In brief of Dogecoin[ssbluelist]
- Dogecoin (DOGE) was created by Jackson Palmer in 2013, as a joke playing on the "doge" Shiba Inu meme.
- Boosted by influencers including Tesla CEO Elon Musk, the cryptocurrency hit a market cap of $88 billion at its peak in May 2021.
What happens when a joke gets taken seriously? In 2013, Dogecoin (DOGE) was created as a way to poke fun at the crypto industry; now it's one of the world's biggest cryptocurrencies. How did it get to this point?
What is Dogecoin?
It has come a long way since 2013, briefly hitting a market cap of $88 billion during its May 2021 price surge.
Who created it?
Jackson Palmer, an Adobe employee, couldn’t believe the huge number of altcoins that were popping up in 2013. As a joke, he sent out a tweet saying he was investing in Dogecoin—a fake coin based on a popular meme featuring a Shiba Inu dog.
Even though he tweeted in jest, several people thought he was on to something. They said the industry really needed a light-hearted token that could counter the more controversial coins on offer. So Palmer teamed up with Billy Markus, a programmer, to make Dogecoin a reality.
“It was always like a hobby project, like a side project thing,” Palmer told Decrypt in 2018. But a community quickly formed around the cryptocurrency, and took it much further than Palmer had anticipated.
A brief history of Dogecoin[ssbluelist]
- Dec 2013 – Dogecoin was founded by Jackson Palmer.
- March 2014 – The Dogecoin community raises $55,000 in DOGE to sponsor NASCAR driver Josh Wise.
- June 2014 – The Dogecoin Foundation is established to preside over the currency's code.
- April 2015 – Co-founder Jackson Palmer leaves Dogecoin.
- January 2018 – Dogecoin briefly surpasses a $2 billion market cap.
- July 2020 – A viral TikTok challenge sends Dogecoin volumes soaring, pushing the price up by 96%. The flurry of price action swiftly passes.
- January 2021 – Dogecoin surges to a market cap of over $9 billion in a price surge orchestrated by the SatoshiStreetBets subreddit.
- May 2021 – Dogecoin's price hits an all-time high of $0.73 in the run-up to Elon Musk's appearance on Saturday Night Live.
- May 2021 – Dogecoin developers reveal that Elon Musk has been advising them since 2019.
- June 2021 – Crypto exchange Coinbase lists Dogecoin.
What’s so special about it?[ssbluelist]
- ? Speed and cost – Dogecoin offers fast transactions and low transaction fees—both essential for wide adoption.
- ? Unlimited supply – Originally Dogecoin was capped at 100 billion coins, but it was later changed to an unlimited supply. That keeps the price relatively stable.
- ? Community – The heart of Dogecoin is its active community. The more than 300,000 members of the r/dogecoin subreddit are renowned for being a friendly and welcoming bunch.
- ? Philanthropy – That same community has been known to rally around good causes. They raised more than $25,000 in Dogecoin to help send the cash-strapped Jamaican bobsled team to the 2014 Olympics. They also teamed up with a water charity to raise thousands to improve clean water access in Kenya through the Doge4Water initiative.
How does Dogecoin work?
The upside of Dogecoin’s never-ending supply of tokens is that the price stays relatively stable. The downside is that the price usually remains very low. Most people get into the crypto world as an investment. They hope that if they hang onto certain tokens long enough, they can sell for a profit.
Not so with Dogecoin. Since the token supply is high and the price is low, it’s not attractive to investors looking to hold onto their currency. The result is a highly liquid, free-flowing peer-to-peer digital currency.
What can you do with Dogecoin?
A key use of Dogecoin is as an online tipping system. If you like what someone posted in the Dogecoin Reddit community, throw them some Dogecoin. It’s part of what gives the community its friendly reputation.
You can also trade it for other cryptocurrencies on several exchanges, which has made the currency an unlikely medium by which people hop from one exchange to another.
How to Buy Dogecoin
Dogecoin is available to purchase from cryptocurrency exchanges including Binance, Binance.US, Kraken, Bittrex and Poloniex; note that some major exchanges such as Coinbase don't list Dogecoin (although, oddly, you can store it in the Coinbase Wallet mobile app).
Buying Dogecoin from an exchange is a very straightforward affair. In this example, we bought Dogecoin from Binance.US using a bank account at the minimum order amount of US $20.
