What is Dogecoin?
Dogecoin is a cryptocurrency that got its name from the Doge internet meme of a Shiba Inu dog and was launched as a “fun” alternative to Bitcoin. Dogecoin is an open source, peer-to-peer digital currency. Like all cryptocurrencies, Dogecoin can be bought and sold like an investment and spent like money. Although each crypto is unique, it shares some similarities with its better known counterparts; for example the code is based on the code written for Litecoin. However, there are a few important differences.
In short, it is a currency that functions just like any other cryptocurrency, you can exchange it for goods and services from retailers and other firms, for other cryptocurrencies, or for fiat currencies like the dollar or euro.
What is mentioned by Dogecoin functioning like many other cryptocurrencies is that it offers users the ability to exchange value over the internet without traditional financial gatekeepers.
As with other cryptocurrencies, it is essentially built on a database using a format called blockchain, where there is a public record of every transaction in the currency’s history.
Every Dogecoin is a “token”, but unlike fiat currency, money does not have a physical representation. There is only a record on the blockchain of who owns a particular token. When you sell the token or use it for a purchase, the blockchain notes that the token has been transferred to a new owner.
Dogecoin still continues to enjoy an enthusiastic fan base and a vibrant online community, which is seen as a surprise even by its creators. Although cryptos are more accepted as a currency for purchasing goods, Dogecoin does not have very common real-world usage. It has several specialized markets, including crowdfunding initiatives and using Dogecoin to tip artists online.
Unlike Bitcoin, which has only 21 million released in the network’s economy, Dogecoin has 129 billion tokens in circulation, has no cap on its amount, and will continue to offer new mining-ready coin blocks every year. One of the reasons why the value of a Dogecoin is much lower than the value of a Bitcoin can be said to be the limited supply of Bitcoin.
The world of cryptocurrencies can be a little daunting and may contain technical language that will daunt some potential investors. Still, this crypto, which we’ve heard a lot of lately, adds some humor to the crypto world. Although it started as a troll, Dogecoin is literally a real cryptocurrency with a market value of around $ 42 billion at the time of writing.
Who Created Dogecoin? Dogecoin Foundation
Dogecoin was created as a joke based on the Doge internet meme in December 2013 by marketer Jackson Palmer, who works for Adobe in Australia. Eventually, Portland-based IBM developer Billy Markus heard about the new currency and got permission to develop the software that now creates the Dogecoin that many people know and love. Palmer left the project in 2015, but Markus remains the lead developer even today.
Despite being hidden behind a funny mask, Dogecoin developers have insisted over the years to take the project and their responsibility to users seriously.
Although Dogecoin is generally thought of as a more fun diversion rather than a serious investment like some other cryptos, it has been found under the spotlight several times. For example, Dogecoin users donated 27 million Dogecoins (worth about $ 30,000) to fund the Jamaican toboggan team’s trip to the Sochi Olympics in 2014.
How Does Dogecoin Work?
The Dogecoin code was originally copied from a previously defunct cryptocurrency called Luckycoin, itself a branch of Litecoin (LTC). Dogecoin borrowed a Scrypt-based consensus algorithm from this previous design to allow it to reach consensus on the transaction history of the computer network running its software.
As with Bitcoin, anyone running Dogecoin software can allocate computing power to provide this service (a process often called “mining”) in exchange for the opportunity to earn a newly minted cryptocurrency.
Dogecoin’s most notable experiment was its monetary policy. For example, there is no longer a limit on how much Dogecoin can be minted by the software. Initially, the total supply of Dogecoin was limited to 100 billion DOGE, but the developers eliminated it a few months after launch in an attempt to make the money supply inflationary.
Over time, this abundance of supply would keep miners from securing the Dogecoin blockchain. As a result, the mining process was integrated with Litecoin in 2014. This meant that anyone who mined Litecoin could mine Dogecoin without additional work.
As of April 2021, more than 129 billion DOGEs have been issued, and 5 billion DOGEs continue to be released by the software each year. Given its unlimited supply, DOGE may be less attractive as an investment, but it remains a purely genuine cryptocurrency as it has a value that can be stored or exchanged.
So What’s Behind Dogecoin’s Rise?
The main reason behind the meteoric rise of Dogecoin is believed to be the same reason that boosted the value of Bitcoin and Etherem, this week, the IPO of Coinbase, the most popular virtual currency exchange in the US.
Coinbase’s market cap reached $ 100 billion for a short time after it went public on Wednesday, and the values of Bitcoin and Ethereum touched $ 64,000 and $ 2,500, respectively, during the week. Dogecoin is also said to be part of this madness.
Another reason behind the token’s current success is said to be a Reddit group called SatoshiStreetBets. Members are thought to have generated a lot of excitement for the cryptocurrency, similar to how it led to the rise of GameStop earlier this year. The name of the group refers to Satoshi Nakamoto, who is the screen name of the person or persons behind Bitcoin.
Even when Markus and Palmer had Dogecoin ready, they neither took the coin seriously nor had any plans to introduce it. At this point, Reddit got involved. The Dogecoin subreddit exploded almost instantly, giving them the attention and resources needed to make a cryptocurrency successful.
Reddit users started sending Dogecoin to each other. The constant currency exchange on the platform made it popular and expanded its user base.
Despite its strong presence on Reddit, not many people took Dogecoin seriously and its use case was limited. It was literally listed as a joke coin until this year, when Tesla CEO Elon Musk tweeted that he would literally put a Dogecoin on the moon. Some thought this tweet was an April Fools joke, but Elon Musk seems to be an ardent supporter of DOGE. Musk often tweets about Dogecoin, contributing to the craze of the digital token. In fact, Musk once changed his Twitter bio to “former CEO of Dogecoin.”
Several other famous names joined the bandwagon. Dallas Mavericks, owned by businessman Mark Cuban, announced that the team will accept Dogecoin as payment. Rapper Snoop Dogg and the bassist of rock band Kiss, Gene Simmons, shared the coin on Twitter, helping it to be recognized on social media. Viral TikTok videos also encouraged people to buy Dogecoin, as its value was very appropriate at the time.
Disclaimer: What is written here is not an investment advice. Crypto money investments are high-risk investments. Each investment decision is under the responsibility of the individuals. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.
Hello there! My name is Oktay from Tokensboss editors. I introduce myself as a business graduate and writer. I have been doing research on cryptocurrencies and new business lines for over 2 years.