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A cryptocurrency that originally started as a joke now has a market cap of more than $1.7 billion. And its founder thinks that’s a bad sign for the cryptocurrency market in general.
Jackson Palmer, currently a product manager at Adobe, created dogecoin — a fairly simple Bitcoin clone — back in 2013. Back before bitcoin become a global phenomenon, dogecoin quickly garnered a strong following, primarily focused on memes including dogecoin’s mascot, a Shiba Inu dog, and jokes about reaching “the moon,” which in crypto lingo means becoming rich.
Having a four-year-long history in the world of crypto is a big deal, and as Dogecoin’s following got stronger, its price steadily increased. At one point in January, Dogecoin’s market cap — the total value of all dogecoins in circulation — exceeded $2 billion, according to CoinMarketCap.
That has set off some alarm bells among people in the cryptocurrency community, including Palmer.
But here’s the deal: Dogecoin does not offer many significant technological advantages over Bitcoin. And it’s not something that’s seen any improvement, having not received a significant update in years. And Palmer, who sold most of his Dogecoin by 2015 and is not actively involved in the project anymore, thinks this type of price growth is indicative of a bubble.
It’s not just about Dogecoin, though. After an article in crypto-oriented media outlet Coindesk focused on Palmer’s comments on Dogecoin, he posted an expanded statement on Twitter. In it, he also bashes Ripple, a cryptocurrency with a market cap that recently soared to more than $100 billion (the price retreated somewhat since then).
“The fact that most conversations happening in the media and between peers focus on the investment potential is worrying, as it draws attention away from the underlying technology and goals this movement was based. As a result, we’re seeing even highly centralized assets such as Ripple achieve extremely high valuations, despite their lack of technological innovation and misalignment with the original vision of Bitcoin,” he wrote.
In general, the current market is a “bubble,” claims Palmer, though he doesn’t dare predict when it will burst.
“My one hope is that when that does happen and people lose large sums of money, the negativity in the market doesn’t stifle technological innovation or interest in digital currency from the mainstream,” he wrote.
These kinds of warnings are becoming more common among people who are optimistic about the long-term future of distributed ledger/blockchain technology.
*All* crypto communities, ethereum included, should heed these words of warning. Need to differentiate between getting hundreds of billions of dollars of digital paper wealth sloshing around and actually achieving something meaningful for society. https://t.co/aNpEnBNGsA
— Vitalik Buterin (@VitalikButerin) December 27, 2017
Palmer is not the only one who’s worried that enormous valuations of cryptocoins and greed have eclipsed the technological innovations that the cryptocurrency space offers. Ethereum co-founder Vitalik Buterin recently tweeted that “billions of dollars of digital paper wealth sloshing around” isn’t quite the same as “achieving something meaningful for society.”
Disclosure: The author of this text owns, or has recently owned, a number of cryptocurrencies, including BTC and ETH.