Cardano (ADA) founder Charles Hoskinson is not a fan of Dogecoin (DOGE).
In a new update on Cardano state and the crypto markets, Hoskinson says DOGE is unsustainable and is likely to lead to a systemic, catastrophic failure that disenfranchises millions of investors.
He believes such an event could “destroy” the reputation of the crypto industry and even lead to stricter regulations.
The executive director of Input Output Hong Kong (IOHK) says the root of the problem is that people are not buying Dogecoin for its benefit.
“If someone buys DOGE and you look at the community comment, 99% says,” We’re getting rich. ”
The only way to get rich with DOGE is by taking your Dogecoin and selling it to someone else. So that other person you have to ask – why are they buying it?
Are you buying this because you intend to use it for something? Or are you buying this because you want to get a 10x?
If that mentality persists, there will only be as much duplication as you can have before it stops and then a panic sale takes place. “
Hoskinson points out high wealth concentration as another potential problem for investors.
“And if you look at the distribution of the coin, over 90% of the stocks are held by less than 1% of the participants, so a cascading error can occur at any time and the people selling are always in the money whether they are DOGE for Sell $ 0.60 or $ 0.01, they make a huge profit, and that is a very bad situation.
Catastrophic failure is the most likely outcome here as people with extremely unrealistic expectations and very limited investing experience acquire these assets. Once the failure occurs, their opinion of the entire industry will be the same as Bill Maher’s, the same as that of a lot of mainstream people like Charlie Munger. ”
Dogecoin is trading at $ 0.5307 at the time of writing and is up a whopping 73% over the past week but up nearly 18% in the past 24 hours, according to CoinGecko.
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Featured image: Shutterstock / Veronika Surovtseva