Under the exchange rate at the time, that $20—less a small fee of $0.10—netted us 2,430 Dogecoin, which was deposited into our exchange wallet once completed. The Dogecoin can then be transferred to another wallet, if you please.
How to Mine Dogecoin
Like a lot of cryptocurrencies, Dogecoin can be mined (see more on mining, here). It was built using the proof-of-work hashing algorithm Scrypt (based on Litecoin), so it takes a lot less computing power than Bitcoin mining.
Mining Dogecoin is considered to be much, much easier than something like Bitcoin, given the immense amount of competition for the latter. On the other hand, considering the vast price differential between the coins, the reward is also much smaller for Dogecoin.
till, if you want to get started, this primer from CoinCentral provides a helpful overview of the technical needs and potential rewards. You can use a Windows, Mac, or Linux PC to get started, and there are different mining applications available for varying setups.
You might want to consider signing up for a mining pool rather than mining solo. As part of a mining pool, you will combine your resources with those of other users. The rewards are smaller, but potentially steadier compared to mining on your own.
From meme coin to Elon Musk's favorite crypto
For something that started out as a joke, Dogecoin has established a legitimate reputation. The community's philanthropic endeavors quickly caught the attention of the media; Dogecoin fans sponsored NASCAR driver Josh Wise in 2014, funded the Jamaican bobsled team at the 2014 Winter Olympics, and later raised thousands for a Kenyan water charity.
Co-founder Jackson Palmer isn't a fan of how seriously people take Dogecoin; he left in 2015, after scammers fleeced the fun-loving members of the Dogecoin community. At the time, he said too many people were jumping in with a ‘get rich quick’ mentality, missing the token’s purpose.
When Dogecoin briefly hit a $2 billion market cap in January 2018, Palmer remained critical. He stated, “I think it says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn’t released a software update in over 2 years has a $1B+ market cap.”
Dogecoin picked up steam once again in 2020; partly thanks to the emergence of a new social media platform that traffics in memes. In July 2020, a viral TikTok challenge encouraged users of the app to invest in the cryptocurrency, briefly causing the price to soar—to the point where the official Dogecoin account had to weigh in, cautioning people to "Stay safe. Be smart."
At the same time, Dogecoin found a celebrity fan in billionaire Tesla CEO Elon Musk, who began tweeting about the cryptocurrency—though he later clarified that he was talking in jest. After one tweet in December 2020, the price of Dogecoin shot up by 17%, from $0.0039 to $0.0046.
GameStop, SNL and Coinbase: Dogecoin's 2021 surge
Early 2021 saw memes rock the financial world, as Reddit traders from the WallStreetBets community sent the price of GameStop stock soaring—dealing a blow to hedge funds who'd shorted the stock.
After trading app Robinhood blocked users from purchasing GameStop and other stocks, cryptocurrency advocates seized on the opportunity to promote the principle of decentralization to retail investors. Dogecoin traders followed suit, launching a campaign to pump Dogecoin, while Elon Musk tweeted out Doge memes during the price rally and celebrities leapt aboard the bandwagon. At one point, crypto exchange Binance found itself unable to generate new Dogecoin deposit addresses fast enough to keep up with demand.
Dogecoin differs from GameStop stock in one crucial respect, however; WallStreetBets traders were attempting to drive a "short squeeze" by forcing hedge funds to buy a diminishing number of shares. Dogecoin has an unlimited supply—meaning that there's no such shorting dynamic involved.
Perhaps inevitably, then, the price of Dogecoin tumbled from its peak—while co-founder Billy Markus found himself the victim of abuse from disgruntled investors, despite his having left the project years earlier.
However, Dogecoin was just getting started. While its price remained relatively stable during February and March, trading between $0.05 and $0.06, in April everything changed.
By the middle of the month, Dogecoin had entered the top 10 cryptocurrencies by market cap, and billionaire Dallas Mavericks owner Mark Cuban had announced that, following the team's acceptance of the crypto as a payment method, it had seen a spike in spending and wouldn't be selling any of its Dogecoin.
Following yet another cryptic tweet from Elon Musk, the price of Dogecoin surged yet again by more than 225%, hitting highs of $0.42 and taking the cryptocurrency to a market cap of more than $54 billion.
