In an ugly week for markets, it’s striking the crypto news that caught even more attention in the mainstream media was not bitcoin’s whopping 24% drop from its peak early Saturday morning, but dogecoin’s spectacular rally earlier in the week. This week’s column dives into why that phenomenon, while literally built on a joke concept, is not something to be laughed at. The surprising clout of the DOGE mob speaks volumes about how power is being redrawn in the digital age.
And for this week’s podcast episode, we deliberately turn a blind eye to the number-go-up (and down) obsessions of the crypto market and talk about what really matters: human dignity. Sheila Warren and I talk to Human Rights Foundation Chief Strategy Officer Alex Gladstein and a Sudanese activist who uses the pseudonym Mo and the handle @SudanHODL for his podcast to talk about what bitcoin, as a “global neutral money,” can do for human rights.
Have a listen after reading the newsletter.
The Doge age
A part of me worried I was giving in to temptation by writing this column.
There’s an understandable concern within the CoinDesk newsroom that covering dogecoin could signal that we favor easy clicks from fanatics over the risk of encouraging bubble-fueled investments in a coin with no inherent technical advantages.
But then I read Max Read’s excellent piece on the future of money from last week, which inspired a delightful New York Magazine cover that asked the question, “Can I SPAC my Stonks With NFTs?” I now realize – hear me out – there’s no more important story about the reimagination of money right now than $DOGE’s crazy price surge. (See the chart in the next section.)
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Dogecoin mania, as exemplified by the cryptocurrency community’s failed quest this week to get its price above 69 cents on Tuesday in honor of a 04/20/69 date meme associated with “national stoner day,” doesn’t just seem frivolous, it is. Yet, there’s real, serious money at stake.
In that sense, dogecoin’s wild ride encapsulates an important moment in human history. Society’s traditional “story” of money is breaking down, where new, head-scratching concepts like SPACs (special purpose acquisition companies) and NFTs (non-fungible tokens) are flourishing, and where fun and games and mob-buying can overwhelm markets.
Doge is part of an intense competition for meaning within the world of money, a testament to the 21st century power shifts fueled by two separate financial crises and by the rise of social media networks. Let’s explore them.
The story’s end
We start with the idea that money is a story.
Regular readers will know I’m a fan of Yuval Harari, whose bestselling “Sapiens” argued that human civilization is built on our capacity to organize around commonly believed imagined concepts.
Harari’s examples of these constructed ideas included “the corporation” and “the nation-state,” among others that have enabled us to form complex societies. It’s money, though, he says, that’s “the most successful story ever told.”
Currencies do not have a core, intrinsic value. (Sorry, gold bugs, that applies to your favorite shiny metal as much to paper money and cryptocurrencies.) A currency’s value is dependent on shared belief in that value. That’s not to say certain types of money don’t have qualities that help its story resonate, which is why bitcoin can be described as “sound money” and dogecoin cannot. But without belief, all money is worthless.
For much of the past two millennia, the dominant story was that money’s value flowed from the sovereign because the state, empowered with taxation, had an overarching interest in optimizing the societal accounting…