The introduction of bitcoin in the year 2009 paved the way for many cryptocurrencies in the market. The tremendous success of bitcoin inspired many other cryptocurrencies to make their name in the market for various uses. Some of these cryptocurrencies considered themselves an alternative to money, while many others thought to aid smart contract programs such as Ethereum.
Dogecoin is one such cryptocurrency with applications for various online transactions. It was merely started as a joke and later became one of the most famous and mined cryptocurrencies.
Dogecoin came into the market in late 2013. It is a open-source, decentralized, peer-to-peer, digital currency that allows a person to make online transactions. Initially, it was started as a joke and meant to be a sarcastic meme on bitcoin. The logo of Dogecoin is Shibu Inu which is a hunting breed of a Japanese dog.
Though it was a sarcastic meme on bitcoin, it still has applications for indulging in online transactions. It can also be exchanged for different currencies. It provides a decentralized, anonymous, and secure atmosphere for transactions.
It has procured its technology from Litecoin. The most attractive aspect of Dogecoin is its unlimited supply and low cost.
History of Dogecoin
Dogecoin was developed in late 2013 by Jackson Palmer, a manager at Adobe Inc. in Sydney, Australia. He developed the coin just as a joke to the overhyped cryptocurrency market. His earlier tweets on the coin were a sarcastic take on bitcoin. But his tweets were received positively by people, and he got a lot of praise on social media for his newly developed Dogecoin.
It is when he decided to buy the domain name dogecoin.com
In the meantime, there was a guy named Billy Markus working as a software developer at IBM. Markus wished to develop a cryptocurrency but had problems in advertising his ideas and thoughts. He was the one behind the discovery of the Dogecoin buzz. When he came across the dogecoin website, he contacted Jackson Palmer to develop software for Dogecoin.
Markus programmed the software for Dogecoin, originally based on Litecoin. Miners used to get random rewards for mining the blocks, which later changed to a stable rewarding system in 2014. Designing Dogecoin involved the use of Scrypt technology, which also makes it proof of work currency.
Later Jackson Palmer and Billy Markus introduced the coin to the market on 6th December 2013. Soon after the introduction of the coin, its value increased by 300%. China’s 2013 policy that did not allow investing in the market of cryptocurrency was the reason for the sharp increase in the coin value.
Prime facts about Dogecoin
- Dogecoin was promoted as a meme coin having a satiric take on bitcoin, and everyone loved this friendly depiction of the crypto community. It provided a more user-friendly, adaptable, and faster design of bitcoin to the people. It was possible due to its unlimited supply and scrypt technology.
- Currently, a total of 128,264,356,384 Dogecoins are in circulation in the market, whereas there are only 18.5 million bitcoins in circulation in the market.
- Due to the feature of unlimited supply, Dogecoin can come under inflation. On the other hand, due to a cap on the bitcoin count, it can never reach an inflation point.
- The Dogecoin community is among the largest communities in the world of cryptocurrency. The community members of Dogecoin are known as Shibes.
- It has also made many community donations across the world. In 2014 the community offered 27 million Digecoins amounting to around $30000 for supporting the Jamaican team on their trip to the Winter Olympic games held in Sochi.
- The community also donated $55,000 to Josh Wise, NASCAR driver. It has also funded $11,000 for building a well for the people of Kenya.
How Can one purchase Dogecoin?
One can obtain a dogecoin in several ways. One can get it through mining or also can get tipped through the community of Dogecoin.
It can be bought through trading and buying on exchanges of cryptocurrencies that allow Dogecoin.
Several crypto exchanges allow trading and buying of Dogecoin. The top three crypto exchanges with the highest volumes of Dogecoin trade are Binance, CoinDCX, and WenX Pro.
Other crypto exchanges that allow trading and buying of Dogecoin are-
- Huobi Global
- Changelly Pro
Several factors need consideration before exchanging cryptocurrencies. Some of the prominent factors are listed below-
- Jurisdiction- Before exchanging Dogecoin, it is essential to be sure that the platform used for exchange is allowed in the language and jurisdiction.
- Exchange Security- Securing the transaction is essential as it can get hacked. Hence two-factor authentication must be the minimum criterion in exchanging the Dogecoin or any other cryptocurrency.
- Exchange capability- Some people are not just interested in holding and purchasing Dogecoin. They also require the controls of risk management, involving stop loss and trading indicators.
- Trade pairings- As many crypto exchange platforms do not allow fiat money for exchanges, if a person wants to buy Dogecoin using fiat money, he must ensure that there are alternatives available in the exchange platform for using fiat money.
