Why Dogecoin Will Fail: 20 Reasons Why Its Price Will Crash

Published: February 7, 2024 | Last Updated: May 5, 2023

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

Today I am going to look into the top reasons that many crypto analysts think Dogecoin will fail.

Dogecoin started off as a joke but took off like a rocket right away proving its naysayers wrong.

Hang on a second.

That’s not true.

For the first 3 years of its life, Dogecoin was a complete flop.

dogecoin price trend
Dogecoin was worth close to nothing during its first 3 years

It was only when the ICO bubble kicked in in 2017 that Dogecoin started to trade at higher valuations. But it only increased because it was part of a rising tide.

Immediately after the ICO bubble burst in early 2018, DOGE too crashed by 10x.

Then in January 2021, Dogecoin started to go viral partly as a result of Elon Musk tweeting in favor of it. After Elon joined Saturday Night Live DOGE reached an all-time high of 0.74 cents. Its market capitalization reached a stunning $73.4Bn.

Since then the price has crashed by -90% again in line with the broader crypto market. For comparison, Bitcoin’s difference from its all-time high is -52%.

DOGE all-time price history

OK, now that you have the context of Dogecoin’s price history let me tell you to walk you through why many people think DOGE is not going to make it.

20 Reasons Dogecoin will fail

why dogecoin will fail

1. Dogecoin is inflationary

There are already 138,929,186,384 DOGE coins out there but this supply increases by 5.2 billion coins every year.

That’s just under 4% per year (it drops a little every year as supply grows). The newly minted Dogecoin is used to reward miners who verify transactions on Dogecoin’s blockchain.

But unlike Bitcoin which has a supply cap of 21Mn, the supply of DOGE is unlimited.

This brings me to my second point

2. DOGE is not a good store of value

If supply is unlimited then every DOGE that gets printed is diluting the value of your holdings. This is how eventually all money dies.

Say what?

Ok so here is the history of money in five sentences and one interjection.

-“I now proclaim this seashell money!”

-“Dude! There’s like loads of seashells over there. “

-“What? Where? Oh. Ok then. I now proclaim this pound of salt money. “

-“Ermmm Hello! There’s an abundance of salt in the sea. “


And though many such iterations we ended up with some better stores of value. Things like real estate and gold and other precious metals. Basically, stuff that has a supply limit.

evolution of money

But Dogecoin ain’t a store of value amigos.

Now, if you are thinking “Ha! The US dollar has a higher inflation rate” let me tell you about another big problemo that Dogecoin has.

3. No way to earn a yield

While it’s true that the US dollar supply does increase there is usually a place where you can park your dollars to earn a higher return than inflation. This parking space is called a treasury bill.

Take a look at the return (yield) you could earn on a 10-year treasury bill vs CPI inflation rates in the United States.

For most of the past 60 years, treasury yields have exceeded inflation.

It’s only during times of financial crises such as the oil crises of the 70s and 80s, the 2008 financial crisis, and the current post-covid induced crisis that inflation has exceeded US Government bond yields.

treasury yields vs CPI inflation
Source: aei.org

In any case, I am not building a case in favor of the US dollar. That’s not my point. My point is that Dogecoin does not have anything to compensate for its inflation.

Crypto has staking. Dogecoin doesn’t

The equivalent of treasury bills for crypto is the process of staking.

When you participate in a proof-of-stake consensus mechanism you receive rewards with the respective blockchain’s native coins. This entices investors to hold the coin for the long term.

For example, staking rewards on ETH are about 4% per year while ETH is inflating at less than 1% per year.

But with Dogecoin there is no staking process.

So you have the worst of both worlds. Unlimited supply and now way to outpace its growth.

What else?

4. Its ownership is very concentrated.

Dogecoin ownership is highly concentrated. I’m talking ULTRA concentrated.

50% of Dogecoin is owned by 13 addresses.

This is not good for the long-term prospects of a coin. Concentrated ownership means the price can be manipulated by whales.

It also changes the narrative. Dogecoin is not the “Coin of the People”. It’s the coin of crypto oligarchs.

The graph below blows my mind.

