Dogecoin (DOGE) is a difficult asset to view as an’investment grade’, with a market capitalization of only $6.73 billion (less than a hundredth of bitcoin) (at the time the article was sent). There are no real use cases, and there is no active derivatives market. For this reason, dealing with Dogecoin in this column may seem a bit puzzled.
But the reason I’m talking about the Dogecoin phenomenon is that it contains two themes that determine institutional investors’ interest in cryptocurrency. One is about the role of’fundamentals’, and the other is about the possibility that the government can effectively ban cryptocurrencies.
The power of passion
Dogecoin market price has risen close to 1350% since the beginning of this year. Last week, famous American rapper Snoop Dogg combined his name and Dogecoin to coincide with the new term’Snoop Doge’, and Jean Simmons, leader of the rock group Kiss, said he was “God of Dogecoin )’posted on Twitter. Kevin Jonas of Jonas Brothers also added. As more and more people post Dogecoin-related memes following Tesla CEO Elon Musk, the number is now countless. People are getting more and more fun, and they are spreading the Dogecoin memes just because they are fun.
So… it’s finally come to this… pic.twitter.com/Gf0Rg2QOaF
— Elon Musk (@elonmusk) February 7, 2021
But, can’fun’ be a practical factor in boosting the value of an asset?
It can be enough. As can be seen from the GameStop situation, the market’s understanding of the concept of’value’ is changing little by little. Even in times of high uncertainty and risk, the stock market is rising frighteningly, and the recent phenomenon in which same-day traders are gaining attention in the media. It can be seen that the influence on the is getting bigger.
Bloomberg columnist Matt Levine’s explanation of this situation is close to perfection.
“Money and value depend on the way people interact. In the end, what we spend for money is determined by who is the person who coordinates social activities. In the days when the government completely coordinated social activities, it was necessary to use fiat currency. But now, Twitter, Reddit, and Elon Musk are playing that role. Dogecoin is also possible.”
The Dogecoin phenomenon may appear temporarily and disappear quickly. The interest in Dogecoin could completely shift to another place tomorrow.
But there is no law that it will. Billy Marcus, co-developer of Dogecoin, told Bloomberg this week that seven years after the launch of Dogecoin, the price of Dogecoin is steadily rising, saying that she is’embarrassed’. Jackson Palmer, who co-developed DojiCoin with Billy Marcus, said last year, “It makes no sense in common sense that people are so passionate about Dojicoin.” But what’s important here is that it’s not the two developers who determine the price of Dogecoin. Dogecoin is based on a decentralized public blockchain that no one controls. If people’s interest shifts to another sparkling thing, the value of Dogecoin will fade as much, but as long as there are fans who pursue the joy of Dojicoin, its value will be maintained.
Face the waves
So now let’s talk about India and Nigeria (do you feel like it’s out of date?). Looking at what has happened in the two countries this week, it feels as though the basic understanding of public blockchain has returned to its origin.
Last month, CoinDesk reported that the Indian Parliament was considering a government bill banning cryptocurrencies. The cryptocurrency industry says’India wants bitcoin’. #IndiaWantsBitcoin Hashtags were created and disseminated, and Indians sent e-mails to legislators representing them to demand more progressive legislation.
The enormous damage to which India’s active cryptocurrency ecosystem will suffer is one of several reasons for opposition to the legislation. Currently, the number of cryptocurrency users in India is estimated to be between 10 and 20 million, and 340 cryptocurrency startups create more than 50,000 jobs. The entire contents of the bill have not been disclosed, but it is interpreted with the intention to block competition for digital rupees issued by the government.
I hope the Indian government will learn from the Nigerian case.
Last week, the Nigerian central bank ordered to close all bank accounts held by cryptocurrency users. On the date of the backlash, the central bank released a press release and insisted that the move is nothing new and is for the benefit of individuals.
What should be noted here is that the Nigerian central bank responded immediately to public backlash. At the end of last year, Nigerians protested the atrocities of the Nigerian Police Force Special Forces (SARS) and demanded the dismantling of the unit. #EndSARS I started exercising. Large-scale protests followed in Nigeria, and SARS was eventually disbanded as the international community supported them online. This is why the Nigerian central bank has no choice but to react sensitively.
At the time, the Nigerian central bank froze the accounts of those who participated in the protests, and this week a Nigerian court ordered the accounts of 20 of them to be released. Cryptocurrencies that cannot be confiscated are rapidly growing in popularity among Nigerian young people who have watched the government freeze personal accounts.