- Exchange fees- The exchange fee usually differs across various exchange platforms. Hence it is essential to know the exchange fees on these platforms when a person wants to trade Dogecoin more frequently.
- Platform customer support- A good customer support is essential. It must be able to solve any issues related to the exchange in an efficient way.
As per the report by Coinranking.com, after considering the above factors, WenX Pro holds the largest market for the trading of Dogecoin by volume at $360.16 million.
Binance and CoinDCX have the second and third largest Dogecoin trading by volume at $149.81 million and $149.70 million each.
Many people like trading on Binance, as it is highly positioned in the crypto market and has a vast global network.
While making transactions in cryptocurrencies, liquidity becomes a significant factor to restrict slippage.
A Dogecoin wallet is essential before registering for an exchange of a dogecoin on any exchange platform.
Follow the following steps-
- Take an adaptable dogecoin wallet
- Purchase Dogecoin
- Utilize the Dogecoin
- Stay updated
One can download a dogecoin wallet from the homepage of the Dogecoin website. Once the Dogecoin wallet is activated, signup for the dogecoin exchange and buy the Dogecoin.
Uses of Dogecoin
Currently, the prime application of Dogecoin allows one
- To buy various goods and services.
- To tip across the community of Dogecoin
- To donate to charity
Several merchants allow the use of Dogecoin to buy various goods. People can buy a variety of goods, including expensive metals and cars. Dallas Mavericks, an NBA franchise in the USA, is well-known for accepting their payments in Dogecoin.
In early 2021, the owner of the Dallas Mavericks claimed to do over 20,000 transactions using Dogecoin. The NBA franchise by Mark Cuban was the biggest merchant of Dogecoin in the world.
How does Dogecoin work?
It works in the following steps-
Dogecoin uses blockchain just like bitcoin uses it. Various blocks are attached through the algorithm (hashing). The participants in the network download open-source software in their systems so that they can play as nodes. It simply means that each participant keeps a copy of all the transactions.
There is no controller of the system as it is decentralized. The participants use cryptographic methods to send their information and data to one another. The unauthentic transactions are rejected straightaway. The correct and authentic transactions make their way to the block and ultimately become part of the blockchain. The cryptographic method is essential to ensure the genuineness of the transactions and the honesty of the peers.
Mining: Proof Of Work Algorithm
Just like bitcoin, Dogecoin also runs on the PoW (Proof Of Work) algorithm. It incentivizes the amount of “work” done. A present-day computer can compute the hash in a fraction of a second.
The blockchain technology used for Dogecoin initiates a difficulty property for increasing the difficulty level in mining the new blocks. It makes a condition that the produced hash needs to meet a particular pattern designed by the difficulty property.
As the difficulty level of the pattern increases, fewer matched hashes are generated. Hence, the hash generation takes a lot of time to match the particular difficulty pattern. Thus this algorithm is known as Proof Of Work (PoW).
After every ten minutes, a new block of bitcoin is mined, whereas it only takes a minute to mine a new block of Dogecoin.
Supply: Inflationary Design
Bitcoin has a ceiling of 21 million bitcoins. It means there are only 21 million bitcoins, and no further bitcoins mining is possible. Till today, around 18.5 million bitcoins are mined. Once the 21 million counts are met, then no more bitcoin mining is allowed. After this stage, miners will only be rewarded with the transaction fees for finding the hash that is matched with the particular difficulty. Hence bitcoin can never reach a state of inflation.
Dogecoin has chosen another design to generate its economy. It has opted for an inflationary design.
This design offers an unlimited supply of Dogecoin. For mining each block, miners are rewarded with 10,000 DOGE coins. At this rate, daily 14,400,000 Dogecoins are rewarded for the mined blocks as each block is mined per minute ( =10,000 DOGE coins*24 hours*60 minutes).
The inflationary design is opted to compensate for the missed coins.
There are many heated discussions around the bitcoin deflationary design and the inflationary dogecoin design. It is essential to know that the increase in money supply is not the reason behind inflation.
An article on the inflation of cryptocurrencies states that “Money supply growth doesn’t necessarily lead to inflation if there is an equal growth in the value of the goods and services in an economy. It could be argued that a productive and growing economy requires a growing money supply to support it.Though such a system can be more productive over time, it is prone to financial instability due to the difficulty in targeting inflation.”
In its initial days, Dogecoin thought to keep 100 million dogecoins as the mark of stability. Anyways, they have already crossed this mark and are still growing. Hence it is difficult to maintain a proper balance between inflation and usage.
