Cryptocurrencies
02
Feb
dogecoin

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What is Dogecoin (DOGE)?

Dogecoin is the most well-known meme coin and one of the oldest cryptocurrencies in the market. The origins of Dogecoin can be traced back to the viral Doge meme that emerged in 2013. Dogecoin entered the mainstream media for the first time in January 2018, when its market capitalization exceeded two billion dollars. Elon Musk is the world’s most famous Dogecoin fan.

From the technical point of view, Dogecoin is based on Litecoin. Over the years, a large community has grown around Dogecoin. Dogecoin is undoubtedly the king of meme coins, and Elon Musk’s influence will likely remain strong.

What is Dogecoin?

Dogecoin is the most well-known meme coin and one of the oldest cryptocurrencies in the market. A meme coin is a cryptocurrency that gets value based on the hype created through internet memes and social media.

The popularity of Dogecoin reached new heights after 2020 due to Elon Musk. Musk openly declared himself a fan of this meme coin, and his tweets have caused significant price increases over the years. Following the Elon Musk hype, Dogecoin has become one of the top 10 cryptocurrencies in market cap.

Technically, Dogecoin is a cryptocurrency in the true sense of the word. It was created purely as a peer-to-peer payment method, and the low unit price makes it suitable for microtransactions.

Here is basic information about Dogecoin:

FeatureInfo
Founder Jackson Palmer
Category Currency
Ticker DOGE
Max supply Unlimited
Circulating supply 143 billion DOGE
All-time high (date) $0.7376 (May 8, 2021)
All-time low (date) $0.00008547 (May 7, 2015)

You can find the current price of Dogecoin on this page: Dogecoin price.

It is good to consider inflation, which increases the number of DOGE coins every year. However, Dogecoin is a disinflationary currency, meaning annual inflation decreases steadily. Inflation will be around 3.5% in 2024 and 2.9% in 2030.

This article is a beginner’s guide to Dogecoin. We will discuss its history, technology, and potential as an investment.

The History of Dogecoin

The origins of Dogecoin can be traced back to the viral Doge meme that emerged in 2013. The meme featured a Shiba Inu dog and humorous captions written in broken English using the Comic Sans font. The term “doge” itself is slang for a dog. Here is an image of the official Dogecoin website incorporating the beloved Doge meme.

dogememe

Jackson Palmer is the founder of Dogecoin. He came up with the idea for a new cryptocurrency in 2013. On November 28, he tweeted:

Investing in Dogecoin, pretty sure it’s the next big thing.

According to Palmer, he had the Coinmarketcap website open in his browser and the Doge meme in the next tab. The name of the coin came from the combination of the words doge and coin.

The joke started to turn into reality when Palmer registered the dogecoin.com domain. At the same time, programmer Billy Markus saw a Dogecoin meme created by Palmer and contacted him.

Markus started building Dogecoin technically as a fork of a cryptocurrency called Luckycoin. On Twitter, Markus is known as Sibetoshi Nakamoto, a joke version of the founder of Bitcoin, Satoshi Nakamoto.

The Luckycoin mentioned above is based on Litecoin, which, in turn, is an almost identical copy of Bitcoin’s code. Hence, you could say Dogecoin is based on Bitcoin (or Litecoin). The Dogecoin blockchain was launched on December 6, 2013.

Dogecoin differs from many other cryptocurrencies because it was fairly launched, like Bitcoin. Anyone could participate in the mining of Dogecoin, and the founders did not hoard the majority of the coins for themselves.

In 2015, founder Jackson Palmer stepped aside, causing a major turn. At the same time, Dogecoin’s development started to slow down, and the currency has not seen any significant reforms, apart from minor bugs and compatibility updates, for many years.

The rise of Dogecoin as a top 10 cryptocurrency

Dogecoin entered the mainstream media for the first time in January 2018, when its market capitalization exceeded two billion dollars. At that time, the price of one DOGE was around 0.018 dollars. However, Dogecoin, like the rest of the market, experienced a rapid decline and remained out of the headlines until the spring of 2021. Then, things started to change.