There is one address that is holding 24% of Dogecoin’s supply. Presently this is worth $3Bn dollars. A further $3.2Bn’s worth is held by just 12 addresses.

Addresses vs Dollar value of Dogecoin (April 2023)

DOGE ownership concentration
Source: bitinfocharts.com

The graph below shows the combined relationship between addresses and their ownership. You see that the single whale address owns 24% of the supply, 13 addresses own 50%, 140 addresses own 70%, 689 addresses own 82% of the supply, and so on.

That is a massive concentration of Dogecoin.

Cumulative holdings of Dogecoin (April 2023)

DOGE cumulative ownership
Source: bitinfocharts.com

Compare this against Bitcoin’s concentration where 155,736 addresses control 82% of the supply. By this metric Dogecoin’s ownership is 266 times more concentrated than Bitcoin’s.

Cumulative holdings of Bitcoin (April 2023)

bitcoin cumulative ownership
Source: bitinfocharts.com

On the flip side, there are arguably other coins that are more or equally concentrated than Dogecoin. Also, these large addresses could be owned by exchanges so it might not reflect exactly the number of people holding DOGE.

Enough about concentration. What else?

5. Dogecoin is extremely reliant on Elon Musk’s sponsorship

The price of Dogecoin is very reliant on what Elon Musk says or does. For those living under a rock, Elon Musk is the CEO of Tesla, SpaceX, and Twitter.

Most recently Elon replaced the logo image of the Twitter bird with that of the Dogecoin mascot, a Shiba Inu dog.

Elon musk's "that's an old photo" tweet
Elon Musk’s tweet before he made the switch. Note the almost 907,000 likes.

This guy can move markets. And indeed, the price of DOGE spiked 30% after Elon changed the logo only to come back down shortly after he removed it.

Dogecoin price spike

But you need to take Musk’s comments with a grain of salt. Can you make money trading based upon them? Possibly.

Can you rely on Musk’s persona to carry Dogecoin forward into the future?

Even if you think that to be true there is another problem.

6. Low volume of transactions

Transaction volume has dropped by 60% from its high of 50,000 transactions per day to around 20,000 in early 2023. For a coin that is thought to have a large and enthusiastic crypto community, the numbers reflect a different reality.

Dogecoin daily transactions

dogecoin daily transactions

Compare Doge’s daily transactions to those of other top-ranking coins and you see there is a mismatch

dogecoin vs top coins daily transactions
Dogecoin transactions are tiny compared to other coins with a high market cap. You can no longer see Dogecoin when I plot the transactions of other coins.

For example, on April 1st, 2023 Bitcoin processed 319,506 transactions, Ethereum processed just over a million transactions, XRP 1.19M, and Litecoin 99,273.

Dogecoin, however, processed a mere 31,233 transactions.

In comparison to the non-crypto world, Visa processes about 150Mn transactions per day.

Dogecoin’s volume of transactions is minuscule compared to its counterparts. What’s Dogecoin doing in the top 10 coins by market cap?

It’s not the big guys who are investing.

7. Lack of institutional backing

Remember those 586 addresses that hold DOGE? Those are not institutional investors.

In a study by Fidelity, 42% of American and 67% of European institutional investors they surveyed had invested in digital assets. However, there are hardly any institutional investors in Dogecoin.

One exception is BlackRock who made an announcement at the end of March 2023 that they now invest in Dogecoin. Blackrock is a massive asset management company managing trillions of dollars worth of investments. If other funds follow the example set by Blackrock it could change Doge’s narrative.

But then what? Does it mean we start paying for things in DOGE?

8. Dogecoin is not accepted as payment widely enough

If it’s not a good store of value then there must be some other utility that Dogecoin offers.

Some argue that Dogecoin’s utility could be that it becomes a form of payment. The Dogecoin community is youthful and full of enthusiasm so maybe DOGE will become a way to pay for stuff.

In fact, there are now more than 40 companies that accept Dogecoin as a payment method. Some estimates I have seen claim that as many as 1,400 companies accept Dogecoin as payment.

However, this is nowhere near the adoption rates you need for Dogecoin’s main utility to be a payment option.

