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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. Over time the dedicated fanbase has helped propel Dogecoin to become one of the most recognised coins on the market – a certifiable “memecoin”.
Dogecoin at a glance
|Maximum supply||Unlimited supply|
|Consensus algorithm||Proof of Work|
|Notable team members||Jackson Palmer (left in 2015)|
What is Dogecoin?
Dogecoin is a cryptocurrency, with some design features similar to that of Bitcoin (BTC) and Litecoin (LTC). It began as a protest, created by software engineers Jackson Palmer and Billy Markus in 2013 to demonstrate that anyone could create a cryptocurrency. Both developers left the project in 2015, leaving it in the hands of the community who began to use it primarily for fundraising and tipping.
Dogecoin gained traction through tipping thanks to its high inflation rate and low value. Instead of tipping someone $1 of Bitcoin, which in late 2015 would have been around 0.025 of a BTC, a user could instead tip approximately 7,500 Dogecoin for an equivalent dollar value. This form of psuedo-wealth, where a larger amount of whole units is coveted, has long been a driver of Dogecoin’s success.
As of May 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 primarily used on platforms such as Reddit and Twitter to tip other users for information, funny posts or whatever else is deemed tip-worthy.
Dogecoin inflation and supply
Dogecoin uses proof-of-work mining using specialised computers, similar to how Bitcoin is mined. As a fork of Litecoin (LTC), Dogecoin uses a similar Scrypt mining algorithm used by LTC.
The current supply of new Dogecoin is 10,000 coins per block, with a new block being mined every minute. This equates to an effective inflation rate of 5.256 billion coins per year. This high rate of inflation threatens the long-term stability of Dogecoin’s price.
Initially, mining gave out a random amount of DOGE, but this was changed to a fixed reward in March 2014.
Dogecoin tipping and fundraising
Before becoming one of the top cryptocurrencies by market capitalisation in 2021, with a single Dogecoin costing as much as US$0.65, DOGE was historically a super cheap cryptocurrency. Before 2021, a single Dogecoin never cost more than a cent. Thanks to such a low unit cost, DOGE became a popular way of tipping people, as it made the tips look bigger than they actually were in dollar terms.
For example, in September 2017 a single Dogecoin 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.
In 2014 Dogecoin won hearts and minds by raising $30,000 to send the Jamaican bobsleigh team to the Soichi Winter Olympics. In a matter of hours, the community pitched in 25 million DOGE (worth roughly US $0.00028 per coin at the time).
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”.
Today’s Dogecoin price
Where can I pay with DOGE?
Thanks to the success of Dogecoin in 2021, there are now several ways to use your DOGE to pay for goods and services. Many retailers already accept cryptocurrency payments, either natively or through the support of third-party services. Cryptocurrency debit cards are also a popular way to spend DOGE and a range of other cryptocurrencies.
Here is a short list of payment services and debit cards you can use to spend your DOGE.
Use the table below to compare a list of cryptocurrency exchanges that you can purchase DOGE on.
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 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 or 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 adviser, 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, euros, etc, and you can even get paid directly by providing your wallet’s public address to the person paying for your services.
Risks of buying Dogecoin
While it has sometimes been called the Internet’s favourite altcoin, Dogecoin is not without its cons.
- High inflation. Dogecoin has a highly inflationary supply, with approximately 10,000 new coins created every minute, equating to 5.256 billion coins per year. Typically an inflationary currency causes the value of each unit of currency (1 DOGE) to reduce over time.
- Celebrity hype. Dogecoin’s astronomical rise in price throughout 2021 is largely attributed to a single person – Elon Musk. Thanks to occasional tweets of Doge related memes, Musk has single-handedly caused the profile of Dogecoin to explode in popularity. If his attitude towards DOGE ever sours, or when he inevitably becomes bored with it, the price may be affected negatively as a result.
- Joke status. Dogecoin started life as a joke and a quick visit to the coin’s website is enough to reveal that this currency doesn’t take itself too seriously. This has been a key factor in its survival and success. However, if you’re looking for a coin to buy and hold in the hope of achieving long-term profits, you’ll need to consider whether DOGE fits with your cryptocurrency strategy.
What’s next for Dogecoin?
The creators of Dogecoin, Billy Markus and Jackson Palmer, stepped away from the project in 2015 leaving its development in the hands of the community. Since then, little development was done to improve the protocol until 2021, when soaring price renewed interest in Dogecoin as well as its development.
As of February 2021, four developers have stepped in to fill the void, led by Ross Nicoll.
Nicoll has the following view on maintaining Dogecoin: “People say it’s a joke coin but we’re very careful to take care of the code. When it took off there was a resurgence in attention and we want to keep the currency operational.”
Frequently asked questions
Image sources: Shutterstock, CoinMarketCap