Original memecoin investor’s video can be seen here: Tweet.
Almost all of my videos to date have been positive and exciting, but this video will not be like that. I will be debunking some harsh lies spread from a famous influencer who owns a ton of Dogecoin. The purpose of this video isn’t to harm his reputation, in fact I’m sure he’s a great guy, I watched his story on Andrei’s channel… however his investing mindset and the ideas he’s sharing on his own platform will be harmful to those who follow him blindly. My goal with this is simply education, and I hope that’s what this article will seem like to you. We’ll be going over what it truly takes for Dogecoin to get to $1, including way more math than what the other channels you see about this topic use, how most cryptocurrencies are scams (which is bold for a cryptocurrency enthusiast to say), and then comparing the Dogecoin Millionaire’s thoughts to a Ponzi Scheme promoter.
Goal to get to a dollar
Right now, dogecoin is valued at around 18 cents. To get that to a dollar, we would need to around 5x the price. Theoretically we would be able to take the current market cap, multiply it by 5 and then do some math to realize we would need around $120 billion dollars of buying pressure to make that happen. In reality, that’s not how it works. In fact, if every dogecoin holder in the world had strict morals and said “I am no longer going to be selling my dogecoin below $1”… well.. Now the price is at $1. Technically, the price could go to $1 without any more money flowing into the project… but all the investors would have to work together to pull it off. The reason it’s at 18 cents is because there’s some smucks out there wanting to sell their investment for cash and are willing to do so at 18 cents. The price is determined by how low any single investor is willing to sell their dogecoin at. If every dogecoin investor didn’t sell at all, the price could go to $10 or $1,000,000… but due to human nature we know that won’t happen.
In the world of crypto, we don’t use order books as much as we use a special algorithm called an automated market maker. Now this is really technical, but I added up all the liquidity out there in those algorithms and found it to be $6,000,000. This means to get the price from 18 cents to 100 cents… all we would need to add to the system is around $4,100,000 of new investor’s money using these algorithms. In the real world, the markets are made up of these algorithms AND the order book model, so it’s hard to tell exactly how much money it would really take to 5x the price. If you want to learn more about that special algorithm, I broke it down so simply your grandpa could understand it in a video called “What is an Automated Market Maker? (Liquidity Pool Algorithm)” … I promise you’ll learn from watching it.
Using the Market Cap method, we would need $120B, using the liquidity method, $4.1M, so I can reasonably guess to hit $1, we would need somewhere between 4m and 120b. This is a kinda pathetic guess, but shows you how much we really can’t forecast when it comes to crypto.
But the Value Increases!
“Everyone encourages everyone else to buy more dogecoin. If I get it at a certain price, you get it at a certain price, if we get more people to get it at a certain price, the value goes up.”
This is actually correct. Technically, each new investor buys less and less of the coin with the same amount of money if the value of the token went up. So on day 1 I might be able to buy 10,000 coins with $1. The next day, I might only be able to buy 500 coins with $1, and then the third day with the same dollar, I might only be able to buy 300 coins. When you say the “value goes up,” it just means more people are buying the available tokens out there, and then reselling at a higher price.
But We Don’t All Make Money
“When the value goes up, I make more money, you make more money, they make more money.”
This is very incorrect. If I put in $1. You put in $1, and BitBoy Crypto puts in $1. The only amount of money we can totally take out is $3. A fourth dollar doesn’t appear out of nowhere for all of us to split and call profit.
Think about any stock or crypto like a line of cups. Value isn’t really created from investors, it’s just moved. The first investor buys a stock, and for this analogy, he puts a cup on the table with his money in it. Since he has the only cup, all the money is his, no matter when he sells. Now, another investor comes along to the table and wants to invest. To do so, he has to split up his money equally between the first guy’s cup and now his own cup. Next, a third guy comes along and has to equally put money into the first two investor’s cups and then also his own cup. So each investor has their own cup, and the earlier they are, the more money future investors put into theirs.