When you look closer it is clear that the most notable companies accepting Dogecoin are doing it more for a publicity stunt than anything else.

You’ve got Elon Musk’s merch stores on Tesla and SpaceX. And then you have the Dallas Mavericks, who are owned by Dogecoin proponent, Mark Cuban, accepting DOGE.

Yes, it could be a good marketing gimmick to offer DOGE as a payment option so as to appeal to your Gen-Z buyers.

However, personally, I am not convinced DOGE is coming to replace my dollars.

But what if you push this scenario to its extreme and assume the world decides to transact in DOGE?

Dogecoin’s tech stack can’t support it.

9. DOGE’s technology is limited.

Doge has a block time of 1 minute which is better than Bitcoin’s 10 minutes but worse than Ethereum’s 12 seconds.

What this means is that in practice Dogecoin can process about 40 transactions per second. Contrast this with Visa’s 24,000 transactions per second and you realize that Dogecoin has a problem.

40 transactions per second mean that the Dogecoin blockchain can process just under 3.5Mn transactions per day. Sounds like a lot but it isn’t.

Say you wanted 100M people to start using Dogecoin then each would have to wait about 28 days for their transaction to go through. Would you be willing to wait a month for your transaction to go through at the grocery store?

On top of that transaction fees are higher than other blockchains.

It’s ok though because Dogecoin’s vibrant community of developers is working on it

Ermm…Except there is no vibrant developer community

10. Developers don’t care about DOGE

Yes, Gen-Z loves the Shiba Inu-themed DOGE brand but developers don’t.

The commonly accepted way to measure developer engagement is to look at GitHub commits.

GitHub is a platform on which you can share your code. Most blockchains’ codes are on there. Then a commit is like a milestone or improvement.

For example, over the past 12 months, Bitcoin has had 1,795 commits.

Solana has had 3,333.

And Sushiswap has had 4,482 commits.

Dogecoin has had 79.

At the time of writing, there have been no commits to Dogecoin since July 2022.

Plus their core developer resigned in February ’23 because he had a day job.

Nuff said.

What else?

11. There aren’t enough nodes

A node is an essential component of any blockchain or cryptocurrency network. It is a computer or server that connects to the network, stores a copy of the blockchain, and participates in the consensus process for validating and verifying transactions. Nodes help to maintain the security, stability, and decentralization of the network.

Dogecoin has 4703 nodes while estimates for Bitcoin vary from 17,000 to 50,000. Ethereum has about 500,000.

A further criticism about Dogecoin’s nodes is that many nodes are far behind in syncing, which shows that there isn’t enough community support in keeping the network strong. The small number of fully synced nodes makes it hard for new users to join and sync their nodes with the network.

I am not sure whether this criticism is outdated as it was from Galaxy in 2021. Plus there are many other coins that have far fewer validators. For example, Cosmos, which is considered to be a robust blockchain only has 100 validators.

Also, the hash rate for Dogecoin has been growing which means that the total computational power being used to mine Dogecoin and secure the network is growing.

DOGE hashrate chart
Dogecoin Hashrate.The hash rate is measured in hashes per second, and a higher hash rate means more miners are participating in the network, or existing miners are using more powerful hardware. Source: Coinmetrics.io

12. Higher risk of attack

Mining is like a competition where computers solve puzzles to secure a cryptocurrency network. Bitcoin and Dogecoin are like two different contests with different rules and prizes.

Now, imagine someone trying to cheat in one of these contests. With Bitcoin mining, it’s much harder and more expensive to cheat than for Dogecoin. In fact, cheating in Bitcoin is 11 times more expensive than in Litecoin.

Bitcoin makes contestants wait the longest before they can use their prizes – around 33.3 hours. But Dogecoin, with its super-fast 1-minute block time, has a way shorter waiting period of just 1 hour!

So, in the end, Bitcoin is safer and more secure for people who want to send and receive money. If a cheater tries to attack Dogecoin, it can cause more damage and people might lose their funds, even if they’re just innocent bystanders

What’s more worrying is that the whole thing started off as a joke.

13. It started off as a joke

It really did.

