Dogecoin (DOGE) is a popular cryptocurrency that is seen as a light-hearted joke by some, but as the future of crypto by its many supporters. This article will explain what the cryptocurrency Dogecoin is and how it originated. It will also explore how it works, what it can be used for, and the benefits and risks in investing in this cryptocurrency.
What is Dogecoin?
Created in 2013, Dogecoin is an open-source, decentralized cryptocurrency based on a fork of Litecoin called Luckycoin. It was initially created as a joke for crypto enthusiasts. It took its name from a once-popular internet meme of a Shiba Inu dog that was described using the deliberately misspelled word “doge”. It was a digital asset that launched with billions of coins in circulation, each of which was almost worthless (a fraction of a cent). Many people believed that Dogecoin would forever be a joke without any utility. Despite that, 2021 saw Dogecoin’s popularity and price explode, soaring to a market cap of $88 billion USD on May 7, 2021.
What are the origins of Dogecoin?
Founding and launch
Billy Markus, an American programmer, came up with the idea of a “joke currency”. He believed that a cryptocurrency with a more light-hearted approach (one that could poke fun at crypto) would be more fun and accessible than Bitcoin. His hope was that it would gain mainstream attention. Around that time, Billy Markus reached out to Jackson Palmer, an Australian product marketing manager at Adobe, who came on board to help with the marketing side of things. Together they started working on the world’s most famous meme coin, and soon after they created Dogecoin. Upon launch, Dogecoin spread rapidly across social media sites, such as Reddit, and within months, its market capitalization had already hit several million dollars.
The Dogecoin community
The community supporting Dogecoin has a reputation for being quirky, passionate, and charitable. Dogecoin was adopted as a tipping system on websites like Reddit, where users could donate small amounts of Dogecoin to show appreciation or support for content creators.
Despite Dogecoin starting out as a joke, the community that has developed around the coin has proven to be extremely passionate and charitable.
In 2014, the community members initiated a number of ambitious fundraisers for different causes. The first was raising over $30,000 worth of Dogecoin to enable the Jamaican bobsled team to participate in the Sochi Winter Olympics. The Jamaican team had qualified but could not afford to attend the event in Russia. Another fundraiser, Doge4Water, raised another $30,000+ to drill wells to provide fresh water in Kenya. Finally, in a shift back to sport, the community raised over $50,000 in order to sponsor NASCAR driver Josh Wise, who painted the Doge meme on the hood of his car and the words “Dogecoin” on the side.
In April, 2019, following a community poll created by the official Dogecoin Twitter account, Tesla CEO Elon Musk was also jokingly elected the CEO of Dogecoin. In response, Musk said: “Dogecoin might be my [favourite] cryptocurrency. It’s pretty cool.”
Musk has since championed the coin, particularly lauding its fast and cheap transactions and its sustainability. In May 2021, Musk hosted Saturday Night Live (SNL). Beforehand, he tweeted a picture of himself as the “Dogefather”. The tweet appears to have sparked enthusiasm among Dogecoin traders, who were hoping for further exposure for the meme-based cryptocurrency in front of a broad television audience.
Dogecoin hit its all-time high on the same day Musk performed on SNL. Since then, it has dropped dramatically in value, as whales began to take profits and bears began to take control of the market.
Elon Musk’s support of Dogecoin, however, seems unshakeable. Musk’s space exploration company, SpaceX, aims to fly a rocket called DOGE-1 to the actual moon in the first quarter of 2022. And the company will be paying for the mission in full using Dogecoin. This fact alone is sure to generate a lot of hype in 2022.
How does Dogecoin work?
Dogecoin is a form of digital currency that allows peer-to-peer transactions using a decentralized network. Dogecoin operates on a blockchain, similar to the Bitcoin blockchain. When users buy, sell, spend, or transfer Dogecoin, the blockchain ledger is updated with these new transactions.
Using cryptography, Dogecoin’s blockchain network ensures the security of all transactions. In a similar fashion to Ethereum and Bitcoin, for a transaction to occur, miners need to verify all transactions. Miners solve complex mathematical equations in order to process transactions and record them on the blockchain.
