CARDIFF GARCIA, HOST:
I'm Cardiff Garcia.
STACEY VANEK SMITH, HOST:
And I'm Stacey Vanek Smith. This is THE INDICATOR, Planet Money's quick take on a number in the news. There is this bitcoin spinoff called dogecoin. It is a cryptocurrency that was literally created as a joke. But today, the market capitalization of dogecoin is $1.4 billion. And that is today's indicator, $1.4 billion. That is the value of all the dogecoins in the world.
GARCIA: Today on the show, the creator of dogecoin tells us his story, and he shares his mixed feelings about the whole thing.
(SOUNDBITE OF MUSIC)
JACKSON PALMER: So my name's Jackson Palmer. I'm based out of San Francisco, Calif. And I'm a product manager.
VANEK SMITH: And you also are a maker of rain. (Laughter) I don't know how to say it.
PALMER: Yes. And back in 2013, I created dogecoin.
GARCIA: Dogecoin. That's D-O-G-E coin.
PALMER: There was a gold rush back then in cryptocurrency. And I'd been monitoring that to a certain degree. And I knew it was getting a little bit bubbly when people at work were talking about it. And so I went and investigated, and I noticed there was a lot more of what are called alt coins, or alternative coins, coming on the market. You know, whatever coin like litecoin, feathercoin. A bunch of this was on the market. So...
VANEK SMITH: Right. Bitcoin copycats, kind of.
PALMER: Bitcoin copycats. They take it, they change a variable, and then they, you know, release it to the world. And so what I noticed was that the prices were inflating and people were making a lot of money out of it. And I was like, this seems a little shady.
GARCIA: Also happening back in 2013 this Internet meme called doge.
VANEK SMITH: Yeah. It was a picture of a dog, a shiba inu, and it had this goofy Comic Sans writing all around it with phrases like much amaze and so good.
GARCIA: Grammatically challenged phrases, I think.
VANEK SMITH: Grammatically challenged phrases. Yeah.
GARCIA: And then one day it all came together.
PALMER: I had - I'd come home for the day and in Australian kind of tradition, you know, cracked open a beer. And I was just sitting around. And the way it kind of came together was that I had one browser tab open with this article about doge and right next to it I had CoinMarketCap, which is a very popular website for checking the valuations of cryptocurrencies. So my tab names kind of almost spelt it out for me in a way. And I just thought, dogecoin. That's hilarious. And so just as a joke I tweeted I think in late November 2013 that I was going to invest in dogecoin because I thought it would be the next big thing.
GARCIA: Then you started hearing from all these people who were like, dogecoin - actually, great idea.
VANEK SMITH: And a friend of his in the tech industry is like, what the hell? Let's make dogecoin a real thing. It's easy to make a new cryptocurrency, and it'll be like a fun project to understand how this stuff really works.
GARCIA: And so they create dogecoin.
VANEK SMITH: OK, you have a joke that is turning into a thing. Did you buy doges? I mean, I'm not...
VANEK SMITH: No, you didn't.
PALMER: No. No. So, yeah, again, you know, when you make a joke you don't - you know, your second thought isn't, how do I monetize this joke, right?
GARCIA: His co-founder gave him, like, a couple of hundred bucks' worth, but he doesn't think anything of it. And then the price of dogecoin starts to take off.
PALMER: And we were like, oh, no. Like, we've - this thing stands to become, you know, the joke that we were making.
VANEK SMITH: So Jackson and his partner decide, OK, if dogecoin is going to be a thing in the world, let's make it something we can be proud of. Not a place where people go to get rich, but a place where people go to learn about cryptocurrency and maybe do some good. On the dogecoin subreddit they started suggesting giving dogecoins to charity. And then someone was like, hey, I heard the Jamaican bobsled team is trying to raise money to go to the Winter Olympics.
PALMER: We thought, well, that's just as ridiculous as a dog on a coin, so sure. Why not? And...
VANEK SMITH: That is why you decided to help them?
PALMER: Yeah. Yeah. So we posted...
VANEK SMITH: 'Cause it just seemed, like, so preposterous?
PALMER: Exactly. So we posted a dogecoin address. And, you know, my friend and I in Australia, we were sitting around, we like, this is never going to work. This is preposterous. But we were out late that night at, like, a pub somewhere and our phones started buzzing. And it was like in 24 hours we'd raised, like, $30,000 to send the Jamaican bobsled team to the Winter Olympics. So there's actually a picture online if you search for dogecoin Jamaican bobsled. We gave them a big novelty-sized check. But...
VANEK SMITH: Did it have a dog on a coin on it?
PALMER: Of course it did. Yeah (laughter).
GARCIA: They donated dogecoin to train guide dogs, to drill wells in Kenya. Things were going great until they weren't.
PALMER: Whenever you have something that's going really successful, you have a successful community like that and there's a monetary element to it, it's like blood in the water, right? Like, sharks can, like, smell it from miles away.
VANEK SMITH: In 2014, someone on the dogecoin subreddit convinced a lot of people to invest a lot of dogecoin in a new cryptocurrency business. The business was really shady. It collapsed, and people lost their money.
PALMER: And that kind of just - you know, it really ended the party - right? - because it was like this thing that was - you know, it had a dog on it. How could that, you know, ever be, you know, kind of associated with people losing all that amount of money? By the end of 2014, I was kind of - I backed out, and by 2015 I was completely out of dogecoin.
VANEK SMITH: You don't have a doge? Not one?
PALMER: No. So I'd given all those - like, the 5 million dogecoin I had, which wasn't worth a lot - I gave that to all those charity things that we were running. So it was pretty much all done through that. And I didn't have any for myself.
VANEK SMITH: You're dogeless (ph) right now.
PALMER: I am dogeless. Yes. That is correct.
GARCIA: And then last year, along with lots of other cryptocurrencies, the price of dogecoin skyrocketed yet again. By earlier this week, its market cap had been approaching $2 billion before falling a bit again. And if Jackson had held on to all of his dogecoin, it would now be worth about $50,000. So a lot of money; not quite a fortune.
VANEK SMITH: Meanwhile, Jackson's kind of watching this whole thing unfold from a distance.
GARCIA: So, Jackson, there's a tremendous irony here that I'm sure is not lost on you, which is that you were a critic of all these other kinds of cryptocurrencies that were being formed and that were attracting all these buyers, and then on a lark you would go on to found a cryptocurrency whose very success would reflect the same trend that you were so deeply skeptical of.
PALMER: Yeah, tell me about it, right (laughter)? The irony is definitely not lost on me. You know, I feel guilty enough for creating dogecoin, which I'm sure that people have at some - you know, I know that people have lost money on in the past. And that pains me.
VANEK SMITH: Do you wish you hadn't created it?
PALMER: I - that's - I think I wouldn't change creating it. I think in a way, dogecoin acts for many people - you know, I've had several people that have come up to me and said, look; dogecoin was the first thing that got me into cryptocurrency. And because of it, I have a reality check on the whole space. And I - and that makes me feel good because they came in, they understood how it worked. And then it gave them the context that if this thing with a dog on it can, like, pump in price by 10X one day, they're, like, yeah, this whole thing's crazy, right?
VANEK SMITH: People are still creating new cryptocurrencies all the time. In just the past year, the number of cryptocurrencies has doubled. There are now more than 1,300. And as of this week, more than 30 of those are worth more than a billion dollars.
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