Dogecoin is the creation of Billy Markus and Jackson Palmer who forked (copied) Bitcoin’s code and riffed off of that to make a coin based on the popular Shiba Inu internet meme that was making the rounds at the time. Both are no longer involved in Dogecoin with Palmer often expressing how he thinks the whole of crypto is one big scam.

Here is the tweet that he has pinned to his profile. So effectively the founders of the meme coin are saying,

“Yeah, we made it as a joke. It’s gotten out of hand and we no longer want to be involved.”

After years of studying it, I believe that cryptocurrency is an inherently right-wing, hyper-capitalistic technology built primarily to amplify the wealth of its proponents through a combination of tax avoidance, diminished regulatory oversight and artificially enforced scarcity.

— Jackson Palmer (@ummjackson) used to have this message pinned on his Twitter profile and has now removed it.

14. Flat growth in active addresses

Dogecoin’s active addresses are kind of flat.

An active address refers to a wallet address that has been involved in at least one transaction within a specified period of time, such as a day, week, or month. Active addresses are used to gauge the level of activity and adoption of a particular cryptocurrency. A higher number of active addresses typically indicates a more active network with more users engaging in transactions, which can be a sign of a healthy and growing crypto ecosystem.

In green below you can see the active addresses of Dogecoin. Two things stand out

  1. The active addresses on Dogecoin are much lower than Bitcoin’s at about 8% on any particular day
  2. DOGE’s active addresses are not growing. See how Bitcoin’s number of active addresses rises to higher lows after its respective crashes in 2021 and 2018. That hasn’t happened to Dogecoin in 2022.
DOGE vs BTC active addresses chart

15. Environmental impact

Another reason people think Dogecoin will fail is its environmental impact.

Like Bitcoin, DOGE uses a proof-of-work consensus mechanism that requires energy. Dogecoin consumes about 2.3TWh. That amount of electricity could power 700,000 US households in a year.

There has been some discussion about DOGE moving to the more eco-friendly option that Ethereum adopted called Proof-of-Stake. In fact, this solution was proposed by Vitalik Buterin himself.

But nothing has come of it so far.

16. Lack of Smart Contracts

Smart contracts let you build things on top blockchains. A smart contract is a piece of code that allows you to say if this happens then do that. This is how the whole DeFi space has emerged with decentralized lending and borrowing, decentralized exchanges, decentralized stablecoins, and much more. With platforms that offer smart contracts, their utility is theoretically infinite because you can just keep on building stuff on them.

With Dogecoin you can’t build anything on top of it.

Dogecoin isn’t the only currency without smart contracts. Bitcoin doesn’t have smart contracts either. But combined with all the arguments against Dogecoin above the lack of smart contracts is seen as a weakness for DOGE.

17. Loss of interest

Dogecoin has a strong culture and community. In fact, this is what propels it forward as the majority of DOGE is owned by retail investors. However, should this narrative change and interest in Dogecoin wane, its value, and support could decline, leading to its eventual failure.

18. Economic downturn

A global economic crisis could impact the entire cryptocurrency market, including Dogecoin, leading to a potential decline in value or failure. Some say we are at the cusp of a further recession which will cause all stocks and crypto assets to plunge.

19. Competition

Dogecoin faces competition from other cryptocurrencies that offer more advanced features, faster transaction speeds, and better security. There are coins out there that are more scalable and faster. There are also coins, such as Ape Coin that have massive marketing resources behind them that could cause them to eclipse Dogecoin

20. Limited use cases

Dogecoin has fewer real-world use cases compared to other cryptocurrencies, which may limit its growth potential. Apart from being used for tips and raising money for good causes, there are limited things you can do with DOGE.

For example, there are no decentralized platforms where you can post DOGE as collateral and borrow against it.

I still want to buy DOGE

Having read these arguments, if you still want to buy DOGE make sure you do it the right way and check out my article on how to buy Dogecoin. In there, I also provide you with the critical information you need to know as well as links to further guides and resources.

I want to short DOGE

See How to Short Dogecoin: a Detailed Guide for Beginners for instructions on how to go about this.


Hey, by the way, you know none of this is investment advice right? Make sure you do your own research to make an informed decision.

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Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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