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What is Dogecoin (DOGE)? From meme to mega market cap
Dogecoin began life as a “joke currency”, but quickly exploded onto the market, harnessing the power of online communities to help it rise.
Dogecoin (DOGE, Ð) began life as a joke. Software engineers Billy Markus and Jackson Palmer created DOGE to be a fun currency, naming it after the Shiba Inu “doge” meme. Eventually it grew in value, with thousands of users and whole Internet communities emerged around sharing the currency and posting memes about the coin online. Overtime the dedicated fanbase has helped propel Dogecoin to become one of the most recognised coins on the market – a certifiable “memecoin”.
What is Dogecoin?
Dogecoin is an altcoin designed to reach a much broader demographic than bitcoin. Additionally, Markus, one of the developers behind it, wanted to keep Dogecoin fresh and fun in order to distance it from the controversial past of bitcoin (for example, being widely used in online black markets like the Silk Road).
As of February 2021, Dogecoin has become one of the most iconic coins on the market, thanks to memes, a cult like following, and even celebrity endorsements by self-proclaimed Former Dogecoin CEO Elon Musk. While many other altcoins are attempting to become something bigger than a simple currency transaction platform, Dogecoin has stuck to its roots and is now widely used on platforms such as Reddit and Twitter to tip other users for information, funny posts or whatever else is deemed tip-worthy.
Dogecoin vs Litecoin
Dogecoin is based on Litecoin and carries with it the various changes made to Litecoin over the bitcoin platform.
Large number of coins and tipping
Rolling out with a huge release of coins, and reaching its maximum cap of 100 billion DOGE by June 2015, has meant the coins have tended to remain at a considerably low value compared with bitcoin or other altcoins with a more limited number of coins. Even though it had a market cap of over US$89 million as of 16 September 2017, at that time each coin cost approximately US$0.0008 to purchase. Users who want to tip other users for small amounts have a much easier time doing it than with another coin. For example, using those September 2017 figures, to give someone US$0.10 would have cost 125 DOGE, but 0.000027 BTC.
Combined with the philosophy that DOGE should be used to reward other people quickly and easily, it’s a common occurrence to see Reddit and Twitter users tipping each other small amounts of DOGE for entertaining posts.
Some online social media platforms, like Reddit, allow the creation of “bots”, fully automated software that runs regularly and is triggered by certain commands. There are many bots on Reddit, from ones that automatically get a YouTube video’s title and description when someone posts a link to the video in a comment, to ones that point out a grammar error, such as “their” used incorrectly instead of “there”.
Tip bots are bots that are called in the comments of a thread and automatically award a user an amount of DOGE as decided by the caller. The coins are first deposited by users into the bot’s wallet to allow tipping and are automatically transferred upon being called.
In the example below, user “PM_ME_UR_SKELETONS” is tipping user “chrislovessushi” 100 DOGE via the tip bot “sodogetip”. The bot then automatically transfers the coins to “chrislovessushi”.
The scrypt algorithm
Just like bitcoin, Dogecoin uses a mining system to maintain its blockchain and award DOGE to workers. However, instead of SHA-256, it uses a scrypt algorithm (as Litecoin does). This decision was taken to avoid the use of mining-specific machines being used to mine unacceptably high amounts of Dogecoin.
Initially, mining gave out a random amount of DOGE, but this was changed to a fixed reward in March 2014.
Today’s Dogecoin price
Where can I pay with DOGE?
There are two primary ways you can use Dogecoin as of September 2017:
Tipping users on social media
If you’re a user of popular social media platforms Twitter and Reddit, you can always tip other users (using the various tip bots available out there) for posting informative, educational, funny, entertaining or simply amusing posts. Tips are often low, rarely going over US$0.20, and are a nice way to reward people for taking the time to produce good content. Tipping not only rewards these people, but also spreads the word and philosophy of Dogecoin. If a user doesn’t have a Dogecoin wallet setup, some tip bots even send information via private message on how to get one.
Products and services
Many merchants providing their products and services online are already accepting bitcoin and they often also take DOGE.
How do I purchase Dogecoin?
