cryptocurrency – The Concordian

Welcome to the doge house

By now, you may have heard of Dogecoin, a cryptocurrency with the face of a dog. Just like what happened with Gamestop last month, this small currency is trying to rocket itself to financial power. Here, we’re going to try to answer all your questions about the budding cryptocurrency.

First off, a quick explanation of what a cryptocurrency is.

A cryptocurrency is a digital form of money that rides the line between a debit card and cash — entirely on the internet. In its most basic form, you exchange cryptocurrencies with participating entities just like any other purchase online, but instead of involving a bank, the money goes to the other person, more or less directly.

Most cryptocurrencies, such as Dogecoin, are built on a technology called the blockchain. Concordia professor and holder of the Industrial Research Chair in Blockchain Technologies at Concordia, Jeremy Clark says “The blockchain is about building something that’s like a database where’s there’s just one copy of the data and everyone agrees on what that copy of the data is, but it’s not held in a single location.”

It’s easiest to think of cryptocurrencies as a universal, digital version of cash.

The most popular cryptocurrency is Bitcoin (BTC), which you probably have heard of since it recently reached the value of $50,000 USD for one single Bitcoin after automaker Tesla announced it would accept Bitcoin as payment for cars.

Here in the explanation is where it gets meta.

Currencies in the world such as the Canadian dollar (CAD) and the US dollar (USD) are backed by the governments that print the bills. Faith in the monetary system the bills represent gives the currency its value.

Cryptocurrencies are backed by nothing but faith in their value. A Bitcoin has value because we all believe it has value. Just like stocks, cryptocurrencies are volatile and change value rapidly, and are influenced by developments around them.

The U.S. classifies Bitcoin and other cryptocurrencies as commodities. That’s the same classification as gold.

Think of people who collect vintage coins. They may have a value printed on them, but they can fetch prices much higher. You wouldn’t spend a rare misprinted 1919 quarter on a pack of gum – even though the coin itself would work – because you can sell it for much higher than its printed value.

“Currency isn’t meant to be something that gives you a tremendous return on value,” said Clark, “You want people to use it and not hoard it for the possibility that it doubles its price in a month, it’s meant to be a currency.”

Cryptocurrencies currently work much like that rare misprinted 1919 coin. You can use them to purchase things now or hold onto them in the hopes that they can fetch a higher value later. They both only have value because someone out there says so, and both can technically work like cash.

Cryptocurrencies do offer reasons to be used as currency. They are decentralized so no one agency controls the currency, they are easier to manage and send to individuals being a digital native currency, and cryptocurrencies at large are secure with publicly accessible transaction records.

That being said, a currency should only be valuable in what you can trade it for, and a currency that’s worth more than what you’re spending it on isn’t much of a currency is it?

If circulation never occurs because everyone holds onto their crypto-coins, they’re not really coins anymore. Coins are currency to be traded. You’re holding onto ones and zeros that at one point might have been cash should people have used them as such, but now are just code.

Everyone okay? Existential crisis under control for now? Okay good.

Now onto Dogecoin.

Beyond the popular coins such as Bitcoin and Ethereum ($ETH), there are literally hundreds of cryptocurrencies. They all function similarly but have different features, advantages, and prices.

Dogecoin is part of a smaller class of cryptocurrencies called altcoins, short for alternate coins.

Basically, Dogecoin is just like other cryptocurrencies except it was created as a joke with a picture of a dog — the doge meme — as its mascot. Well, that and being quoted on the project’s website as the digital currency “Favoured by Shiba Inus worldwide.”

“I always thought that there would be a sort of winner that would be chosen by the market,” said Clark when referring to the hundreds of smaller coins on the market. Currently, there’s value in many of them and no clear winner.

The Doge in question is an image commonly found in memes. Doge herself is a Shiba Inu named Kabosu from Japan.

So, why should I care?

Dogecoin has had quite the boom as of late.

Just like what happened with Gamestop and other meme stocks, an organized group of Reddit traders all decided to buy into Dogecoin, leading it to achieve a peak value of just under $0.085 USD per Doge on Feb 8.

Eight cents doesn’t sound like much, but this is a massive jump from below one cent per Doge just over a week before.

On top of that, Dogecoin has had lots of support.

Elon Musk, ever the champion of nonsense, tweeted about Dogecoin on Feb. 24 using language reminiscent of r/wallstreetbets and the Gamestop meme stock surge, “Literally, on the actual moon.”

ATM company CoinFlip announced in a tweet on March 1 that it would begin trading Dogecoin at its ATMs across the country.

The Dallas Mavericks basketball team announced on March 4 that they would accept Dogecoin for tickets and merchandise.