In the spring of 2021, Dogecoin witnessed an astonishing rally, surging from around 0.01 to 0.74 dollars. The long-standing joke circulating on social media about Dogecoin reaching one dollar became almost a reality! At its peak, Dogecoin reached the top 5 positions in cryptocurrency rankings. Its market cap reached nearly 100 billion dollars (May 2021).

The general altcoin boom in the crypto market fueled the absurd price surge. In the spring of 2021, there was also a clear trend of meme coins, which originated from the meme stock trading initiated by the WallStreetBets community.

In 2021, Dogecoin received hundreds of new competitors. The most popular dog coin, Shiba Inu, temporarily surpassed Dogecoin in market value. Nowadays, there are thousands of meme coins, and each blockchain has its memes. Dogecoin still has a clear number-one position in this sector.

Dogecoin remained a top 10 currency even during the fierce bear market 2022. This happened even though Elon Musk’s interest in the coin seemed to decrease. Dogecoin fans are not giving up their holdings easily, even though many predicted that Dogecoin would fall from the top positions.

Dogecoin and Elon Musk

Elon Musk is the world’s most famous Dogecoin fan. Musk’s tweets and comments have often contributed to the boost in Dogecoin’s price. The tweet below is from December 2020 and is a typical example of Elon Musk’s trolling on Twitter, which he has done numerous times about Dogecoin.

Musk even had the text CEO of Dogecoin in his Twitter bio for a while. This describes well what Dogecoin is. It’s about memes and having fun. You shouldn’t take it too seriously.

There was lots of speculation in 2021 about whether Musk has any DOGE himself. At The B Word conference in July, he admitted to owning Bitcoin, Ethereum, and Dogecoin. However, his DOGE position is small, and Musk is not a Dogecoin whale.

Elon Musk has also acted behind the scenes. Ross Nicholls revealed for Decrypt in 2021 that Musk had contacted the Dogecoin development team as early as 2019. He had also offered them funding, but the team had refused politely.

A non-profit foundation in the United States coordinates Dogecoin’s development. The Dogecoin Foundation was originally founded in 2014. It was brought back alive in August 2021. The board consists of long-term Dogecoin developers. Advisors include Ethereum founder Vitalik Buterin, who is a known Dogecoin fan.

Elon Musk has no official role in the foundation. However, one of the advisors is Jard Birchall, representing Elon Musk and a legal & financial advisor.

The technology behind Dogecoin

From the technical point of view, Dogecoin is based on Litecoin. Consequently, Dogecoin is also a mineable coin, meaning its consensus algorithm is Proof of Work, just like Litecoin and Bitcoin. Computers engaged in mining maintain the Dogecoin blockchain.

The difference from Bitcoin lies in the mining algorithm used. Dogecoin’s mining algorithm is scrypt, which is also the mining algorithm of Litecoin. Litecoin uses the scrypt algorithm to prevent mining with specialized ASIC devices, which have entirely overtaken Bitcoin mining. However, this advantage has diminished as ASIC machines are now available for scrypt mining.

There is a peculiarity regarding Dogecoin mining. Its mining process is connected with Litecoin through a technology called AuxPoW (Auxiliary Proof of Work).

Since many coins use the Scrypt algorithm for their Proof of Work, the basic algorithm for these coins is the same and solutions can be shared. Because of this, miners will be able to submit their solutions to dogecoin even if they aren’t mining dogecoin specifically. To do this though, the coin they were actually mining must have a higher difficulty (guaranteeing that you can’t spend less time than required on a solution).

Right now, the only Scrypt-based coin with a higher difficulty than Dogecoin is Litecoin. Thus, Litecoin miners will be able to choose to also submit their solution to (potentially) receive dogecoin.” (Source: Reddit)

AuxPow was implemented in 2014. The Litecoin founder, Charlie Lee, contacted Dogecoin developers and presented this idea. Merged mining with Litecoin would improve the security of the Dogecoin blockchain, which was vulnerable to 51% attacks.

