peak.
Dogecoin was originally a spoof cryptocurrency named after the "doge" cyber meme: a photo of a Shiba Inu dog speaking in Comic Sans font. Dogecoin fans (nicknamed "shibes") gathered on the Reddit forum: r/Dogecoin section. They would tip each other Dogecoin for funny comments.
(By the way, I owned 6 Dogecoins in 2014 — I didn't pay for them — even though they were removed when I reformat my laptop, and I didn't bother to transfer those Dogecoins over.) If I had held them, I would have made a full dollar earlier this week. ）
The forum engaged in charity. In January 2014, they raised nearly $30,000 in Dogecoin to support the Jamaican bobsleigh team to compete in the 2014 Winter Olympics. The Doge4Water campaign raised $32,000 to provide clean water to Kenya. They just created their own magic internet currency, sold it at the price of Bitcoin, and then exchanged Bitcoin for dollars — which was surprisingly feasible at the height of the bubble.
However, even the most fun money is money. A toy cryptocurrency can also turn into real money; there are a lot of people who are easily fooled, if not infinite. So Dogecoin fans began to dream of getting rich for free, and scammers began to act.
A guy named Alex Green joined the Dogecoin community. He set up a cryptocurrency exchange called Moolah in the UK to process Dogecoin and other cryptocurrencies. Most Dogecoin users tip less than 1 cent, but Green tipping thousands of dollars. Green then began selling Moolah shares on the r/dogecoin forum section. He threatened to sue the original Dogecoin founders for questioning Green's use of Dogecoin in this way.
Moolah closed in October 2014 and Green disappeared with the money. As it turns out, he's actually serial crook Ryan Kennedy and has a history of creating scam startups that disappear after raising money. Kennedy was not only a serial fraudster, but also a serial rapist; in May 2016, he was convicted of three rape counts and sentenced to 11 years in prison.
The remaining Dogecoin community has recovered (although the creators have long since been driven away) and continues to play with their Dogecoin without being noticed by the world.
Work on Dogecoin codes stopped, and the software was barely maintained. In the cryptocurrency exchange market, Dogecoin is just another alternative coin: a token with a very low volume and little value that gamblers and day traders can exchange for other cryptocurrencies in the hope of earning a few cents.
Dogecoin
Cryptocurrencies have no use other than trading. The market is sparsely traded and regulators do not exist. So price manipulation and price gouging are common phenomena. Since these digital currencies can be exchanged for money for the first time, the cycle of "raising the price and then trading it off" has emerged. Curiously, despite the recent increase in the price of Bitcoin, it has lacked retail trading volume for a long time. It wasn't until the price of Bitcoin was high enough to attract media headlines and make the public think that the price of Bitcoin was indeed rising, that it brought in a volume of transactions.
In mid-January, when Reddit forum r/wallstreetbets successfully pushed GameStop's stock to an all-time high, cryptocurrency promoters saw their long-awaited audience: those who didn't understand what they were doing, who would throw their money into it, thinking they were hitting the big companies and "having fun" with it.
On Jan. 19, rapper Soulja Boy — recently known for his participation in the Fyre Festival — was bought off by an unknown group to record a cameo video ad for Dogecoin. Later, he praised his cryptocurrency portfolio on Twitter.
On January 28, a Twitter user named "WSBChairman" – who claimed to have no connection to r/wallstreetbets – chose Dogecoin as the next asset that could be "inflated", and the forum followed suit, and the price of Dogecoin soared. Elon Musk is the CEO of a tech company and a loyal user of Twitter. He tweeted the cover of a mock magazine called "Dog Dog" (DOGUE) and wrote "$DOGE (Dogecoin)" in his Twitter profile. Dogecoin soared all the way, but collapsed the next day. But under Musk's continued attention, the price of the near-dead, unprotected alternative began to soar again the following week.
Psychologists have long understood that the outward rewards of behavior tend to drown out the inner rewards — if you associate social behavior with money, then social behavior will immediately be completely "money-oriented."
On Reddit, users can earn "karma" points — points are calculated by voting up or down on their posts and comments. These are meaningless network credits. But in 2020, Reddit decided to experiment with "community currency" — causality integrals — but as a token running on the Ethereum blockchain, you might be able to sell it for money.
In 2019, ethereum cryptocurrency trading forum r/ethtrader launched a "mini version" of the community currency, which subsequently triggered a completely predictable disaster. These coins, known as "donuts," influenced the management of forums and increased the weight of user votes — so companies began to "plant" the coins. Moderators changed the rules to buy themselves more coins. Many community members moved to a new forum to get away from "donuts": r/ethfinance.
Money changes everything – and "playing money" in exchange for real money will attract people who only want money.
On February 8, Billy Markus, one of the original founders of Dogecoin, sent an open letter to the r/Dogecoin forum. He urged the community to return to the spirit of joy and stop dogcoin "for money purposes." But he still spoke in detail about the dogecoin side of money: "Continue to learn as much as possible about how cryptocurrencies work, how these markets work, never risk more than you can lose to safety, be vigilant and vigilant." ”
Cryptocurrencies are digital objects without use cases. Promoters of cryptocurrencies often claim that their currencies will solve all sorts of problems: journalists, bananas, dentists, but always end up with another (big and useless) digital white elephant. The only way to make money from cryptocurrency is to sell it to someone else for more money, and the only way for them to make money is to continue selling it at a higher price. It's a hot potato with a price tag, and once you build that structure, your system follows the logic of cryptocurrency — and the worst part of human nature emerges: selling dreams to people in exchange for magic beans.
If it's about money, and the big guy tells you it's not about money, it's definitely for the money. If he tells you that it's all for fun, not for money, it's definitely for money. If he asks you to do something interesting, it requires you to invest your own money, but it's not for the money... That's definitely for the money.
Dogecoin fans exchange Dogecoin tips, and there is no good end. Beginning in 2014, the operator of the robot that manages dogecoin tipping admitted in 2017 that he stole all the deposited dogecoin two years ago. Many people expressed great regret, and this also brought huge losses to users.
Editor-in-Charge: Han Shaohua
Proofreader: Luan Meng