The coin's price has remained volatile, with a series of tweets by Elon Musk seemingly driving a rally that briefly saw Dogecoin's price hit $0.05. A subsequent community effort to boost the crypto's price on 'Doge Day', April 20 (4/20, geddit?) flopped, with prices dropping by more than 20%, but Dogecoin still had further to go.
Early May 2021 saw Dogecoin frenzy reach a fever pitch, as Elon Musk was announced as the host for an episode of TV comedy show Saturday Night Live. After the billionaire hinted that he'd be mentioning Dogecoin on the show—reaching an audience of millions—the price of Dogecoin surged, and kept on surging. In the days leading up to the cryptocurrency's much-anticipated TV appearance, Dogecoin passed milestone after milestone, eventually hitting an all-time high of over $0.73 on the day of the episode's broadcast.
But it couldn't last. In the days following the SNL episode, Dogecoin pulled back to around $0.40, and subsequent rallies haven't stopped the overall bearish trend. Even the news that crypto exchange Coinbase was listing Dogecoin only briefly pumped its price. At time of going to press, Dogecoin is trading at around $0.20, a 72% drop from its all-time high. However, while it's dropped off from its peak, Dogecoin's price is still substantially higher than its pre-April 2021 price of around $0.05.
While the price of Dogecoin has fluctuated wildly over the course of 2021, developers have been working steadily to improve the cryptocurrency. In May 2021, Dogecoin developer Ross Nicoll revealed to Decrypt that Elon Musk had been talking to the devs working part-time on the cryptocurrency from as far back as 2019.
While they've turned down offers of funding from Musk and others, the Dogecoin devs have tapped the Tesla CEO for advice and input on reducing its energy consumption and (as Musk himself revealed) improving its transaction efficiency.
Musk "messages every now and then," Nicoll said, sending the devs into a "flurry of activity." The team has drawn on the PayPal founder's experience in payment processing, and, according to Nicol, Musk has "improved the higher transaction throughput." But the bulk of the work is being done by developers working at the coalface.
Nicoll told Decrypt that interest in developing the coin has gone through the roof, saying that, “We're seeing an avalanche of developers jumping in and working on it now.”
The devs are currently working on Dogecoin's 1.21 upgrade, the biggest since 2019, which includes improvements to sync speed, ensuring that wallet backups are valid forever, and tweaks to make it easier for service providers to integrate Dogecoin. In June 2021, the developers demoed a proof of concept for an upgrade that would reduce transaction fees from 1 DOGE to 0.1 DOGE, making it more viable as a payment method. A month later Musk tweeted that "There is merit imo to Doge maximizing base layer transaction rate & minimizing transaction cost with exchanges acting as the de facto secondary layer."
Ultimately, the shared goal of Musk and the Dogecoin devs is to make the cryptocurrency cheap and easy enough to use to buy a cup of coffee.
Rise of the meme coins
Perhaps inevitably, Dogecoin's success has inspired imitators. Other so-called "meme coins" have sprung up, including SafeMoon (SAFEMOON), Shiba Inu Coin (SHIB) and Baby Doge (BABYDOGE), the latter of which was (possibly inadvertently) boosted by a tweet from Elon Musk. And those are just the headliners; the meme coin pack is buoyed by the likes of Doge Cash, Akita Inu, Dogelon Mars, Baby Doge Cash (which can be considered a spin-off of a spin-off) and even Floki Inu (named after Musk's pet Shiba Inu), all fuelled by an ecosystem of influencers.
While Dogecoin's devs are knuckling down to the long-term goal of turning the meme coin into a fully-functioning everyday currency, many latterday meme coins are open about the fact that they're taking a more trial-and-error approach; in SHIB's case, it bills itself as "an experiment in decentralized spontaneous community building."
Others don't see the funny side; in June 2020, Thailand's Securities and Exchange Commission ordered crypto exchanges to delist meme coins (alongside NFTs and social tokens), defining them as tokens that have “no clear objective or substance or underlying [value],” and whose price relies on social media trends.
Whether Dogecoin itself is here to stay—or whether it's destined to flame out as it did after its 2018 peak—is open to debate. But, as the Dogecoin community says, in the end one thing is immutable: 1 DOGE = 1 DOGE.
Throughout its lifespan, the Dogecoin community has remained active and loyal. If Elon Musk's goal of turning Dogecoin into a bona fide (or 'bona fido', perhaps?) currency for transacting in, it could very well stick around long into the future. Wow.