The average block time on the Dogecoin blockchain is one minute. The block reward for the successful miner of each block is 10,000 DOGE, which is currently a decent incentive to mine Dogecoin. There was originally a maximum supply limit of a hundred billion DOGE, but that has since been removed. Dogecoin supporters suggest that the removal of the limit is a good decision, as it incentivizes spending the coin and prevents early adopters from disproportionate profits.
What can Dogecoin be used for?
Dogecoin is primarily a payment coin that can be used to pay for goods and services. Elon Musk has referred to Dogecoin as “the people’s crypto”. In a sense, he is correct. As a payment coin, Dogecoin is much faster and cheaper to use than many of its competitors, such as Bitcoin and Litecoin. But there are plenty of other established payment coins that offer faster and cheaper transactions than Bitcoin and Litecoin.
Did You Know?
As a payment coin, Dogecoin is much faster and cheaper to use than Bitcoin. However, it is unlikely that the meme coin will ever receive as much adoption as more serious payment coins like Bitcoin and Litecoin. There are very few vendors that currently accept Dogecoin as payment.
Dogecoin vs Shiba Inu
Dogecoin runs on its own unique blockchain, which is based on a fork of Litecoin called Luckycoin. In terms of code, it is very similar to Bitcoin, and functions as a quick and cheap payment method with vendors that accept DOGE as payment. By contrast, Shiba Inu is an ERC20 token, based on the Ethereum network, which means that SHIB can utilise the power of smart contracts. In terms of supply, DOGE is an inflationary currency with over 130 billion coins in circulation, with roughly five billion more mined every year. SHIB is a deflationary asset with a total supply of just below six hundred trillion, with no new coins entering the market.
What are the Risks Involved in Investing in Doge?
The crypto market is highly unpredictable, with regular price fluctuations. Nowhere is this more evident than with meme coins, and despite being the king of the meme coins, Dogecoin is incredibly susceptible to significant price moves, both organic and manipulated. People like Elon Musk have proven they have the ability to influence the price of meme coins very easily, which is a red flag for many involved in crypto trading.
Garrick Hileman, head of analysis at Blockchain.com, a cryptocurrency transactions firm, warns that Dogecoin could easily lose 90% of its value. “I am concerned about the amount of attention being given to a cryptocurrency that has never had real-world traction and is a bit of a joke—literally,” he said.
One of the aspects of Bitcoin that makes it a very lucrative investment is its scarcity. There is a limited number of available coins. One of the most basic economic concepts is that of supply and demand. If there are more people who want to buy a product than there are available, the price of that product will most likely go up. One of the problems with Dogecoin is that the number of coins is growing constantly. For now, the supply and demand seem to be fairly steady, but who’s to say when that will come to an end?
Did You Know?
Bitcoin’s max supply is 21,000,000 coins, whereas Dogecoin has no limit. There are already over one hundred and thirty billion coins in circulation, with five billion more added every year.
Another thing that can make Dogecoin a less than stable investment is that isn’t backed by much utility. Dogecoin started out as satire, and it remains, for the most part, satire. There are plenty of publicity stunts, memes, and discussions over social media about it, but very little of this translates to real-world adoption.
Buying any cryptocurrency can be risky and volatile, but Dogecoin may be a little more so than most. If you decide to trade Dogecoin or any other meme coins, just remember: live by the sword, die by the sword.
How to buy Dogecoin?
You can typically buy Dogecoin from all big cryptocurrency exchanges. A crypto exchange allows you to buy, sell, and swap cryptocurrencies. Swyftx is a popular crypto exchange in Australia and New Zealand where people can buy Dogecoin with low fees and spreads, store it in their own crypto wallet, and perform all of their other cryptocurrency trading.
Dogecoin is a popular meme coin that has a diverse community of avid supporters. This piece has explored what Dogecoin is and how it started. It has also detailed how Dogecoin works, what it can be used for, and the potential risks in investing in this crypto. If you want to learn more about any other digital currencies or blockchain technology, explore Swyftx Learn for more useful content!