Dogecoin was quite literally meant to be a joke. Yet 11 years into its existence, a punchline is emerging that no one expected: The token has become surprisingly popular among businesses looking to accept crypto for real-world purchases. — Photo by Kanchanara on Unsplash
At Williamsburg Pizza in New York, there is only one cryptocurrency you can use to pay for your pie: Dogecoin.
You can also use the memecoin to buy a beer and the “famous wings”, or maybe a “Barry Bonds Homerun Baked Potato”, at the University Sports Grill in Tempe, Arizona. And even the most high-profile fan of Dogecoin, Elon Musk, has floated the idea of once again accepting the token as payments for Tesla merch.
Dogecoin was quite literally meant to be a joke. Yet 11 years into its existence, a punchline is emerging that no one expected: The token has become surprisingly popular among businesses looking to accept crypto for real-world purchases.
That’s largely because payments on the memecoin’s network are much faster and cost way less than many other cryptocurrencies. While transaction costs vary, the average fee is currently around 0.07 Dogecoin, or less than a penny, whereas using Bitcoin costs the equivalent of about US$0.79 (RM3.32), according to BitInfoCharts.
“Dogecoin is the only proof-of-work cryptocurrency with transaction times fast enough and fees low enough to be practical for merchants like myself,” said Aaron McCann, Williamsburg Pizza’s co-founder. While payments in Dogecoin only make up about 1% of gross sales, he said, “it’s a small, but growing part of our revenue.”
McCann is doing his best to enlarge what is still very much a niche use of the token, since use of all cryptocurrencies in payments remains somewhat rare. After trying to figure out how to accept cryptocurrency at Williamsburg Pizza for six years, McCann took matters into his own hands and built DogeExpress, a payment processor specifically for Dogecoin.
McCann began using DogeExpress at Williamsburg Pizza more than two months ago and he has since rolled it out at five retailers, with eleven others in the early stages of onboarding.
Another surprising use for Dogecoin is in remittances. Cash payments from relatives living abroad are traditionally sent through international banks or financial retail businesses, but those often include transaction fees as high as 7%. And Dogecoin transactions, even across borders, typically take only about one minute – much faster than the average Bitcoin transaction times, which can range from 10 minutes to an hour. The most popular exchanges used to send Dogecoin are Binance and Coinbase, according to data provider CoinMarketCap.com.
Of course, the tongue-in-cheek nature of Dogecoin that inspired countless memes adds to its appeal as well. Even if you’re not a cryptocurrency enthusiast, you’ve probably heard about Dogecoin. The king of memecoins, repped by a picture of a Shiba Inu dog, is everywhere: on social-media platforms like X and Reddit or, more importantly, in Coinbase Wallet. It was created as a parody in 2013 when cryptocurrencies started gaining popularity.
Its notable endorsers include celebrities like rappers Snoop Dogg and Lil Yachty, and even Mark Cuban, a billionaire on the opposite end of the political spectrum from Musk, his frequent sparring partner on X. The Dallas Mavericks basketball team started accepting Dogecoin as payment for merchandise and tickets in 2021, though usage so far has been modest: Cuban estimates that the Mavericks have accepted around 25,000 Dogecoin so far.
‘Vibrant online community’
“It’s an inexpensive way to become part of an incredibly vibrant online community,” Cuban told Bloomberg.
The virality of Dogecoin makes the cryptocurrency an effective marketing tool for businesses, according to McCann. That helps it stand out from comparable alternatives such as Litecoin that also allow for fast and cheap transactions.
Litecoin is the most-used cryptocurrency for transactions made using the payments app BitPay, accounting for a 38% share in August, according to the company’s website. Dogecoin ranked fifth, ahead of larger tokens like XRP and USDC.
Yet Litecoin’s current market cap sits at less than US$5bil (RM21.04bil), compared with Dogecoin’s US$16bil (RM67.34bil), which ranks it as the eighth-biggest cryptocurrency, according to CoinMarketCap.com.
Similar to digital assets such Bitcoin and Ethereum, Dogecoin is a peer-to-peer currency that uses blockchain technology to verify transactions. And like Bitcoin, it’s a “proof of work” token, meaning so-called miners compete to solve complex mathematical puzzles in order to validate transactions and earn compensation paid in crypto.
For crypto diehards, there are some disadvantages to the memecoin compared with the original cryptocurrency. Dogecoin is considered to be less secure than Bitcoin. And unlike Bitcoin, which was designed to have a limited supply, there is no cap on the amount of Dogecoin in circulation, meaning the case for buying and holding it over the long term is weaker.
Its value is also prone to wider swings, with a 260-day historical volatility that is almost twice that of Bitcoin’s. It traded for about 6 cents a year ago, as high as 22 cents in March, and goes for about 11 cents today.
‘Right tailed’
Yet Dogecoin has a multi-year track record of being really “right-tailed, meaning most of its violent moves have been to the upside rather than the downside”, said Frederick Collins, chief executive and founder of crypto data platform Velo Data.
“If decreases in Dogecoin’s value tend to happen slower than increases in value, that’s a plus when you want to use it as a quick intermediary.”
Adds Collins: “As time goes on, Dogecoin has become less of a memecoin and more of just a blank slate – one without much technological or idiosyncratic risk. Relative to the rest of the crypto market, it offers a pretty solid mix of familiarity, simplicity, and low cost.”
Kevin Nohr, owner of University Sports Grill in Tempe, began accepting Dogecoin at his bar about a month ago. So far, he has booked around 20 transactions with the memecoin. The currency’s appeal to him extends to the community surrounding it, which he described as “loyal” and “supportive”.
“Usually the memecoins come and go, so for Doge to still be in this space means a lot for the Doge community,” Nohr said.
That community just so happens to include none other than the richest man on the planet. Musk, a lover of the meme culture on his X platform, frequently engages with Dogecoin-themed accounts. A few weeks ago, Musk floated the idea of reinstating the option to pay for Tesla merchandise with Dogecoin after the company removed the feature earlier this year.
In August, Musk and Tesla won a US$258bil (RM1.08 trillion) class action lawsuit claiming they pumped up the price of Dogecoin into a “pyramid scheme”. Investors said that Musk caused the token’s price to rise by posting about Doge on X, but a judge dismissed the claims.
Now that Musk has the ear of Republican presidential candidate Donald Trump, a onetime crypto sceptic turned cheerleader who promises to be the “crypto president”, the memecoin community’s dreams of sending “Dogecoin to the moon” – or US$1 to be precise – seem less far-fetched than they once were. Musk has even suggested he would lead a new Department of Government Efficiency (acronym: DOGE) if Trump returns to the White House.
In the meantime, small businesses like University Sports Grill are working on a more-grassroots approach to promoting usage of the token.
“I suspect that with a little bit more advertising and word of mouth, we could probably end up doing 10% of our overall revenue a month in Dogecoin,” Nohr said. “Hopefully in the future, Dogecoin will become one of the most popular forms of payment.” – Bloomberg
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