Dogecoin passion could prevent government crypto bans

Dogecoin, which has existed for a few years, is not a cryptocurrency of the usual kind. It’s a fun, ‘meme’ coin and Elon Musk, Gene Simmons, The Jonas Brothers and Snoop Doge have been having some fun with it recently. However, although it has no utility, Noelle Acheson, says “it embodies two key themes impacting institutional interest in crypto assets: the role of “fundamentals,” and the likelihood of successful government bans.”

Acheson asks if fun should drive value (Dogecoin is up 1,350% in 2021, and answers her own question with, why not? She points to GameStop (yes, again!) saying that the market’s understanding of ‘value’ is shifting. Matt Levine at Bloomberg summed it up: “Money and value are coordination games; what we use for money depends on the channels that we use to coordinate social activity. Once society was mediated by governments, and we used fiat currency. Now society is mediated by Twitter and Reddit and Elon Musk, so, sure, Dogecoin.”

Even Dogecoin’s founders have no idea why its success has continued some seven years after launching it. But they can’t remove it, or close it down, because Dogecoin runs on a public, decentralized blockchain that no one controls. So, it will probably continue to exist so long as people value its fun element.

It’s about passion

GameStop and Dogecoin both exemplify what community passion can achieve, and how it may potentially block government bans on crypto. For example, India tried to ban cryptocurrencies recently, but the community mobilised, created a hashtag and rallied its members to lobby government representatives. They pointed out that the country has 10-20 million crypto users, plus 340 startups and 50,000 employees in the crypto space.

Something similar happened in Nigeria where the central bank ordered banks to close the accounts of cryptocurrency users. There was a public outcry, and the central bank had to issue a press statement “reminding the public that the rule was not new, and that it was for their own good.” The central bank had to unblock accounts of 20 people involved in the #EndSARS movement, which was about the dissolution of a federal police unit with a reputation for fierce brutality. Acheson says, “The fact that the accounts were frozen in the first place is one of the many reasons seizure-resistant cryptocurrencies are rapidly gaining in popularity amongst Nigeria’s young.” It is also the case that Nigeria is gaining recognition as Africa’s Silicon Valley, and trading crypto assets is a way of life for many young people. They have new tools to work with and a growing disrespect for institutions. Because of the central bank directive, they are simply moving from exchanges to peer-to-peer channels. As a result, the politicians have taken notice,, and some prominent voices in government have spoken out against the ban. Other countries will be watching this with interest, because as Acheson warns, “the very act of attempting to repress cryptocurrency’s use could light a fire under a generational understanding of why it’s necessary.”

The Gamestop frenzy that shocked Wall Street

Shareholders in video game retailer, Gamestop, have had a fantastic week, especially the top three thanks to a “frenzied dual between Wall Street traders and small investors, “ as The Guardian reports. Please note that it’s a story so big that has hit the MSM as well as the crypto media.

On Wednesday, the company shares hit a fresh “52-week high of $354.83, making the 13% stake held by Ryan Cohen, 34, GameStop’s largest single shareholder, worth more than $1.3bn.” CNBC reported that Cohen’s wealth   increased an average of $90m a day, or nearly $4m per hour over the last two weeks. The other two major shareholders, Donald Foss and George Sherman made $500m and $350m respectively. Let’s not forget that the stock was trading at less than $20 per share earlier this month. However members of a subreddit group believed Gamestop stock was under attack by a hedge fund that had disclosed a large short position in the stock.

For these small investors the action took place in a Reddit chat room called r/WallStreetBets, where they organised their strategies, their aim being to beat Wall Street traders and funds, such as Black Rock, which holds Gamestop shares now valued at $3 bn. The subreddit members coordinated a pump action on the stock on Reddit, which was executed by individual traders using platforms like TD Ameritrade and Robinhood.

What happened is that these subreddit small investors poured their money into the retailers stocks, while the hedge funds, which had been betting against Gamestop ultimately lost billions. The action became so heated that even the Biden administration announced they were monitoring it.

Over at Cointelegraph, the commentary is focused more on the implications for decentralization. It says, “The success of the GameStop short squeeze in pumping the price above $370 has highlighted the need for decentralized finance, according to some in the crypto industry.”

Why are they talking about decentralization? Because, “Various centralized trading platforms have now put limits on trading the stock and the president of NASDAQ — the exchange on which GME is listed — suggested that trading could be temporarily halted on stocks deliberately targeted by internet users, in order to give investors a chance to ‘recalibrate’.”

Anthony Scaramucci of SkyBridge Capital, believes these recent events surrounding GME are good for crypto and especially bitcoin. He told Bloomberg, it was “more proof of concept that Bitcoin is going to work.”

Furthermore, thanks to activity by derivatives and futures specialists FTX, which has listed a tokenized version of Gamestop futures that can be traded against crypto collateral, the price of GME opened at $354.83 on Wednesday, representing a 140% gain overnight. Keep an eye on this story, as it could be the beginning of something very interesting.

