Unlike other cryptocurrencies like bitcoin (BTC-USD) and Litecoin (LTC-USD), Dogecoin (DOGE-USD) has no legitimate use and was created as a joke, Ric Edelman, founder of Edelman Financial Engines, told Yahoo Finance Live.
“I am strongly opposed to Dogecoin, Doggy-coin, because it was invented as a joke,” Edelman said. “It was not serious. It has no legitimate use-case. It is not something that I think is doing the crypto community any good in its efforts to generate credibility and legitimacy in the financial marketplace, or approval by the SEC.”
“Doggy-coin, which is the other pronunciation for this, misspelling of the word doggy, D-O-G-E, is the bad boy of crypto,” he added.
The cryptocurrency was invented as an alternative to bitcoin back in 2013 by software engineers Billy Markus and Jackson Palmer, the latter of which would later leave the project. The name derives from the “Doge” internet meme, a surrealist trend that featured a popular photo of a Shiba Inu.
Dogecoin has been a highly speculative asset, at times experiencing 20%-30% volatility daily. Edelman said that it may come dangerously close to fraud territory. Dogecoin essentially is a victim of a “pump and dump scheme,” he said, by extremely wealthy individuals like Elon Musk.
The cryptocurrency has received criticism in the past for having no underlying value; some analysts have called it a bubble in light of the 2021 run that saw Dogecoin multiply 100 times over in value. Yet startups and investors have raised millions of dollars for Dogecoin funds.
“[Dogecoin is] creating the environment for people to do crazy things in crazy chat rooms, and creating a bump and dump environment of people who are trying to get rich quick,” Edelman said. “So there’s a big difference between Ethereum and Bitcoin and jokes like Doggy-coin.”
Bullish on bitcoin and Ethereum
Outside of Dogecoin, Edelman said other cryptocurrencies can be promising. “I’m actually more excited about Ethereum than I am about bitcoin, although I’m bullish on both,” he said. “And there’s a whole variety of others. But I would say if you’re just getting started, bitcoin and Ethereum are about 80% of the market. That’s plenty. So just go ahead and do those.”
The price of Bitcoin fell almost 37% in May, and remains down 38% from the mid-April peak. Bitcoin’s price increased yesterday after Elon Musk announced Tesla would resume accepting Bitcoin transactions when the cryptocurrency becomes more environmentally-friendly.
Edelman recommended using funds like Grayscale (GBTC), Osprey (OBTC), and Bitwise (BITW) to help with investing in cryptocurrencies. “These funds are readily available if you’re an accredited investor, investments such as SkyBridge, that allow you to invest in it the way you invest in any kind of mutual fund or ETF,” he said.
Edelman, who disclosed that he is an investor in Bitwise, also noted that the fund offers a top 10 crypto index fund that could be useful to potential investors.
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