Behind the Dogecoin carnival is just a conspiracy marketing

On May 11, Beijing time, Elon Musk launched a poll on social platforms: "Do you want Tesla to accept Dogecoin as payment?" As of press time, a total of 3.92 million netizens voted, of which 78.2% chose "Yes" .

As early as February 1, Elon Musk mentioned in the ClubHouse discussion: "The most ironic and interesting result may be that Dogecoin eventually becomes the world currency." Now it seems to be gradually becoming a reality. Since the price of Dogecoin rose sharply in 2021, many overseas companies have announced that they accept Dogecoin as a means of payment.

At present, NBA Dallas Mavericks, NBA Houston Rockets, MLB Oakland, online retailer Newegg, wine auction house Acker, Latvian Airlines, American Cancer Society and many other companies or organizations have announced to accept Dogecoin payment.

However, the "Lianxin" survey found that these so-called acceptance of Dogecoin payments are more of an opportunity to market in this cryptocurrency carnival.

Well-known companies such as the NBA Dallas, Rockets, and Newegg have publicly accepted Dogecoin payments this year.

Urban Tea, the parent company of Mingyuntang, announced that it will accept Dogecoin, Ethereum and Bitcoin as payment: Urban Tea, a Nasdaq-listed company and the parent company of the Chinese tea brand Mingyuntang, announced that its Chinese tea stores will begin to accept Dogecoin , Ethereum and Bitcoin payments. By deploying cryptocurrency payments, Urban Tea plans to bring cryptocurrency application scenarios into customers' daily lives. According to news in February, Urban Tea transformed into Bitcoin mining. (U.today)[2021/5/10 21:45:51]

"Lianxin" survey found that the acceptance of Dogecoin payment claimed by these companies does not mean that merchants directly accept Dogecoin payment, but that their cooperative payment platform BitPay began to accept Dogecoin for settlement on March 4 this year.

The specific operation is that merchants can choose to accept encrypted assets or US dollars at the time of settlement. If USD settlement is selected, BitPay will sell the encrypted assets received by the merchant into USD; if encrypted assets such as Dogecoin and Bitcoin are selected, merchants need to bear the volatility risks brought by encrypted assets.

Dogecoin merged mining revenue has increased 10-fold since early April, far outpacing Litecoin: Dogecoin’s block rewards have long been seen as rewards for Litecoin’s merged mining. But that appears to be changing as DOGE’s recent price rally has overshadowed LTC. According to data from Bitinfocharts, Dogecoin’s mining revenue of 1 GH/s computing power in one day is $25, which has increased 10 times since the beginning of April, which is consistent with the price increase of Dogecoin in the past month. During the same period, the mining revenue of Litecoin with 1 GH/s computing power has only increased from $5 to about $8 now. (The Block)[2021/5/6 21:29:17]

BitPay users can choose to use Bitcoin, Ethereum, and other encrypted digital assets for payment. According to BitPay CCO Singh, even though Dogecoin’s popularity continues to rise, its share of BitPay’s payment still only accounts for 10% of the total. %.

Interestingly, many of the companies that recently announced acceptance of Dogecoin payments, including Newegg, were already BitPay merchants a few years ago.

"Dogecoin soaring" is on the Weibo hot search-zce list: Weibo hot search-zce shows that "Dogecoin soaring" is on the Weibo hot search-zce list, ranking 47th. [2021/4/16 20:29:07]

It is not only the relevant merchants who are hyping the topic of Dogecoin payment, but also the currency holders. According to change.org data, more than 225,000 people have signed a petition calling on Amazon to adopt Dogecoin as a payment method.

In fact, Amazon was one of BitPay’s partners as early as 2019. Dogecoin’s official Twitter also stated that users have long been able to use Dogecoin to pay on Amazon. But avid Dogecoin enthusiasts don't seem to care about this outcome, and the number of people signing the petition continues to increase daily.

This oolong phenomenon means that most of the netizens participating in the petition are not clear about Amazon’s payment process, nor are they familiar with the payment development of encrypted digital assets. It is only through this kind of collective behavior and marketing by taking advantage of the situation that Dogecoin will receive more attention and then drive up the price.

