The reckless abandon of the investing world has a new fixation: a cryptocurrency that began in 2013 as a joke, was mostly forgotten, and thanks to a flurry of tweets from
Chief Executive Elon Musk, is suddenly worth a total of more than $6 billion.
It is called dogecoin, a homage to bitcoin that was designed to serve no real purpose. Dogecoin holders can’t buy much with it and can’t easily convert it to cash. For most of its life, the virtual currency has traded for no reason other than to generate online laughs.
Dogecoin is named after an internet meme that surfaced nearly a decade ago. The meme centered around an image of a Shiba Inu dog with bad spelling habits (thus doge instead of dog). Users Photoshopped the dog’s furry face onto everything from astronauts to Twinkies.
In 2013, the software developer Billy Markus was watching bitcoin gain in popularity and decided to make his own lighthearted cryptocurrency. He first based it on the videogame “Animal Crossing,” and called it bells, named after the game’s pretend currency.
People online hated it, he said. So when another developer, Jackson Palmer, shared a new idea for a cryptocurrency based on the doge meme, Mr. Markus reconfigured his code for bells to fit the meme.
He set out to create a coin so ridiculous it could never be taken seriously. In return for solving mathematical puzzles, dogecoin miners operating fast-running computers received anywhere from one dogecoin to hundreds of thousands of dogecoins.
The coin had a fleeting moment of fame when it started. In 2014, its online supporters helped fund the Jamaican bobsled team’s journey to the Winter Olympics in Sochi, Russia, and sent a dogecoin Nascar racer to the Talladega Superspeedway in Alabama. Like most memes, it faded from relevance.
Then came Mr. Musk. On Jan 28, he tweeted a faux “Dogue” magazine cover.
Dogecoin surged as a topic on WallStreetBets, the Reddit forum that incubated trading in
In late January, the price of dogecoin rose to 8 cents from half a cent, where it had traded at the beginning of the month.
The billionaire Tesla boss tweeted about it again Thursday, breaking what he said was going to be a hiatus from the social-media platform. “No highs, no lows, only Doge,” he posted. Dogecoin immediately shot up 80% intraday, before paring gains.
Dogecoin’s network, maintained by volunteers, struggled to accommodate the influx of buyers. The volunteers ponied up real money—in euros—to buy more server space.
Mr. Markus, who no longer works on dogecoin, couldn’t believe code he wrote in three hours on a Sunday gave rise to a cryptocurrency worth billions of dollars in total market value.
“The idea of dogecoin…