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A parody cryptocurrency just broke $2 billion for its market cap

  • Dogecoin, a cryptocurrency created as a parody after a popular internet meme, saw its market cap crack $2 billion on Sunday
  • The rise of Dogecoin and other bitcoin descendants is due to the fact that they're perceived as being "cheap" compared to bitcoin or ether, according to Dave Chapman from Octagon Strategy
  • One of the Dogecoin founders told a cryptocurrency news site that the token's rise makes him worry about market excess

A cryptocurrency that was created as a parody and named after an internet meme now has a market value of more than $2 billion.

Dogecoin crossed the $2 billion barrier on Sunday, around two weeks after it first touched the $1 billion level on Christmas day. The digital currency traded as high as $0.018773, putting its market capitalization at $2.12 billion, according to CoinMarketCap.

Data from the cryptocurrency site showed dogecoin's current market value is about $1.98 billion — as of Jan. 8, 1:00 p.m. HK/SIN — and traded at $0.017535 per token. That's a roughly 69 percent increase compared to levels seen during Friday's Asian trading session.

Last month, the virtual coin rose more than 400 percent and briefly topped $0.0107 in late December.

As of Monday, there were a total of 43 cryptocurrencies with a market cap above $1 billion. The largest of those, bitcoin, traded at $15,768.34 as of 1:15 p.m. HK/SIN, according to industry site CoinDesk. That put its market cap at around $264 billion.

Source: CoinMarketCap

Dogecoin is an example of an altcoin, which are peer-to-peer digital tokens that descended from bitcoin. The more popular ones include ethereum, which topped $1,000 for the first time on Thursday, and ripple, which saw a staggering 35,000 percent jump in its value last year.

Dogecoin, for its part, was created in 2013 and its mascot is a Japanese shiba inu dog popularized by an internet meme that dates back to 2010. The creators of dogecoin positioned the virtual token as "the internet currency" that can allow users to easily send money online.

There are several ways to get dogecoins: Users can buy them at online exchanges, get tipped in the cryptocurrency and even mine them.

The virtual currency's meteoric rise in recent months has the project's creator expressing concern about market excess. Jackson Palmer, the founder of dogecoin who left the team in 2015, told cryptocurrency news site CoinDesk that it was telling that the token saw such a sharp jump in price even when the project hadn't released a software update in over 2 years.

The total value of cryptocurrencies is over $750 billion, according to CoinMarketCap, and bitcoin dominates around 34 percent of that market.

"The most significant contributing cause for altcoins to rise so parabolically is owing to the perception of 'cheap' coins," Dave Chapman, managing director at Hong Kong-based commodities and digital assets trading house Octagon Strategy, told CNBC.

"The two most well known cryptocurrencies (i.e. bitcoin and ethereum) are considered too expensive for most new entrants. Despite being able to purchase a fraction of each, there is a real psychological barrier around owning something in its entirety," Chapman added.

A buyer, he explained, would feel better knowing they own 2,000 ripple tokens, which would cost a little over $6,000, rather than owning less than half of a bitcoin at the same price.

Chapman also said there is a mindset among new investors than they have missed the "upside opportunity with cryptocurrencies that have already demonstrated incredible returns."

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