Dogecoin's price is spiking again after comments from Mark Cuban and Elon Musk that the digital coin is the best cryptocurrency as a medium of exchange. But experts don't necessarily agree with the two billionaires' assessment of Dogecoin — or the value and utility of cryptos in general.
Last week, "Shark Tank" star and billionaire investor Cuban told CNBC Make It that, "the community for doge is the strongest when it comes to using it as a medium of exchange." Tesla's CEO and fellow billionaire Musk then backed up Cuban's claim over the weekend, tweeting "I’ve been saying this for a while."
Their comments seem to have made an impression on crypto investors. Dogecoin's price was 33 cents per coin at midday on Monday, a 10% increase in 24 hours, according to CoinMarketCap.
It's not the first time Cuban and Musk have commented on Dogecoin — and their comments have likely had a role in the cryptocurrency's nearly 7,000% surge since the beginning of this year. Back in April, Cuban called Dogecoin "the one coin that people actually use for transactions." Meanwhile, Musk need only post comments like "Doge Barking at the Moon" ("to the moon" is a phrase used by traders on sites like Reddit and Twitter to indicate a price might soar) and a "Dogue" cover (in the style of Vogue) to send the price of the crypto jumping. (Plus we can't forget that Saturday Night Live skit.)
But not everyone sees the appeal of the cryptocurrency that started as a joke. Cryptocurrencies in general are extremely volatile. Even investors in Bitcoin, the most "mainstream" crypto, have to stomach constant ups and downs.
Cryptocurrency isn't regulated like stocks and bonds, and the introduction of regulation could be a huge risk to crypto values. (There's also the possibility of crypto being banned completely, Money has previously reported.) The lack of regulation is also a risk as it limits financial advisors from recommending cryptocurrencies to clients, and means exchange-traded funds (ETF) aren't available to investors.
But there's no denying that Dogecoin has a supportive online community that wants to see it soar.
"It could be the next great investment,” Hanna Halaburda, an associate professor at NYU Stern School of Business, told Money in April.
“Or it could be the next pump-and-dump scheme," she added.
As for Cuban's claim that Dogecoin is the "strongest" cryptocurrency as a medium of exchange? Not the case, an expert says, for many of the reasons listed above.
"There is no compelling use case for people to use it in place of other payment mechanisms," says James Angel, a finance professor at Georgetown University. "A good payment medium has to have a stable value, and Dogecoin is anything but stable."
He says he thinks some influencers are just pumping and dumping for fun and profit.