Imagine this out all the way to 100 cups. The table is filled with people’s money and the cups, and the first guy is the guy who has a cup so full of cash he had to upgrade from a cup to a bucket simply because those 99 other people had put money into his cup. Even more so the first 20 people also had their cups loaded, even if during their initial deposit it may have seemed like they gave most of their money to the previous investors.
Now, to finish up this analogy, it’s time to think about what happens when we want to take our money out. Up to this point, all these investors just wanted to put their money in, not take it out. The rules in this cup analogy is that whatever your cup is, You can cash out only what’s in your cup. So if the first guy cashes out, no matter what… he’s gonna be loaded. The last guy though, technically 99% of the money he deposited is in other people’s cups… so he definitely isn’t going to make any money unless he can get more people to invest in this cup game.
Obviously this analogy is broken a little bit, I know that, but if you’re reading this, your understanding of how securities work is probably also broken… “if we keep putting money in, we’ll all get rich.” That’s not how it works!
It’s a zero-sum game—no value is truly created, just rearranged. The way most of these tokens work is when you make money… you’re taking money from someone else. In fact, every crypto is like this. Even when you provide liquidity, the money is coming from traders who pay that money… but they do it happily and knowing the complete terms of the deal. If you lend out your crypto, the money is coming from the people who are borrowing your money happily paying you an interest rate. And if you are farming rewards somewhere, that money’s coming from thin air from the project minting themselves new tokens and handing them over to you.
Most, if not all, of every crypto project is based on a zero-sum game. Yes, even Olympus and all of it’s forks. 3,3 is kinda a stupid idea when you realize 2,2 works in the stock world. Of course we want all the other stock holders to keep buying more and to hold forever so our share of the stock increases in price… 3,3 isn’t a new idea, it’s just been marketed in a way that makes it twitter-friendly to get people new to crypto to buy OHM or TIME.
Ponzi Scheme Definition
“Let’s get more people to buy it, the valuation goes up”
“We all make money” — Wrong
Like I mentioned earlier, you can only take out of the system what you’ve put into it, you can’t magically create more dollars. Yes, temporarily there might be a point in time where every dogecoin holder is an unrealized millionaire, meaning they hold enough dogecoin that if they sold it all, they would be a millionaire, but as soon as one person does that, it brings the price down and suddenly everyone else loses their millionaire status. So you can’t magically make everyone a millionaire by investing in something. The money simply flows from one place to another place, it is not created. The only place that can create more money is the US Federal Reserve, and they have! I would advise you to look at recent house and car prices to see how their infinite money printing affects the value of the dollar.
“Doge to a dollar”
I don’t have much to say here, but if you study cults, they commonly have rituals or songs or phrases that bring peace to the members in times of trials, and “doge to a dollar” to me sounds very similar.
What is shilling? Perfect example
“Everybody gets rich”
Shilling is a new term when it comes to cryptocurrencies and it basically means someone spouting off: “This coin is gonna be the next moon coin, you should invest!” Basically, they’re giving financial advice for someone else to buy an asset, which may or may not be illegal, but has a bad rep in the real world. If you have to tell someone to invest simply by telling them to invest, and not by explaining what problem the investment money will solve… then you need to rethink your investment.
What problem is Dogecoin solving? Taking money from a few hundred thousand investors and giving that money to a few hundred people who invested early enough to be lucky? The creator started the coin as a joke to poke fun at bitcoin, so that should give you some ideas on the problems it’s solving.
“Having a goal… that’s why I feel like Dogecoin is an incredible investment opportunity.”
The last thing he mentions here is that he believes Dogecoin is a great investment opportunity simply because the community has a goal. I can guarantee you Ethereum has some goals, Tesla has goals, even a group of representatives for Bitcoin have specific goals set up, in fact I guarantee my dog has goals when I let him outside in the morning and he sees the squirrel across the street. Goals inherently don’t give value or make an investment profitable. This is faulty logic. Faulty logic has no place for any investors, especially an investor who has accumulated a large following. So please, do your own research!