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November 19, 2019

Dogecoin Video Contest Entry Sums Up Why I’m Still Bearish on Bitcoin

BitcoinAnyone who’s spent at least a few minutes on Reddit in the last few weeks has probably run into a few users sharing Dogecoin memes. The Dogecoin subreddit is hosting a video contest with a pretty impressive prize pool (18 million Doge), and while I don’t personally invest in Doge, the contest caught my curiosity and I decided to look through some of the entries. A few of them are pretty clever and I encourage you to visit the subreddit and browse through them.

One video, however, made a point that, after thinking about it, was pretty brilliant. It was a parody of the popular “I’m a Mac, and I’m a PC,” commercials, featuring a Dogecoin and a Bitcoin. The video argues that Bitcoin isn’t a real currency; no one actually uses Bitcoin, investors just use it as a vehicle to trade against one another. To prove it, the Dogecoin challenges the Bitcoin to take a look at the respective trade histories of each coin, to see what kinds of transactions actually happen between them.

I distinctly remember the most recent cryptocurrency crash. I was watching a live stream of transactions while people rushed to sell, and I was struck by how many $100,000 – $1,000,000+ trades I saw coming from Bitcoin. It was obvious that the vast majority of traders were large-scale investors. I too, had to ask, where are all the normal people?

The video closes by taking a look at the trading history of Dogecoin, claiming that it’s typically full of small scale trades, owing to the actual use factor people have for Dogecoin. Not to be one to take any message at face value, I did just that. Using Cryptocompare, I painstakingly combed through the Dogecoin transaction history. And I have to admit, the video was completely right. I had to look very hard to find any trades over $1,000.

Here’s a quick snapshot of the most recent Dogecoin trades:

And here’s a comparison of Bitcoin trades at the same time:

While this is just a small sample, I encourage any interested investors to take a look for themselves. The difference in relative trade sizes, even over large samples, is pretty staggering. It’s enough to make me wonder if Dogecoin really is just purely adopted by actual small scale users.

However, the recent rise and fall of Dogecoin is proof that there are at least some large scale investors betting heavily on the coin, but still nothing like Bitcoin. While some have called the slow average historical growth of Dogecoin as proof that it’s not a serious crypto, it may be it’s biggest asset. People are actually using it. And it’s growing, slowly, and organically. So to the creator of that video, I have to tip my hat. You’ve turned me into a Dogecoin believer. I may not run out and buy any tomorrow, but I’m now going to be looking very closely.

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