Trading in Dogecoin comes in three parts: buying and holding coins, paying/tipping other users and joining the community.
More and more users are diving into the (sometimes silly) world of Dogecoin. Whether that comes from spreading memes on social media, buying products and services online with DOGE or tipping other users online, this cryptocurrency has been seen to respond well to healthy community activity.
This positive community activity often results in an increase in the value of a coin, especially if it’s shadowing an increase in the value of bitcoin beforehand.
Joining the community will not only teach you as much as you need to know about Dogecoin, but it will also increase the visibility of the coin online, exposing it to users who might not have known of its existence.
Standard Dogecoin transfers (such as those made to pay for a product or service online) are carried out in much the same way as other altcoins, as long as you own some DOGE in a Dogecoin compatible wallet. Here’s how it works:
- Enter the recipient’s address. Whether it’s sent as a string of numbers and letters or scanned from a QR code into your mobile wallet, you first require the recipient’s wallet address (or public key).
- Enter an amount of DOGE to send. After agreeing on how much DOGE you are required to send, enter that amount into your wallet. Make sure you have enough funds to avoid failed transactions.
- Send your coins. After pressing your wallet’s “Send” button equivalent, the amount of DOGE sent will be taken out of your balance and added to the recipient’s. Even though the transaction is instantaneous, it might take a few minutes for it to be validated and the funds to be made available for use on the recipient’s end.
Making money with Dogecoin
You can make money with Dogecoin in one of three ways:
- Get tipped. Producing good content (whether that’s free art posted online, articles or funny comments on Reddit) can result in tips being sent in from users of Dogecoin. Tips are automatically added to your wallet, and can either be used to buy products/services from others, tipping other users in return or holding onto them as an investment.
- Sell products or services. Whether you’re a website developer, writer, business advisor, jeweller or social media marketing guru, taking payment in the form of Dogecoin is as easy as taking any other form of payment via fiat currency. Lots of online cart platforms have plugins for accepting DOGE as payment alongside USD, CAD, EUR, etc. and you can even get paid directly by providing your wallet’s public address to the person paying for your services.
- Buy Dogecoin. Similar to buying stocks, shares or ForEx trading, you can buy Dogecoin and hope it rises in value. While cryptocurrencies are still new, and prices tend to be volatile, DOGE had a steady rise (as of September 2017). From US$0.000236/DOGE when it was created in January 2017…
Dogecoin’s value rose to US$0.003749 in less than 6 months.
This means that if you had jumped in early and were holding US$1,000 worth of DOGE in the beginning of 2017, that would have converted to over US$15,000 if sold not more than 6 months later.
If you’re able to predict such movements in the market, investing in Dogecoin this way would likely be very profitable. We should emphasize again that cryptocurrencies are highly unpredictable, so past performance is not an indicator of future growth.
What to watch out for
While it has sometimes been called the Internet’s favourite altcoin, Dogecoin is not without its cons.
- Low value. As is often the case, Dogecoin’s biggest advantage is also considered its biggest disadvantage by some: its low price. US$100 could have bought you 120,192 DOGE on 16 September 2017 and this can be seen as a sign that the coin is not as valuable as something like bitcoin (where US$100 at that time would have bought you 0.028149 BTC). Bitcoin is considered the gold of the Internet, Litecoin the silver, while large amounts of Dogecoin are thrown around between users without even batting an eye. This might discourage serious investors from putting their money into Dogecoin.
- Just another altcoin. While other cryptocurrencies like Ethereum aim to rise above the altcoin label, Dogecoin is happy to remain a simple cryptocurrency for small transactions. Again, this is both a pro and a con, as it might turn away buyers who are looking for something with a vision that’s a little more ambitious.
What’s next for Dogecoin?
Dogecoin’s community aims to send their favourite coin’s value soaring. With more and more merchants embracing Dogecoin every day, the future appears to look bright. If more users and communities adopt the tipping ecosystem, in which Dogecoin currently has a leading role, the community behind this altcoin might very well see its hard work come to fruition.
Image sources: Shutterstock, CoinMarketCap
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