What Is Dogecoin?
In this article, we explore the internet’s most fun cryptocurrency. Who are the two Australians that created it? Why did its price increase 30,000% in one year? And how can you buy dogecoin? Let’s begin with the basics.
So, What Is Dogecoin?
Dogecoin is a cryptocurrency. It was first created as a joke, featuring the likeness of the Shiba Inu dog popularized in the Doge meme. At the time, the creators were making fun of the wild speculation in cryptocurrencies. However, in an ironic twist of fate, it has become one of the largest and most valuable cryptocurrencies in the world. Currently, it’s worth tens of billions of dollars. That’s no joke.
So, what is Dogecoin?
Dogecoin is a cryptocurrency, like bitcoin. Thousands of people store the exact same file on their computer. That file is a list of who owns each coin. When people send those coins to someone else, those transactions are recorded in a new file that is then added to the stack of previous files. Powerful computers verify these transactions using math. This whole system works because people are rewarded when they work together.
So, what is Dogecoin?
It’s internet money. People buy it hoping to get rich. Some of them do.
What’s the Story Behind Dogecoin?
“I made doge in like 2 hours,” said Shibetoshi Nakamoto. Officially, the internet gave birth to Dogecoin (pronounced ‘dohj coin’) on December 6, 2013. The Australian software developers, Billy Markus (aka Shibetoshi Nakamoto) from IBM and Jackson Palmer from Adobe wanted to create a satirical cryptocurrency that poked fun at the hype surrounding bitcoin and other coins.
“It took about 3 hours to make [Dogecoin], with the bulk of that time making alterations to the client to make the text Comic Sans,” said Markus. “The first few weeks after Dogecoin was released was incredibly fast-moving, and I think I would succinctly describe it as ‘complete utter insanity.’ It went from a silly joke to something worth something to people very quickly.”
The initial traction is largely credited to Jackson Palmer. He made the website Dogecoin.com which quickly received millions of hits. Less than two weeks after creation the price had climbed over 300%. In January of 2014, the trading volume of Dogecoin briefly surpassed that of bitcoin and all other cryptocurrencies combined.
Jamaican Bobsleigh Team
Over the following years, it gained traction as a community of Dogecoin enthusiasts organised publicity stunts to promote the coin. Famously, they sent the Jamaican Bobsleigh team to the 2014 Olympics and sponsored a NASCAR driver. However, in Dogecoin lore, the NASCAR race car has been outshone by a Honda.
In 2015, and possibly one of the worst crypto trades of all time, Billy Markus announced an “extended leave of absence” from the community and sold his Dogecoin stack to buy a Honda Civic. In 2021, those Dogecoins could buy thousands of Lamborghinis.
However, Billy Markus can see the bigger picture, recognising that the “true value” of Dogecoin isn’t how much each coin is worth but how much good can be done with the cryptocurrency. He celebrates the Dogecoin community sending service dogs to children in need and delivering water to a drought-stricken Kenya.
Let’s all get rich
“Let's all get rich. Dogecoin is practically worthless. There are 800 million TikTok users. Invest just $25, once the stock hits $1 you’ll have $10,000... Tell everyone you know,” pumped a TikTok user mid 2020. This snowballed into a trend that made its way to Reddit's WallStreetBets forum in early 2021, where enthusiasts planned to send it “to the moon.” They got close, with the price rising 800% in 24 hours.
It then gained Celebrity endorsement. Supporters include Snoop Dogg, Gene Simmons, Lil Yachty, Guy Fieri, and Mark Cuban. It was Mark Cuban that became the cryptocurrency’s first major merchant, with his NBA team the Dallas Mavericks selling tens of thousands of tickets and pieces of merchandise using Dogecoin. However, Dogecoin went to another level when it caught the attention of the Dogefather.
Elon Musk is the Dogefather. His Tweets and public support of Dogecoin have had the biggest impact on the growth and adoption of the cryptocurrency. He first tweeted about Dogecoin in 2019, saying “Dogecoin might be my fav cryptocurrency.”
While the majority of his Doge tweets are quirky memes that are “Really just meant to be jokes,” at times, he offers more profound possibilities… “The most entertaining outcome and the most ironic outcome would be that Dogecoin becomes the currency of earth in the future.”
