What Is Dogecoin?
Dogecoin (DOGE) is a peer-to-peer, open-source cryptocurrency. It is considered an altcoin and an almost sarcastic meme coin. Launched in December 2013, Dogecoin has the image of a Shiba Inu dog as its logo.
While it was created seemingly as a joke, Dogecoin's blockchain still has merit. Its underlying technology is derived from Litecoin. Notable features of Dogecoin, which uses a scrypt algorithm, are its low price and unlimited supply.
- Dogecoin is an open-source cryptocurrency started in 2013 by Jackson Palmer and Billy Markus.
- Dogecoin initially started as a joke based on a popular meme featuring a Shiba Inu (a Japanese breed of dog).
- It is based on Litecoin and uses the same proof-of-work technology.
- Dogecoin has a loyal community of supporters who trade it and use it as a tipping currency for social media content.
Dogecoin started as something of a joke, but after it was created, it gained a following. 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 use it to tip for content on Twitter and Reddit.
Users can buy and sell Dogecoin on digital currency exchanges. They can opt to store their Dogecoin on an exchange or in a Dogecoin wallet.
The History of Dogecoin
In the Beginning
Jackson Palmer, a product manager at the Sydney, Australia, office of Adobe Inc., created Dogecoin in 2013 as a way to satirize the hype surrounding cryptocurrencies. Palmer has been described as a "skeptic-analytic" observer of the emerging technology, and his initial tweets about his new cryptocurrency venture were done tongue-in-cheek. 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. Markus 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 (PoW) coin.
Proof of Work (PoW) forms the basis of many cryptocurrencies, allowing for secure, decentralized consensus.
Palmer and Markus launched the coin on Dec. 6, 2013. Two weeks later on Dec. 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 Inu (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 $30,000 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.
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 Green (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 2017-2019
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.
Dogecoin surpassed a $1 billion market capitalization for the first time in the cryto bull run of 2017/18.
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, Inc. (TSLA) CEO Elon Musk had endorsed the coin in a cryptic tweet.
Dogecoin in the 2020s
Dogecoin's infrastructure has not been a central focus for the coin's developers, who are volunteers. One reason Dogecoin continues to operate and trade is its active community of miners. As Zachary Mashiach 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.
Musk has openly supported Dogecoin in 2021, tweeting in May that he was working with the coin's developers to improve transaction efficiency. Earlier in the year, the SpaceX founder even ran a poll on social media asking if Tesla should accept Dogecoin as a form of payment. In October, cinema chain AMC Entertainment Holdings, Inc. (AMC) announced that it would accept Dogecoin for digital gift card purchases by the end of the year, further adding utility to the meme-based cryptocurrency.
As of Oct. 8, 2021, Dogecoin's market cap ranking was number 10, with a market capitalization of $31.9 billion, substantially higher than its year-ago position of 48 and $339 million market value.
Frequently Asked Questions (FAQs)
How can I buy Dogecoin?
You can purchase Dogecoin by establishing an account with one of many cryptocurrency exchanges. Some of the exchanges that support Dogecoin transactions include Coinbase, Binance, and Kraken. Robinhood, a traditional brokerage that enables crypto trades, also supports Dogecoin.
Where can I spend Dogecoin?
You can spend your Dogecoin with any merchant that chooses to accept it. Many different types of businesses accept DOGE, with some of the highest profile including Elon Musk's SpaceX and the Dallas Mavericks. Many Dogecoin holders use their DOGE to tip content creators on Reddit and other social media platforms.
Is Dogecoin safe?
Dogecoin uses blockchain technology, just like Bitcoin and other cryptocurrencies. Blockchain tech is considered extremely difficult, although not impossible, to hack. Being among the cryptocurrencies with the largest market capitalization and widest adoption rate, Dogecoin is relatively secure.