Below is a picture of an ASIC device suitable for Litecoin & Dogecoin mining.

dogecoin litecoin asic

Dogecoin is fast and cheap to use. A new block is created every minute, and transaction fees are meager. DOGE is well-suited for making micro-transactions, such as giving tips online.

Dogecoin currently has a yearly inflation of about 3.5 % through block rewards. These rewards are slowly going down over time. For example, in 2045, the inflation rate will be 2.0 %.

Dogecoin hasn’t seen any significant technical changes since 2015. This is not that surprising, though. Coins in the currency category don’t tend to change that much.

Dogecoin is all about having fun

Over the years, a large community has grown around Dogecoin. Its Reddit page currently has nearly 2.4 million followers, and on Twitter, it has 3.8 million followers! Dogecoin has become a fun and lighthearted alternative to the serious world of Bitcoin investing and concerns over price fluctuations.

Even if DOGE is a meme coin about having fun, it is also a currency worth a billion dollars. The community can also get serious if needed. It has shown fantastic fundraising efforts in the past.

Dogecoiners helped the Jamaican bobsled team to the 2014 Winter Olympics, raised 40 million dollars to build wells in Kenya, and sponsored a NASCAR driver.

Dogecoin has also been used on Reddit as a tipping currency. Overall, DOGE is a coin not to be taken too seriously. It certainly lightens up the mood on social media!

With all this said, one must remember developments and serious efforts are being made daily to ensure Dogecoin’s existence. It’s impressive how Dogecoin has stayed relevant and popular without a billion-dollar war chest or a big marketing team.

Overview of Dogecoin

Dogecoin is undoubtedly the king of meme coins, and Elon Musk’s influence will likely remain strong. However, the landscape has significantly changed for DOGE. The rise of decentralized exchanges (DEX) in 2021 has made it easy to launch new meme coins with minimal effort. This has led to hundreds of competing dog-themed coins and other meme investments.

Dogecoin’s competitors have also gained significant market positions. The largest among them, Shiba Inu, surpassed Dogecoin in market capitalization and reached the top 10 in the fall of 2021.

Dogecoin offers speculators the opportunity to make quick profits. Its historical price surges have been incredibly fast and powerful, even reaching hundreds of percentages daily. However, the price can also quickly return to its previous levels. If one intends to speculate on DOGE’s price:

  • Coins should be bought before the boom and the skyrocketing phase when the price is low.
  • One must be willing to let go of the coins and cash out before the price crash.

However, many retail investors do the opposite. They join the hype only after the price has experienced significant gains and made headlines in mainstream media. At this point, the whales (large investors) cash out their profits at the expense of greedy retail investors. An investor should discover a meme coin before the masses, but it isn’t easy. Hundreds of options, of which over 99 percent will never reach great heights.

Dogecoin has managed to maintain its position surprisingly well. Nevertheless, DOGE is not recommended for long-term holding. It is a highly speculative cryptocurrency with only a small number of winners and a large number of losers. We strongly advise caution with such coins.

If you are interested in investing in Dogecoin, we have published a guide on how to buy DOGE. The guide provides detailed information and covers the safe storage of DOGE coins.

Antti Hyppänen

Antti Hyppänen is the founder and editor-in-chief of AboutBitcoin.io. Antti has written articles about cryptos since 2017. He follows the crypto market every day of the year and is responsible for the daily operations of AboutBitcoin. Antti is not a maximalist regarding any cryptocurrency but looks at the industry objectively. Antti’s investment profile is “buy & hold,” i.e., he does not trade or use leverage. His crypto portfolio consists of mainly Bitcoin and Ethereum. Antti also follows macroeconomic events. In addition to cryptos, his interests include gold, silver, and the US stock market.