What is Dogecoin?
Dogecoin (DOGE) is a digital currency that runs on blockchain technology.
The Long Definition
Dogecoin is a cryptocurrency, just like Bitcoin and Ethereum. It belongs to a class of digital assets known as meme coins. These are coins that are created as a joke. But, unlike other meme coins, DOGE has gone on to achieve considerable success.
History of Dogecoin
Created in 2013 by Jackson Palmer and Billy Markus, DOGE is considered to be the first meme coin. Meme coins are a class of altcoins that are created after memes and/or to make fun of situations.
The Birth of Memecoins
Dogecoin is widely regarded as the first meme coin. Its creation was meant to poke fun at the hype surrounding crypto – specifically bitcoin. To do this, Jackson and Billy based their coin on the doge meme.
The meme was quite popular at the time. It featured a misspelled version of the word ‘dog’ and an image of a Shiba Inu dog. This dog became the face of the coin, which also assumed the name ‘doge.’
Many meme coins have been created since then. Today, there are well over a hundred meme coins in circulation. The most popular of these are Dogecoin and Shiba Inu.
Dogecoin Through the Years
Most meme coins fail. But, Dogecoin is different. It started enjoying success almost immediately after launch. In the first month, more than a million people visited the coin’s official website. And in no time, the coin had attracted an enthusiastic online community.
At the time, Dogecoin was still worth close to nothing. However, this did not stop its community from using it. They mostly used it to tip strangers for good Reddit comments and fund acts of altruism.
For instance, in 2014, the community donated over a hundred thousand dollars in DOGE. These funds went to sponsor the Jamaican bobsled team, build a well in Kenya, and sponsor NASCAR driver Josh Wise.
In 2017, the crypto boom caused the value of DOGE to skyrocket. This allowed the coin to surpass a $1 billion market cap. However, its value would fall with the rest of the market when the bubble burst in 2018.
DOGE’s next bull run would come in 2021. Its price rose from around $0.003 in the previous year to an all-time high of $0.68. This represented a jump of around 20,000% and pushed the coin to a spot in the top five cryptocurrencies by market capitalization.
The sharp increase in value was a result of efforts by retail investors on Reddit, Tesla Founder Elon Musk voicing his support for the coin and a bullish market. Since then, the value of Dogecoin has dropped, but it still tends to do well. However, its market cap of close to $8 billion is still high for a meme coin.
How Does Dogecoin Work?
DOGE’s infrastructure is similar to that of Litecoin (LTC), a Bitcoin fork. It runs on its own blockchain. This makes it a full-fledged cryptocurrency.
Like Bitcoin, the blockchain uses a proof-of-work (PoW) consensus mechanism. Here, miners are tasked with solving complex math puzzles in order to be selected to verify transactions before adding them to the blockchain. They are then rewarded in newly minted Dogecoin.
Dogecoin vs. Bitcoin
Dogecoin’s PoW equations are not as difficult as Bitcoin’s. This makes mining the coin less resource and power-intensive.
Also, Dogecoin has no cap on the maximum supply of coins. Bitcoin has a lifetime cap of 21 million bitcoins. While both coins are inflationary (their supply increases over time) DOGE will suffer a lot more from inflation in the long run. Bitcoin will eventually stop being inflationary when it reaches 21 million Bitcoins after which no more Bitcoins will be mined.
What is Dogecoin Used For
Like all cryptocurrencies, the volatile nature of DOGE allows traders to speculate on its value. It’s currently listed on all major crypto exchanges.
DOGE can also be used to buy goods and services at any merchant that allows it. Tesla and SpaceX are some of the companies that accept Dogecoin payments.
Lastly, the DOGE community still uses the coin to tip people for great posts and comments on Reddit and other social media platforms.
Recent Developments in Dogecoin
In 2021, Elon Musk openly supported Dogecoin. He shared via a tweet that he was working with Dogecoin’s developers to improve transaction efficiency. This paved the way for some of his companies, like Tesla and SpaceX, to accept the coin as a form of payment.
AMC also announced in 2021 that it would temporarily a