Sputnik: What does this sharp price rise in Dogecoin represent? Will the crypto likely hit its $1 target?
Nafis Alam: At the moment we are seeing a revolution going on in the financial market where there are a group of enthusiasts on Reddit, which are trying to save some of the dying commodities like GameStop shares, or cryptos like Dogecoin. So, it is like share enthusiasm and these people are desperately trying to raise the price by talking about, and investing or even inviting, a group of people. At the same time, the price has been also fuelled by a one-word tweet coming from Elon Musk, I think he's also getting a superstar status in that. Whenever he wants to raise the price of Bitcoin or any other shares, he will just tweet a simple word, and people treat it as the indication that maybe Elon Musk is also investing, or he is also interested to boost up the price. It's too early to say [if] it will reach $1, but we can say that it is going to be having some level of enthusiasm, some level of price rise, but that value will still be a bit far to reach at $1 for Dogecoin.
Sputnik: Ok. You mentioned the power and influence of Elon Musk on social media. How much of Dogecoin's value is based upon social media, and does it represent the same value as other cryptos like Bitcoin?
Nafis Alam: It's becoming a fad at the moment, the social media influences that people are not really paying attention to. If you really look into a currency like Dogecoin, which has no value, a limited supply, there should be no incentive to have a price rise there. It's just fear and following the bandwagon. Dogecoin coin went into two rounds of appreciation; one was last Friday, when the need group started promoting the price, and the [other] one was today when suddenly Elon Musk came back from his two-day hiatus of [when] he said he's going away from the social media, so many people are thinking that he referred to Dogecoin.
But we cannot say that it is the real reason for the price rise. It doesn't really gel well with what is the aspiration of people like Elon Musk. At one time he tried to promote saving the environment, and [was] also talking about Bitcoin, which is producing so much energy, eating up the heat, and things like that. So yeah, it is a fad at the moment. People can come and say one word, people can come and say some favourable tweets for the stock, or the crypto like this, but it's not going to sustain in the long run.
Sputnik: Is there a future in cryptocurrencies, and will we likely see greater regulation against social media websites, to limit their influence over the value of stocks, shares and cryptos?
Nafis Alam: Regulation was one of the weak areas in the last few years, but I think 2021 has started with a bang in that aspect. Regulators all over the world, including India, including the US, are now more serious, and keen, about regulating these cryptos or looking into those currencies; which do not have any intrinsic value, and is being freely traded, and can be used for money laundering, [and] can be used for terrorism financing, etc. So yes, definitely regulation is on the way, a lot of homework has been done and it needs to be regulated. I am a proponent, I'm a supporter of regulating these upcoming digital currencies, which is not backed by any central bank [and] doesn't have any intrinsic value, and it is more like a very speculative asset.
If you look into the curve of the Bitcoin price, or any of the cryptos' price, it goes up and down every day on a daily basis, so it doesn't make sense that you are really going to hold on. You can make a price on a daily basis come out, and when it comes closer for example, for Bitcoin when the supply is coming closer to the maximum, there will be no incentive for people to mine anymore, so what will happen? So, there are some insiders who are holding on to these huge chunks of volume of these cryptos, who want to cash in on the market, and then they go and talk, or maybe tweet, about these. Again, I don't know whether people, celebrities, like Elon Musk are holding on Bitcoin or not, but favouring these types of speculative assets is also not coming from people like him, which are looking more into sustainable financing, or looking into more things which are helping the investor rather than trying to harm them in the long run.
The views and opinions expressed in the article do not necessarily reflect those of Sputnik.