“It’s hard to say what the longevity of these things will be if people will continue to prefer having dozens of [currencies] around,” said Clark, “or if eventually, the market will coalesce behind one or two winners.”

For now, all that can be said for the joke-turned cryptocurrency is much coin, such wow.

Graphic by Taylor Reddam

How lucrative the rare pepe-making market is becoming

In November 2017, Leonardo da Vinci’s Salvator Mundi was sold at Christie’s, the biggest auction house in the world, for US$450.3 million. In October 2020, Satoshi Nakamoto’s Block 21 was sold at Christie’s for $131,250.

The former is the most expensive piece of art in the world. The second is the first piece of crypto art to ever be sold at a major auction house.

Cryptocurrencies have been having their moment for a while, with the 2018 Bitcoin mania (which, by the way, was created by the person under the alias of Satoshi Nakamoto) and the recent rumours that it could replace paper money once central banks inevitably crash due to the pandemic. And because, of course, it wouldn’t be the internet without the idiosyncratic evolution of an underground subculture, there’s now also an increasing presence of crypto art in the crypto community.

I hear you asking: “What the hell is crypto art?”

Crypto art is a new movement that allows people to create digital art while guaranteeing official ownership of the piece with what crypto fiends call an NFT.

NFT stands for Non-Fungible Token, which means something that is certified unique; it’s irreplaceable, which gives it a certain amount of intrinsic value. Since most online art can be replicated à volonté by just about anyone, making a piece of digital art an NFT, where the copyrights and ownership details would be stored on a cryptocurrency’s blockchain, would give it the same amount of rarity as a physical piece of art like da Vinci’s Salvator Mundi.

The art can still be replicated, but only the person who has the token — the artist’s cyber signature on the piece, essentially — really owns it.

NFTs can have many forms. They can be specific pieces of artwork just like they can be collectible characters and games, like CryptoPunks — a bunch of punk characters that you can buy using Ether, a cryptocurrency— and CryptoKitties, which is kind of like Nintendogs, but with a digital cat that has a unique NFT genetic code and that you can breed with other cats to make another unique kitty.

Another use for crypto art is what is called cold storage: some crypto art pieces are available as physical prints that feature a QR code, which Bitcoin users can then use to store their Bitcoin outside their crypto wallet. Since they’re transferring funds onto a physical, two-dimensional object — which therefore can’t be hacked into — the art print then acts like a safety deposit box at a bank.

For the most part, crypto artworks can run anywhere from $50 to $500,000. But it’s difficult to follow the value of these pieces because the value of cryptocurrencies changes so much, and there are so many sources claiming different values for the most expensive pieces of crypto art.

So far, a crypto photo of a rose, sold for $1 million, is said to be the most expensive piece of crypto art out there. As a fast-paced business, it’s estimated the crypto art market is worth well over $128 million, and it expanded by $8.2 million in December 2020 alone.

Some are seeing this as a counterculture movement against the traditional art world, which has come to embody elitism and luxury. Where museums, art buyers, and the like are deciding which types of art and which artists will be put under the spotlight, the internet is able to democratize the industry and give small artists the support and recognition they deserve. The web is also home to a wealth of different styles and themes of art.

Now crypto art is all fun and games, but this is the internet we’re talking about, and on the internet people just have to make things weird. Enter the Rare Pepe Directory.

The Directory is a panel of “experts” who work to verify and approve user-submitted Rare Pepe artworks (which act and look similar to trading cards). They have a list of specific criteria to consider any submission, like dimension specifications and how many shares it must have had, to confirm the Pepe before their eyes is indeed rare. If approved, the new Pepe can then be bought and traded as an NFT.

As far as I know, there aren’t really any practical uses to crypto art. But the concept has been questioned by many as just another way for internet users to launder money more effectively. After all, the world of fine art is already used as a way to clean dirty money and tax evade through under-the-table payments and over appraisals; creating an art industry based on decentralized, anonymous payments seems like an obvious next step for the elite of the blockchain.

The rise in popularity and value of intangible art starts an important conversation about the reasons why we care about art in the first place. Salvator Mundi’s exorbitant price denotes the scarcity of original Leonardo da Vinci pieces, but what difference does it make when it’s possible to scrutinize the piece and enjoy it just as much as a JPEG file? Are we about to see higher and higher price records from digital pieces?

Most importantly, crypto art, as a prediction of what the future of art looks like, is an indicator that the barriers of entry to the art world have reached a tipping point. Just as we’re seeing in the rest of the digital world, the 99 per cent is taking art back from those who have capitalized on its captivity.

Photo collage by Kit Mergaert