What is Dogecoin?
May 20, 2021 - 5 min read
Dogecoin is a decentralized cryptocurrency that experienced a sharp increase in popularity after support by social media content creators and other personalities, such as Elon Musk. Like Bitcoin, Dogecoin is a peer-to-peer digital currency that enables fast, decentralized transactions between users all over the world. It was first created as a humorous take on the meme-fueled popularity of cryptocurrencies, but has now gained new-found prominence.
Dogecoin was originally conceived as a satirical take on the dramatic growth of cryptocurrencies following the introduction of Bitcoin in 2009. Launched in 2013, Dogecoin was created by Billy Markus and Jackson Palmer, who both brought backgrounds in software engineering to their development efforts. In devising Dogecoin, Markus and Jackson, drew their cryptocurrency’s name from the popular ‘doge’ meme (a misspelling and mispronunciation of the word “dog”), along with the meme’s corresponding image of a Japanese Shiba Inu dog. Accordingly, Dogecoin is typically referred to as a ‘memecoin’.
Dogecoin’s blockchain algorithm is based on the same technology as Litecoin, which allows for blocks to be mined at a faster rate than Bitcoin and, in turn, enables faster transaction speeds. Dogecoin mining involves a proof-of-work consensus system that requires users to dedicate computing power to the transaction verification process and offers a DOGE token reward in exchange for adding new blocks to the blockchain.
Dogecoin launched with a supply cap of 100 billion DOGE tokens – by contrast, Bitcoin’s supply cap is 21 million coins.
In 2014, Palmer announced the removal of the 100 billion supply cap, allowing new DOGE tokens to be mined: by Q1 2021, DOGE was being mined at a rate of 14.4 million coins per day (5.2 billion a year). The removal of the supply cap was supposedly an effort to discourage users from holding DOGE tokens, and instead promote their use as a tipping currency on social media platforms.
In early 2021, Dogecoin’s value experienced another dramatic spike after it was promoted by a number of industry and media personalities including Tesla CEO Elon Musk – after his comments on social media, DOGE hit a then-peak value of $0.08. Dogecoin’s popularity has also been reflected by the growth of an enthusiastic online community on sites like Reddit, where users have responded to both its light-hearted origins and utility as a currency.
Dogecoin was conceived as a satirical take on the esoteric cryptocurrency boom and was not developed with a stated purpose beyond its use as a decentralized digital currency. With that in mind, DOGE can be bought, held, and traded on certain exchanges and, without a central authority or bank, can be transferred directly between wallets quickly and securely and from locations in any part of the world.
As it gained value and recognition in the crypto-space, Jackson and Markus characterised Dogecoin as ‘the fun and friendly internet currency’, actively emphasizing the appeal of its user community. With that in mind, Dogecoin has gained traction as a tipping system for social media content creators on platforms such as video streaming site Twitch. The relatively low value of the DOGE token makes it particularly suitable for tipping in small amounts while its digital format allows for fast, secure online transactions that work well as part of an online, live-content delivery environment.
In 2014, a tip bot known as Dogetipbot developed by Josh Mohland, was launched to facilitate DOGE tipping on Twitch and Reddit. While Mohland revealed that Dogetipbot had handled around $150,000 in Dogecoin tips from Reddit users, the bot did not gain widespread popularity and was discontinued in 2017.
The Dogecoin user community has driven usage of DOGE with several high-profile fundraising projects. These include:
- A $50,000 fundraising project to help the Jamaican bobsled team attend the 2014 Winter Olympics.
- A portal to fund charity water projects in the developing world.
- Community sponsorship of NASCAR teams at several high-profile races.
Dogecoin continues to gain exposure through the ongoing attention and projects of its user community. With that in mind, one of Dogecoin’s most significant proponents, Elon Musk, recently announced a Dogecoin-funded project through his company SpaceX. The ‘DOGE-1 Mission to the Moon’ has been scheduled for 2022 and paid for in DOGE by the Geometric Energy Corporation. The mission will see a Falcon 9 rocket deploy a 40-kilogram cube satellite into lunar orbit to gather “lunar-spatial intelligence from sensors and cameras on-board”.
Beyond its scientific applications, the DOGE-1 mission is intended to raise Dogecoin’s international profile. Vice president of SpaceX commercial sales, Tom Ochinero, has said that the DOGE-1 mission “will demonstrate the application of cryptocurrency beyond Earth orbit and set the foundation for interplanetary commerce.”
Despite the growth of the Dogecoin community, further development of the Dogecoin technology has long stopped, as judged by its Github repository.