What is Dogecoin, and what makes it the ‘fun and friendly internet currency?’ After being inspired by the viral Doge meme of 2013, two software developers in that same year got together and created a cryptocurrency to embody the spirit of friendliness, simplicity, and community.
|Original author||Billy Markus, Jackson Palmer|
|Date released||07 December 2013|
|Block time||60 seconds|
Up until late January 2021, only a handful in the world really knew much about the cryptocurrency, Dogecoin. However, in about ten days, a rebellious herd of Reddit users who joined forces to mass-buy the coin, coupled with a series of tweets from Elon Musk, Snoop Dogg, and Gene Simmons, saw DOGE reach unprecedented heights.
DOGE’s price increased about 1000% from 28 January until 07 February 2021 (now valued at $0.07), making it the 10th most traded cryptocurrency, according to CoinMarketCap (at the time of writing).
The highly increased trading volume in this timespan means DOGE now boasts a market cap of approximately $9 billion (as of 09 February 2021). So, how does a coin that got its name from an internet meme garner so much interest?
Aside from conclusively answering this question, this article will cover what Dogecoin is, how it works, and what’s made it the social media darling and valuable cryptocurrency it is.
Despite seeming like somewhat of a dark horse, Dogecoin has existed since early December 2013, although it has made several media headlines ever since. The project is the genius of two software engineers, Billy Markus (American) and Jackson Palmer (Australian), who plied their trade at IBM and Adobe, respectively.
Markus comically uses the Twitter username, ‘Shibetoshi Nakamoto’ (in reference to Bitcoin’s Satoshi Nakamoto). The launch of Dogecoin coincided with a viral internet meme in 2013 known as the ‘Doge’ meme, which depicts a Shiba Inu dog and Comic Sans text with funny broken English.
Inspired by the phenomenon, Palmer registered the domain name, dogecoin.com, adding a splash screen of Dogecoin’s logo that mimicked the meme’s design. Dogecoin is technically a fork from Litecoin, meaning it shares much of its coding base and workings.
After its official launch on 06 December 2013, within two weeks, its value rose by 300%. Other massive increases with DOGE occurred towards the end of the cryptocurrencies bull market in late 2017 and most recently in late January/early February 2021.
How does Dogecoin work?
The depiction of the ‘Doge’ meme is the reflection of Dogecoin being a simple, fun, and light-hearted cryptocurrency. Markus himself has stated it only took three hours to build the coin. There is nothing complex about Dogecoin as it operates very much like others, a decentralized, open-source, peer-to-peer digital currency.
It is available for trade at many recognized cryptocurrency exchanges and is an acceptable payment method at tens of niche merchants. 2013 was not a year yet for the complex projects involving smart contracts, staking, and the like that are commonplace today.
Despite the incredible advancements of its new and old competitors, Dogecoin has largely remained the same.
The only other unique utility of DOGE is its use as a tipping system for good content, mostly on the Shiba subreddit (a similar mechanism also exists on Twitter and on a dedicated Dogecoin forum).
Furthermore, several Dogecoin ‘faucets’ (websites giving away free cryptocurrencies to incentivize users to interact with them) listed on Dogecoin’s subreddit can reward users with DOGE.
Dogecoin’s blockchain is secured through a proof-of-work consensus mechanism, initially pioneered by Bitcoin. This process involves mining, where advanced computers globally compete to solve complex math equations for adding a block on the network.
Whichever miner (known as a ‘digger’ with Dogecoin) is first to solve the puzzle currently receives Ð10,000, where each block takes about a minute to form.
The fast block creation makes it one of the better transactable cryptocurrencies as good speed in confirming transactions improves the customer experience and enables lower fees. DOGE employs the same hashing algorithm as Litecoin, known as Scrypt.
When Litecoin came onto the scene, the implementation of Scrypt was to prevent high-powered computers (known as application-specific integrated circuits or ASIC) from dominating the mining power.
This exception allowed for less powerful machines like CPUs (central processing units) and GPUs (graphics processing units) a chance to participate.
However, with the growth of mining difficulty, developers eventually created ASICs to mine DOGE. The supply of DOGE is uncapped, and currently, there are about 128.3 billion of these coins in distribution.
What makes Dogecoin valuable?
Dogecoin has a peculiar value proposition, despite that there haven’t been any major upgrades since 2015, according to various sources (with even Palmer declaring to leave the crypto space in April of the same year).
The key to Dogecoin’s success is the society around it. DOGE has a passionate social media following of tight-knit communities who refer to themselves as Shibes, with their own Shibe language, and who always exhibit a hilarious spirit.
Such groups reward others through the posting and sharing of valuable content. These groups are also known for supporting various charitable and other causes over the years through DOGE donations. Furthermore, they have fuelled media trends on platforms such as TikTok.
There is some technical distinction, however, that makes Dogecoin a better alternative to other coins. Aside from the speedy block creation, miners have preferred mining DOGE to the more competitive Bitcoin or Ethereum.
Many experienced investors still consider DOGE a meme-based coin with no intrinsic value largely driven by media hype or antics. However, it is still one of the oldest in the space, with a vibrant community still rallying behind the Shiba Inu-inspired project.
The strength of this engagement is what will sustain DOGE in the future in this competitive field. Due to its dirt-cheap cost, only costing a few cents, it may still be worth a shot if the overall cryptocurrency market continues to grow.