Musk: Dogecoin is the funniest cryptocurrency: Twitter netizens said that people make fun of Dogecoin as a joke, but ignore the fact that being a joke is one of the biggest advantages of Dogecoin. In response, Musk replied that it is the most interesting cryptocurrency. [2021/2/7 19:09:16]

Under the collusion and hype of merchants and currency holders, the actual use of Dogecoin in the payment field is not much.

Mike Bucella, a partner at BlockTower Capital, said: "Looking at it now, the merchant's announcement that they will start accepting Dogecoin is just a large-scale marketing strategy."

On May 13, Tesla Motors CEO Elon Musk stated on social media that Tesla no longer accepts bitcoin payments because the bitcoin mining process consumes a lot of electricity, causing environmental pollution and energy waste, but Another vote on whether Tesla should accept Dogecoin payment.

Dogecoin, which Elon Musk has been optimistic about for a long time, actually adopts the same mining method as Bitcoin, and has not performed better in terms of environmental protection.

In this way, Musk doesn't really care about environmental issues.

On April 3, 2019, Musk said on the social platform: "The value of Dogecoin may be different", and replaced his signature with "Former CEO of Dogecoin". On that day, Dogecoin rose sharply, with an amplitude of 33%.

Every time Musk mentions Dogecoin on social media, it will cause violent shocks in the market. From February 6, 2021 to the present, Musk has posted information about Dogecoin on social platforms more than 20 times in total. At the same time, the price of Dogecoin rose by more than 15 times. Since March 2020, Dogecoin has risen by a maximum of 400 times.

Accompanied by the skyrocketing price is the huge fluctuation of the price of Dogecoin, and the price has been cut in half in just a few days many times. If it is not held for a long time, it is easy to cause losses.

On May 8, after Elon Musk claimed that Dogecoin was a "fraud" on the old American entertainment variety show Saturday Night Live (Saturday Night Live), the price of Dogecoin once plummeted by 39%, and the decline in the following days was even worse. As a result, the currency price is "halved" compared to the highest point.

As the initiator of Dogecoin's high volatility, does Musk really think that Dogecoin is suitable for buying Tesla? Can he convince the board? the

In recent years, although encrypted digital assets dominated by Bitcoin have been included in the allocation table by more and more mainstream financial institutions, the excessive volatility has led to encrypted digital assets being always considered high-risk assets. Without addressing volatility, it will be difficult to provide sufficient stability for payments such as shopping. At the same time, the lack of sovereign credit endorsement, the lack of real value bearing, and only relying on the community consensus method magnify the high risk of it as a means of payment.

Another NBA team, the Boston Celtics, has not yet accepted encrypted digital asset payments. The team's shareholder Steve Paglica said in an interview: "It is difficult to see Bitcoin as a viable currency at present. "

In addition to excessive volatility, encrypted digital assets also have huge shortcomings in terms of transaction costs, which are currently unsatisfactory in terms of currency costs and time costs. Taking Bitcoin as an example, as of press time, the miner fee for a single transaction of Bitcoin is about $4.49, while the transaction fee of Ethereum is about $10.93 per transaction. The transfer time of Bitcoin normally takes about 30 minutes to arrive. High transaction costs are an unbearable burden for frequent business transactions.

High volatility and low efficiency hinder the payment application of cryptocurrencies such as Bitcoin. Therefore, most of the time, investors just configure mainstream cryptocurrencies like Bitcoin as an asset instead of valuing its attributes as a "payment currency". The consensus of Dogecoin is weaker and more volatile. The higher the cryptocurrency, the more difficult it is to undertake the function of payment.

Li Bo, deputy governor of the People's Bank of China, stated at the Boao Forum that Bitcoin is an encrypted asset and an investment option. It is not a currency itself, but an alternative investment. Therefore, the main role that encrypted assets should play in the future is as an investment tool or alternative investment.

Overall, no matter how popular Dogecoin is in the market, when it comes to payment, it is still just a marketing campaign by merchants and coin holders.

Author | Wang Shengyu

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