Did Coinbase’s CEO Just Promise to Support Dogecoin?
Leading cryptocurrency trading platform Coinbase Global (NASDAQ:COIN) doesn’t let you trade Dogecoin (CRYPTO:DOGE) tokens yet. The slightly tweaked carbon copy of Bitcoin (CRYPTO:BTC) with a meme-based image is one of the largest digital currencies on the market today with a $70 billion market cap, but Dogecoin investors still have to look for the token in other trading services.
Coinbase CEO Brian Armstrong used Thursday’s first-quarter earnings call to announce that the company is about to jump aboard the Dogecoin bandwagon.
No promises here…
Here’s the earnings call tidbit in question, with emphasis added to the most interesting bit:
“The crypto market is bigger than just Bitcoin, and Coinbase will ultimately strive to support every legitimate cryptocurrency in the market,” Armstrong said. “In Q1 alone, we added support for 18 new assets, bringing the number of unique assets supported on our platform to 108. For comparison, this is up from over 40 assets at the end of 2019 and 90 assets at the end of 2020.”
Armstrong stopped short of making any promises. Dogecoin was never mentioned directly on this call, and the way he clarified that Coinbase will focus on “every legitimate cryptocurrency” (emphasis mine again) made it sound like the jocular Dogecoin asset could be left untouched.
But wait — there’s more!
The brand-new participant in the public market had a trick up its sleeve. Coinbase actually held two conference calls for its first public earnings report, and Armstrong saved his promises for the other one.
“We plan to list Doge in the next six to eight weeks. And then more broadly, we’re going to be focused on how we can accelerate asset addition in the future,” he said this time.
There you have it, straight from the CEO. Dogecoin support is coming to Coinbase within the next couple of months.
Be careful out there
Dogecoin prices spiked 16% higher when Armstrong promised to list the token, underscoring Coinbase’s market-moving role in the cryptocurrency market.
Is Dogecoin evolving into a serious digital asset as we speak? I don’t know, and it will take a while before anybody really knows.
The currency is quite solid from a technical point of view, sharing most of its programming DNA with Bitcoin. The biggest difference between the two is that Bitcoin has a hard cap on the total number of tokens that can be mined while Dogecoin comes with no cap at all. They also use different mining algorithms, which means that the specialized hardware that gives you the best bang for the buck in Bitcoin mining is virtually useless for Dogecoin miners — and vice versa.
Beyond that, it’s really just a question of market acceptance. If businesses start to accept Dogecoin as payment for their goods and services, or investors feel that they can rely on the token as a reliable store of long-term value, then the meme-based cryptocurrency will have outgrown its role as a comic sidekick. That’s not happening yet, though Coinbase’s active involvement could help Dogecoin tip the scales in the end.
Having gained more than 8,000% in 2021 alone, Dogecoin could very well be headed for an equally dramatic ride in the opposite direction. There are many safer ways to invest in the cryptocurrency space if this token is too risky for your blood. Betting the farm on Dogecoin could be bad for your financial health, with or without Coinbase’s trading support.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.