Biden puts crypto wallet regs on hold

Finally the inauguration of Joseph R Biden, 46th president of the United States took place on 20th January, and the whole event concluded without so much as a sneeze. He didn’t waste time when he sat down at the Resolute desk for the first time, signing a swathe of executive orders that overturned some of his predecessors more contentious policies, such as leaving the Paris Climate Agreement. As of yesterday the USA is back in, for which many are thankful.

However, there was something else he did that is of great interest to the cryptocurrency community. He put a freeze on FinCEN’s proposed crypto wallet regulations proposed by former Treasury Secretary, Steve Mnuchin, a known ‘hater’ of crypto. These rules would be detrimental to the crypto industry and were already seen as controversial.

Cointelegraph says: “The announcement came in a White House memorandum for the heads of various federal agencies, the Financial Crimes Enforcement Network (FinCEN) included.” As it remarks, the wallet proposal wasn’t specifically mentioned, but it comes under the general edict.

Mnuchin’s seldf-hosted wallet proposal, which alarmed the crypto industry, if passed, “would require that banks and money service businesses submit reports, keep records, and verify the identity of customers who make transactions to and from private cryptocurrency wallets.”

This goes against the basic philosophy of decentralization, and as Jack Dorsey said, “counterparty name and address collection should not be required for cryptocurrency just as it’s not required for cash today.”

Other critics of the proposal also pointed out that anyone using smart contracts, as one example, couldn’t comply with the proposed regulation, because “smart contracts do not contain name or address information.”

Now we must wait and see what Janet Yellen, the new Treasury Secretary will do. She is not known for being a massive fan of crypto, but some industry insiders see her in a positive light. Compound Finance General Council Jake Chervinsky is optimistic, saying: “We fought hard & earned the right to take a breath & reset. Janet Yellen isn’t Steve Mnuchin. I’m optimistic.” He believes that unlike Mnuchin, Yellen will be more open to learning about crypto and listening to its experts when it comes to making decisions about new regulations. Furthermore, as everyone has been pointing out for weeks now, Biden appointed Gary Gensler to head up the Securities and Exchange commission, and he appears to be much more sympathetic to the idea of decentralization than those who went before him.

It’s early days, but it would seem that we are entering a period of compromise, rational thinking and cool heads, and this may just be what the US crypto industry needs to progress.

Why this bull run is not a repeat of 2017

Do you remember the last months of 2017 in the cryptocurrency market? It was everywhere. Even the MSM started talking about it, although its journalists tended to get it all wrong. The ‘haters’ compared it to the Tulip Fever of the 1600s, and when Bitcoin crashed after reaching an ATH of $20,000, perhaps they felt vindicated.

It has taken three years for Bitcoin and the altcoins to retake their 2017 positions, and who would have guessed that it would happen at the same time as the world was mostly staying at home due to a rampaging virus. But that is what has happened, and in the last few days we have seen Bitcoin break through the $40,000 barrier to become ‘virtual gold’.

The question most cryptocurrency owners must be asking themselves is this: is this bull run the same as in 2017? Jeff Wilser has taken a look at it, starting by saying, “for some reason this bull run feels different – not as mainstream, not as talked about, not as Paris Hilton-y.” Dare I suggest this is because people are more hooked on Covid numbers right now?

As Wilser says, there are ways to measure a bull run by looking at the frequency of Google searches for ‘Bitcoin’, and expert market analyses. However, what he has done is take a qualitative approach, to see how it ‘feels’, particularly to those he calls the “OG Bitcoin HODLers.”

One example is Erik Finman, the ‘Teenage Bitcoin Millionaire’, who bought 100 Bitcoin in 2011 with money his grandmother had given him. He dropped out of school at 15 and set up a crypto payments company, Metal Pay. Oh yeah, he also launched a satellite with Taylor Swift. He has a theory about why this new cycle is going relatively unnoticed: “The cultural space that was once occupied by crypto is now gobbled up by politics (Trump) and the coronavirus pandemic.” What did I say earlier?

“[Donald] Trump gets more clicks than crypto,” says Finman. Exactly! He thinks the Biden presidency may change that. Not because he dislikes Biden, but because he believes Bitcoin may be more interesting. And, if Covid-19 becomes about as interesting as the common cold that too will make space for crypto. It’s worth noting that during the shocking scenes of rioting at the Capitol on 6th January, Bitcoin surged by 10%.

Erik Voorhees, the CEO of ShapeShift, takes another view on it. He says: “You see the bull and the bust cycles that repeat several times over the last decade, and you see that each time bitcoin “crashes” the new level is higher than the prior cycle.” So, why the quiet now? Because, “We’re not in the real bubble yet,” Voorhees claims. It needs to get more exciting before the media starts shouting.

Others, such as Jill Carlson of Slow Ventures, says that with 20% of US dollars printed in 2020, Bitcoin has become a hedge against inflation. That doesn’t have quite the same ring for retail buyers as ‘When Lambo!’

There’s less hype this time round, but surely that is a sign that the market is maturing, and those of us who have owned crypto for some time are less anxious about the inherent volatility, while still quietly excited to see where this bull run goes.