Risks of investing in Dogecoin
- Like any cryptocurrency, volatility is the primary issue that makes any person trade the Dogecoin with utmost care.
- The endless supply of the Dogecoin is its main feature and also its main drawback. There is no limit on the dogecoin number in the market, making investors fear the dilution of the intrinsic dogecoin value.
- The finite and limited supply of litecoin and bitcoin has always attracted investors, which Dogecoin finds very difficult to fight. The investors face the downward effect as the larger market gets more successful. It demotivates people to invest in Dogecoin.
- In the past few years, there has been no significant change in the dogecoin blockchain technology. There are no major updates from 2015. The last code update was in November 2019. Hence it can go obsolete and can lose the competition.
- Some reports indicate that Shibes are evacuating the community of Dogecoin and are moving towards the latest platforms.
- As seen in the past, the Dogecoin community plays a prominent role in supporting its price. The community has made many donations to help the individuals who lost money due to the hacks.
- Hence, if such a strong community gets weak, it is difficult for Dogecoin to sustain itself in the market without the advancements in blockchain technology.
Impact of Crypto Bubble of 2017-2018 on Dogecoin
Like the other cryptocurrencies, the value of Dogecoin also increased when the crypto bubble was at its peak in late 2017. As the crypto bubble ended in early 2018, the value of Dogecoin also decreased like the value of other cryptocurrencies. At the peak of the crypto bubble, the value of Dogecoin reached $0.018 and had a ceiling of around $2 billion.
During the 2019 summer, Dogecoin saw a sudden increase in its value like other cryptocurrencies. Dogecoin investors were overwhelmed as it was listed in Binance (crypto exchange), and also Elon Musk himself advertised the coin by tweeting about it.
The current state of Dogecoin
Dogecoin has become very famous and is now globally accepted. In early 2021, CoinFlip declared that Dogecoin could be bought at 18,000 ATMs in 46 states across the USA.
In the initial months of 2021, Dogecoin started making the news headlines as the members of the cryptocurrency community started their positive talks.
The Dogecoin has an unlimited supply of coins as opposed to other cryptocurrencies like litecoin and bitcoin. Hence the demand and supply of Dogecoin will never be the same as litecoin and bitcoin. The unlimited supply of dogecoins may not be as advantageous as the upside of bitcoin. However, it still has its fair share of benefits.
The unlimited supply of dogecoins makes them perfect for minor transactions.
Currently, the value of DOGE is at $0.0575. However, before January 2021, the maximum value was at $0.1004. DODGE has retained the gains of early 2021.
The newswires of the cryptocurrencies fueled much of the spike of January and the upside for the ongoing year.
This year, Dogecoin saw a steep rise of 1000%. The community members of Dogecoin are expecting to reach $1 levels.
The community of Dogecoin is continuously growing, and the coin is being widely used across the world. In addition to this, more positive words from the elite and famous members of the cryptocurrency can make it reach $1 levels.
The prominent reason is its operation and competes due to its dedicated miners’ community. Zachary Mashiach, a famous CryptoIQ podcaster (a podcast that does in-depth market analysis on cryptocurrency), states that “Numerous Scrypt miners still prefer Dogecoin (DOGE) over other Scrypt PoW cryptocurrencies. Indeed, the Dogecoin (DOGE) hash rate is roughly 150 TH/s. This is just below the Litecoin (LTC) hash rate of 170 TH/s, likely because Dogecoin (DOGE) can be merge-mined with Litecoin (LTC), meaning miners can mine both cryptos simultaneously using the same work. Essentially, practically everyone who mines Litecoin (LTC) chooses to mine Dogecoin (DOGE) as well, because merge mining Dogecoin (DOGE) increases profits”.
Celebs and Dogecoin
Several celebrities have spoken about Dogecoin. However, four prominent celebs talked about Dogecoin, which led to the initial surge of 2021 to $1.
The four prominent celebs are Elon Musk, Snoop Dogg, Mark Cuban, Gene Simmons.
On 15th February, Elon Musk condemned whales (token holders) for reserving a high amount of Dogecoin. As per Elon, these reserves are restricting Dogecoin from being the “currency of the internet”. Musk thinks that Dogecoin has an immense potential to become the “currency of the internet” as numerous people hold dogecoins with them.
From its journey from being a meme to a full-fledged cryptocurrency, Dogecoin has come a long way. Shibes is the most dedicated and largest community among all the communities of the crypto market.
Dogecoin has maintained a ceiling of millions of US dollars for the past six years. Dogecoin has the potential to be an official and valid currency to trade in the market only if it improves its technical support and enhances its maintenance.