Nigeria is also called Africa’s’Silicon Valley’. In Lagos, the largest city on the African continent, the tech industry is growing rapidly. Meanwhile, Nigeria’s inflation rate is over 12% and the unemployment rate is close to 30%. Young people make up 70% of the total workforce, and many of them use cryptocurrency transactions as a means of living. According to data research firm Statista’s Global Consumer Survey this week, Nigerians who say they have cryptocurrency accounted for a third of all Nigerians. Nigeria had the highest cryptocurrency investment rate among all surveyed countries.
Nigerian youth are young, tech savvy, have a new weapon of cryptocurrency, and have a deep distrust of institutions and institutions. Based on this, they are using social media to cultivate a force that opposes the actions of the Nigerian central bank. What happened just a few months ago seems to be recreating.
In addition, they do not know to give up. Although local payment companies are refusing to trade with cryptocurrency exchanges such as Binance due to the Nigerian central bank policy, circumstances are being confirmed that cryptocurrency transactions are moving to P2P channels.
The #EndSARS movement, which has already achieved my goals, is not really over. Now, on a broader level, the government is fighting against the oppression of the people, and in the future, it is against the cryptocurrency sanctions of the Nigerian central bank. #WeWantOurCryptoBack It is expected to join forces with the forces and call for radical change in Nigeria.
Political circles are also aware of this movement. The Nigerian Senate called for the governor of the central bank and the general director of the securities sector to clarify the measures taken by crypto users to close their accounts. A senator also said that he was “strongly opposed” to the move.
Countries that are considering banning the use of bitcoin will keep an eye on how the situation goes. However, they will realize that while the introduction of the new regulations has the effect of making cryptocurrency trading difficult and reducing investor sentiment, it is impossible to completely eliminate them. No matter what DojiCoin developers think, users can know by looking at the situation where they do what they want to do without worrying at all.
In addition, the importance of cryptocurrency felt by the younger generation will become even stronger just by attempting to suppress the use of cryptocurrency.
Support troops
Then, I will relate this to the interest of institutional investors in cryptocurrency.
Bitcoin’s biggest risk is excessive regulation. Some are concerned that as the power of the Bitcoin network grows stronger, the government, which feels it as a threat, will intervene. In addition, it is argued that countries such as Iran, North Korea, and Russia are actively mining bitcoin, thus affecting national security.
That’s why investors and regulators in some Western countries will have to keep an eye on what’s going on in India and Nigeria and see if it is practically possible to forcibly ban the use of cryptocurrencies.
However, the difference now is that there is not only a problem that the general public is engaged in large-scale demonstrations or the use of P2P platforms outside the regulatory framework is increasing, but institutional investors are involved.
In the United States alone, this week, BNY Mellon, the world’s largest fiduciary bank, announced that it will launch digital fiduciary services within this year. There are rumors that Goldman Sachs, JP Morgan, and Citibank are also considering cryptocurrency consignment services. There are also large payment companies. This week, Mastercard announced that it plans to launch a feature that allows merchants to pay with cryptocurrency within the year. Not long ago, Visa announced its cryptocurrency business plan. PayPal has expanded the cryptocurrency trading service, which was provided only to some customers, to all customers. However, this is only the tip of the iceberg. More institutions are quietly preparing cryptocurrency services where we can’t see them.
In addition, cryptocurrency plays a significant role in institutional finance in the United States and other countries around the world. From financial products listed on the stock market to data businesses, there are increasing cases where institutional finance and cryptocurrency markets are closely related and interact.
The response from individual investors is also significant. According to a study published last summer, about 15% of Americans have cryptocurrency, many of which are the first to invest in cryptocurrency in the first half of 2020. Even with some errors, given this trend, the share of Americans currently holding cryptocurrencies will be significantly higher.
Could the government, which wants to regain public trust, be bold enough to suppress not only individuals but also institutions?
As can be seen in the case of Dogecoin, people who deal with cryptocurrency are passionate about how to speak out. It’s not just because you like memes, or because you’re trying to make money. This is because they pursue innovation, freedom of choice, and freedom of expression, and they want to correct what is wrong. Now that social conflicts are constantly overflowing and boiling slowly, individuals are enthusiastic about the values represented by cryptocurrencies and cryptocurrencies, and institutional investors are also supporting them by growing their powers. And in this process, the applicability of cryptocurrency is getting bigger. In such a situation, any government is bound to be cautious about measures that could potentially amplify complaints beyond its control.
The cryptocurrency industry is working together to move forward, and the market is changing. Cheering is pouring out for young people in developing countries who will lead the future, and the new president of the United States is appointing people with knowledge of cryptocurrency as regulatory positions. And the possibility of excessive and repressive regulations in major developed countries is getting farther away.
Translation: Hyowon Jeong/News Peppermint
· Translated by NewsPeppermint.
For reports and press releases, [email protected]