Notably, Elon Musk earned an economics degree from the prestigious Wharton School of business and was a co-founder of PayPal. Musk knows money. Not to mention, he’s one of the richest people on earth.
Moreover, Musk has since promoted the coin on Saturday Night live, briefly changed his Twitter bio to “Dogecoin CEO,” and announced a rideshare mission to the Moon completely funded by Dogecoin. That’s right, Elon Musk is literally taking Dogecoin to the Moon.
“We've held a long DOGE position for *months* and it's gone great — all based on noticing how it goes up when Elon tweets,” tweeted Sam Trabucco of Alameda Research, a leading quantitative crypto trading firm. They aren’t the only serious investors.
When Canadian company Hello Pal acquired DOGE miner Crypto Pal Technology for $3.5 million, they became the first publicly listed entity with primary exposure to Dogecoin. The coin is now also available to all major institutions, as the US exchange Coinbase has listed it on their platform.
Not everyone is excited about Dogecoin. When talking on CNBC, the venture capitalist and bitcoin bull Nic Carter said the coin is “disconcerting” as it’s mainly used as a “vehicle for speculation.” He sees bitcoin as a far more reliable investment.
Regardless, the speculators have been successful so far. At its recent 2021 peak, it had increased over 30,000% in one year. Crazier still, If you’d purchased $1,000 in 2016... you’d have made over $300 million. Wow. Such vroom!
The most powerful aspect of Dogecoin is its community. Still, the underlying technology remains fundamental to the ongoing success of the project. Let’s examine the details now.
The Dogecoin protocol is based on the cryptocurrency Litecoin. It uses a scrypt hash function as its proof-of-work consensus mechanism, which makes it incredibly costly to perform large-scale hardware attacks on the network. You can view the source code here.
More specifically, Dogecoin employs Auxiliary Proof of Work (AuxPoW). This enables the Dogecoin blockchain to receive proof-of-work from other scrypt-based networks, such as Litecoin. This means that miners can mine multiple currencies at the same time, a concept known as ‘merged mining’.
Essentially, Litecoin miners can earn coins in the Dogecoin network without any additional cost. Increasing the rewards for miners fortifies the security of both protocols. Valuing the symbiotic relationship, LiteCoin creator Charlie Lee is a “big fan of Dogecoin.”
The block reward is fixed at 10,000 DOGE per block, with one block being mined every minute. That means 14.4 million Dogecoins enter supply every single day, or 5.2 billion every year. The current circulating supply is well over 100 billion Dogecoins.
Who let the DOGE out? The supply was originally capped at 100 billion Dogecoin, but this was abolished in 2014. With no maximum supply, Dogecoin is an inflationary cryptocurrency. Notably, the rate of inflation decreases over time, as the ratio of new Dogecoins to existing Dogecoins decreases.
In the long term, this makes Dogecoin supply more akin to gold which has low inflation, in contrast to bitcoin which has a fixed supply and is deflationary.
- Asset: Cryptocurrency
- Consensus method: Proof of work
- Algorithm: Scrypt
- Block reward: 10,000 Doge
- Block time: 60 seconds
- Maximum supply: unlimited
- Circulating supply: > 129 billion
- Genesis date: 6th December 2013
How to Buy Dogecoin (DOGE)?
You can buy Dogecoin on an online cryptocurrency exchange like Cointree. Much like a stock exchange, it facilitates the exchange of different cryptocurrencies between buyers and sellers. You can select from a range of different crypto assets as you build your portfolio, such as bitcoin, ethereum, and Litecoin.
New to crypto? At Cointree, Australia’s easiest cryptocurrency exchange, we make it simple for beginners to invest in their first coin. With an easy-to-use platform and account managers ready to assist you every step of the way, you don’t need any crypto trading experience. It’s quick and easy.
Simply follow three main steps to get started:
- Create an account
- Deposit funds
- Buy Dogecoin (DOGE)
Beginners are always welcome at Cointree. Operating since 2013, we have facilitated over $250 million of cryptocurrency transactions. Today, we’re trusted by over 80,000 members. If you’re ready to get started, you can sign up here.