What’s up with Dogecoin?
- CryptoX
- May 29, 2018
- 4 min read
Updated: Jul 1, 2018
A joke currency?
Dogecoin is a pretty popular cryptocurrency officially launched on December 6, 2013.
The Dogecoin project emerged out of the desire of a programmer named Billy Markus, to create a cryptocurrency that would have a wider reach than bitcoin. According to Wikipedia, Markus got his co-founder, Jackson Palmer, through Twitter.
After he (Palmer) received mentions on Twitter, he bought the domain name and made the logo for Dogecoin. Markus then reached out to Palmer and started making Dogecoin a reality.
Although Dogecoin started as joke, based on the Internet meme, featuring the famous Shiba Inu Dog, it peaked the market capitalization of almost $2 Billion in early January 2018, indicating that the investors took it otherwise.
The number of Dogecoins currently in supply are 113 Billion (at the time of writing). Initially the mining limit was set to 100 Billion coins, however, the limit was soon pulled-off altogether, which means that an infinite number of Dogecoins can be produced.
The value of Dogecoin surged by a whooping 300% soon after its launch, however, the sky-rocketing spurt turned out to be transitory. It was followed by an 80% plunge in its value resulting from the Chinese regulation, which placed an embargo on the Chinese Banks to invest in Bitcoin.
Use case
Dogecoin, like other altcoins, brings with it high speed transactions which are anonymous. However, it differentiates itself by facilitating micro-payments. People can transfer as little as 10 cents through the Dogecoin Network, which has been possible only due to its low transaction fees.
“If Bitcoin is the 100 dollar bill that you keep under your pillow, Dogecoin is the change which you bring home and put it in the drawer” — Jackson Palmer
The reason behind low fees is that the supply of Dogecoin is uncapped unlike other currencies like Bitcoin (21 million) and Litecoin (84 million).
This ensures that the transaction fees are low since the rewards of the miners do not keep on decreasing over a period of time (as they do in Bitcoin), thereby, insuring that they always have incentives to mine the coin.
Also, due to the stable price people do not buy and keep it as a store of value because they know that the price may not go up in future.
Another pertinent use case, popular within the Dogecoin community, is the use of Dogecoin to pay/tip content creators that create good content.
On the reddit forums, it is very common for community members to generously give small amounts of Dogecoin to people who write entertaining posts. Again, the low fees make transferring such small amounts feasible through the network.
Apart from tipping content creators, it can also be used to buy items from online retailers.
This is congruent with the aim of Palmer who wants to make Dogecoin a medium of exchange to actually be used as a digital currency rather than just being held as a store of value wherein people enter into speculative transactions.
He clearly mentions in an interview, that he doesn’t look at Dogecoin as a good investment opportunity but rather its micro-transaction specialty, an area where bitcoin fails to perform.
The Community
The Dogecoin community is probably one of the largest community one can find as far as crypto communities are concerned.
In the event of theft of Dogecoin, where millions of Dogecoins were stolen, the community donated Dogecoins to those who had their coins stolen by launching an initiative called “SaveDogemas”.
The community has raised 67.8 million Dogecoins to sponsor NASCAR driver Josh Wise, over 40 million Dogecoins to build a well in the Tana River Basin in Kenya (Doge4Water) and has raised money for athletes participating in the Winter Olympics 2014.
Merged Mining with Litecoin
Both Dogecoin and Litecoin use the same algorithm called Scrypt to secure their networks. However, Dogecoin has hard-forked into Auxiliary Proof of Work (Aux PoW) which means that the Dogecoin blockchain can now get the “work” from Litecoin network.
In other words, the Litecoin network is contributing its hashing power to the Dogecoin network. Put it simply, if a person is mining Litecoin, he/she is mining Dogecoin too.
This applies to any network using the Scrypt algorithm and not only to Litecoin.
According to Charlie Lee, the CEO of Litecoin, this hard fork helps the Dogecoin network to not worry about security and attacks but rather focus on its unique use cases such as tipping, donations etc.
Conclusion
It may seem that Dogecoin was not made to explode and perform on the way it has, nonetheless it has definitely made it’s mark on the crypto market by proving to be useful, doing what it does best and gathering people to form a strong community along the way. It may be safe to say that Dogecoin is actually going to the moon
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