What Is Dogecoin?
Dogecoin was launched in December 2013. Its underlying technology is derived from Litecoin. Its market capitalization is under $500 million, and its market cap rank given by CoinMarketCap is 26.
- Dogecoin started as a joke based on a popular 2013 meme.
- It is based on Litecoin and has the same technology behind its proof-of-work.
- Though it has not been developed actively since 2018, it is still a popular coin with miners, and its market cap puts it near the top 25 crypto assets.
Dogecoin started as something of a joke, but after it was created, it gained a following, and by late 2017 it was participating in the cryptocurrency bubble that sent the values of many coins up significantly. After the bubble burst in 2018, Dogecoin lost much of its value, but it still has a core of supporters who trade it and allegedly use it to tip on Twitter.
The History of Dogecoin
In the Beginning
Jackson Palmer, a product manager at the Sydney, Australia office of Adobe Inc., tweeted in late November 2013, "Investing in Dogecoin, pretty sure it's the next big thing." (The tweet has since been deleted.)
Palmer has been described as a "skeptic-analytic" observer of cryptocurrency, and his tweet was probably a bit of sarcasm and satire. But after getting positive feedback on social media, he bought the domain dogecoin.com.
Meanwhile in Portland, Oregon, Billy Markus, a software developer at IBM who wanted to create a digital currency but had trouble promoting his efforts, discovered the Dogecoin buzz and reached out to Palmer to get permission to build the software behind an actual Dogecoin.
Markus based Dogecoin's code on Luckycoin, which is itself derived from Litecoin and initially used a randomized reward for block mining, although that was changed to a static reward in March 2014. Dogecoin uses Litecoin's scrypt technology and is a proof-of-work coin.
Palmer and Markus launched the coin on December 6, 2013. Two weeks later on December 19, the value of Dogecoin jumped 300%, perhaps due to China forbidding its banks from investing in cryptocurrency.
The Rise of Dogecoin
Dogecoin marketed itself as a "fun" version of Bitcoin with a Shibu Inus (Japanese dog) as its logo. Dogecoin's casual presentation suited the mood of the burgeoning crypto community. Its scrypt technology and unlimited supply was an argument for a faster, more adaptable, and consumer-friendly version of Bitcoin. (Dogecoin is an "inflationary coin," while cryptocurrencies like Bitcoin are deflationary because there’s a ceiling on the number of coins that will be created. Every four years the amount of Bitcoin released into circulation via mining rewards is halved and its inflation rate is halved along with it until all coins are released.)
In January 2014, the Dogecoin community donated 27 million dogecoins worth approximately $US30,000 to fund the Jamaican bobsled team's trip to the Sochi Winter Olympic games. In March of that year, the Dogecoin community donated $11,000 worth of Dogecoin to build a well in Kenya and $55,000 of Dogecoin to sponsor NASCAR driver Josh Wise.
By its first birthday, Dogecoin had a market cap of $20 million and a loyal fanbase.
Controversy Takes Some Fun From Dogecoin
The freewheeling fun of Dogecoin lost some of its mirth in 2015 as the crypto community, in general, started to grow more serious.
The first sign that not all was well with the Dogecoin community was the departure of Jackson Palmer who has said that a “toxic community” had grown up around the coin and the money it was producing.
One member of that toxic community was Alex Green a.k.a. Ryan Kennedy, a British citizen who created a Dogecoin exchange called Moolah. Alex Gren (his pseudonym) was known in the community as a lavish tipper who reportedly mistakenly gave $15,000 instead of $1,500 to the NASCAR fundraiser.
Green's exchange convinced members of the community to donate large sums to help fund the creation of his exchange, but it later surfaced that he had used the donations to buy more than $1.5 million of bitcoin that in turn bought him a lavish lifestyle. Separately, Kennedy was convicted in 2016 of multiple counts of rape and sentenced to 11 years in prison.
Dogecoin During and After the Crypto Bubble of 2017-2018
Dogecoin's value skyrocketed with the rest of the cryptoverse during the bubble that peaked at the end of 2017, and it fell with the rest of the cryptoverse over 2018. At its height, Dogecoin was trading for $0.018 and had a market cap of over $2 billion.
In the summer of 2019 Dogecoin saw another bump in value along with the rest of the crypto market. Dogecoin enthusiasts were happy when the crypto exchange Binance listed the coin, and many thought Tesla CEO Elon Musk had endorsed the coin in a cryptic tweet.
Dogecoin in the 2020s
Its infrastructure has not been a central source of concern for the coin's developers, however, who are still volunteers. The last update listed on Github is over two years old. One reason it still continues to operate and trade, however, is its active community of miners. As Zachary Maschiach of CryptoIQ puts it:
Numerous Scrypt miners still prefer Dogecoin (DOGE) over other Scrypt PoW cryptocurrencies. Indeed, the Dogecoin (DOGE) hash rate is roughly 150 TH/s. This is just below the Litecoin (LTC) hash rate of 170 TH/s, likely because Dogecoin (DOGE) can be merge mined with Litecoin (LTC), meaning miners can mine both cryptos simultaneously using the same work. Essentially, practically everyone who mines Litecoin (LTC) chooses to mine Dogecoin (DOGE) as well, because merge mining Dogecoin (DOGE) increases profits.
As of Q2 2020, Dogecoin is the 26th biggest cryptocurrency by market cap with a total capitalization of over $570 million.