Despite centralization concerns, Dogecoin surging thanks to Elon Musk

  • Elon Musk pumped the Dogecoin price again with several tweets.
  • A mysterious Dogecoin whale holds 27% of all DOGE in circulation, 20 addresses hold 50% of all DOGE.

Even though the big hype around Dogecoin and the WallStreetBets pump is slowly dying down, the DOGE price is still posting dream gains for investors. Thus, over the last 30 days DOGE writes a plus of 368%; while on a weekly basis DOGE is still up 41% and 14% in the last 24 hours.

Elon Musk is likely to have played a not insignificant role in the current rise in DOGE’s price. The Dogecoin/Musk saga dates back to April 2019, when Musk was named “CEO of Dogecoin” in a joke poll, and responded by saying that it “might be my fav cryptocurrency. It’s pretty cool.” Since then, Musk has regularly kept the price pumping with his DOGE tweets. The Tesla CEO tweeted several times about Dogecoin yesterday.

However, the billionaire most recently made it clear in an interview on Clubhouse that he only “occasionally jokes about Dogecoin” because it’s a fun cryptocurrency. Still, investors seem to be responding to Musk’s tweets, perhaps because he also said:

[The tweets] are really just meant to be jokes, but you know Dogecoin was made as a joke to make fun of cryptocurrencies obviously, but fate loves irony and often as a friend of mine says that the most ironic outcome or I’d say the most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of earth in the future.

Concerns about the centralization of Dogecoin

However, despite a growing community and recent high-profile endorsements, such as by Kiss’ Gene Simmons, concerns have arisen about the centralization of Dogecoin. Binance CEO Changpeng Zhao spoke about the pros and cons of Dogecoin in a tweet yesterday.

“CZ” states that on the pro side, “Cool, fun, PR manager @elonmusk. Decentralized in the sense there are no “core team”. It’s abandoned.” However, Zhao also pointed out the risks he sees, first and foremost, the centralization of DOGE holdings.

Dogecoin’s blockchain data shows that over half of all DOGE is distributed in just 20 wallets. Moreover, a single wallet owns 27% of all DOGE, which is why Zhao stated, “Kinda centralized in that sense.”

Zhao also stated that he has no idea who the address with 27% of all DOGE belongs to. Of course, there has been a lot of speculation about this in the crypto community, with Elon Musk being one of them, as the address appeared two months before the first Musk tweets and has been accumulating new DOGE regularly ever since.

However, this seems rather unlikely. The address could belong to an exchange or mining pool, as the Binance CEO also wrote. This theory could be logical insofar as the so-called “merge mining” is possible with Dogecoin and Litecoin, whereby both cryptocurrencies share the hash power and do not require additional power consumption.

Meanwhile, Pierre Rochard, co-founder of the Satoshi Nakamoto Institute, commented that DOGE’s biggest weakness is unlimited supply:

The biggest risk with dogecoin is that it does not have halvings, there is never-ending dilution of the doge supply. This makes dogecoin unusable for long term savings.

Contrast with #BTC, which successfully had its third halving last year. 1 btc = 1/21 million btc, no dilution.

About Author

Jake Simmons has been a crypto enthusiast since 2016, and since hearing about Bitcoin and blockchain technology, he's been involved with the subject every day. Beyond cryptocurrencies, Jake studied computer science and worked for 2 years for a startup in the blockchain sector. At CNF he is responsible for technical issues. His goal is to make the world aware of cryptocurrencies in a simple and understandable way.

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