Jim Cramer: Dogecoin Is A Security

Dogecoin may be a lighthearted joke, but it’s no laughing matter when your money is involved.

Jim Cramer – host of “Mad Money” on CNBC – recently claimed that Dogecoin is security eventually regulated.

Is Doge A Security?

Cramer issued a warning about the meme coin in a tweet on Thursday. Were the SEC to agree with his assessment, he suspects exchanges will come under fire for making money from newly “created” Dogecoin.

“Please be careful with Dogecoin…It is a security,” he said. “It will be regulated. We will find out how many there are and how many are being created each day to make money for the exchanges.”

This statement reflects a misconception that Cramer has about Dogecoin’s production. The coin’s creator – Billy Markus (aka Shibethoshi Nakamoto) – corrected this mistake in the replies. In addition, he pointed out that the number of Dogecoin in circulation is already well documented and publicly accessible.

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About 14,400,000 DOGE are created per day, at a rate of 10,000 DOGE per minute as a block reward for miners. Miners are network nodes that spend energy competing to make the next block in Dogecoin’s blockchain. This process is known as “proof-of-work”.

Proof of work chains (ex.Bitcoin, Dogecoin) differs from proof of stake chains (Cardano, Solana) in that they are embedded with a competitive coin distribution method. The latter, however, are typically created in advance and manually distributed to the founder’s select parties, including insiders and VCs.

Bitcoin’s use of proof of work sets it apart from typical securities offerings and has allowed it to be classified as a commodity instead. Since Dogecoin mimics it in this regard, Cramer’s argument is more challenging to support.

Yet Cramer’s general opinions on crypto have fluctuated significantly over time. Last year, the host asked that his salary be paid in Bitcoin yet sold his holdings following China’s mining ban in May. Unlike some Bitcoiners today, he hardly had strong hands.

Dogecoin: Bigger Than You Think

If Cramers’ claims were valid, it could spell hot water for many crypto investors. However, despite its foolish exterior, Dogecoin is currently the 11th largest cryptocurrency and was the third most researched coin in 2021. A survey from Grayscale even found that more investors are aware of the meme coins existence than of Ethereum – the second-largest cryptocurrency.

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It’s also got some celebrity clout. For example, Tesla CEO Elon Musk considers it even better than Bitcoin for conducting transactions and accepts it as a payment for merchandise.