Dogecoin (DOGE) is best known as a joke cryptocurrency that was born out of an internet meme and launched into a serious player that is among the top ten cryptos by market cap. It started out as a joke project that would still retain all the functionalities of its more serious counterparts within the cryptocurrency space. Nowadays, it is best known for the endorsements it has received from various billionaires who often tout its “strong community” as its biggest advantage.
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If you have not heard about Dogecoin before it reached its all-time high in May 2021, then you were bound to hear about it at that point; as its price shot up, so did its popularity far beyond the crypto space. For many, it serves as a reminder that technology is more powerful than many admit, but also that not everything has to be completely serious in order to have a strong use case.
What Is Dogecoin?
Dogecoin is a cryptocurrency that serves as a means of payment, but also as a store of value for many. It was initially created as a parody of Bitcoin (BTC), as it poked fun at all the serious discussions revolving around BTC and other cryptocurrencies. While it had no real purpose when it was first created, it was quickly adopted by the internet and used to tip users on forums who contributed something other users deemed worthy.
These days, many online merchants accepting cryptocurrencies have also added support for payments made in DOGE to their stores. This enables many holders to use it as a means of payment for any number of goods and services, going far beyond jokes and meme culture. On the other hand, many DOGE owners have decided to hold it as a store of value in hopes it will appreciate again in the same way as when it reached its most recent all time high, when many owners profited off the upward trajectory.
How Does it Work?
Something not many people know is that Dogecoin is a fork of Bitcoin—just many times removed. Bitcoin’s source code was copied and adapted to create Litecoin (LTC) in 2011. Litecoin itself spawned many offshoots, but notably LuckyCoin, which later forked into Dogecoin.
Dogecoin uses a consensus algorithm called Auxiliary Proof of Work, which allows those who mine other Proof of Work cryptocurrencies (primarily Litecoin) to mine DOGE at no additional cost in a process known as merged mining. Many DOGE holders actually got their hands on the coins in its early days while mining LTC. DOGE is also relatively fast for a Proof of Work blockchain: it can handle around 30 transactions per second, whereas Bitcoin, for example, handles only between 3 and 6.
During the first phase of mining DOGE, the cryptocurrency—true to its joking origins—was designed to yield a random mining reward between zero and one million DOGE. When it reached a supply of 100 billion DOGE in early 2018, the reward was changed to a fixed DOGE 10,000 per mined block. There is no supply cap, which was decided with the purpose of keeping the price of the coin low; capping the supply could have caused the price to rise once no more of them could be mined.
Internet meme culture has always had its recognizable meme templates; some of them quickly became mainstream, others were quite obscure and only used by certain groups of online users, while others still lost their initial meaning once they were taken out of the original context. One of the best known memes—in part due to the cryptocurrency it would subsequently influence—was Doge, a picture of a Shiba Inu dog captioned with inner monologues in a Comic Sans font. Although the picture that was used in the meme was first posted online in 2010, the meme itself took off a couple years later.
The Dogecoin cryptocurrency was born in December of 2013, when software engineer Jackson Palmer realized he had two tabs in his browser opened side by side: one was crypto data aggregator CoinMarketCap, and the other was a news article about the Doge meme that was all the rage online at that point. This side by side view gave him the idea to put the two together, which led to the birth of the Dogecoin cryptocurrency. He introduced the project on the BitcoinTalk forum as a satire of Bitcoin itself, titling it, “Dogecoin – very currency – many coin – wow – v1.1 Released” in the style of the meme.
Palmer worked with IBM developer Billy Markus on launching the cryptocurrency. Markus had been looking for a way to create a cryptocurrency that would be “truly open to the masses,” as opposed to Bitcoin which had an anonymous creator and only attracted a small, niche group of miners at the time. He found what he was looking for when he met Palmer, who purchased the dogecoin.com domain and set the plan into motion.
Dogecoin officially launched on December 6th, 2013. The first hack it suffered happened on December 25th, 2013, when a number of Dogecoin wallets were hacked and drained. However, the community came together and refunded the affected users.
The Dogecoin community makes up a big part of its success. The coin was consistently used as a way to tip internet users, most notably on Reddit and Twitter. This was largely due to its price, which was often between USD 0.002 and USD 0.003 until 2021. However, the community has also participated in many charitable initiatives, like sponsoring the Jamaican bobsled team in 2014 to allow them to compete in the Sochi Winter Olympics, as well as sponsoring NASCAR driver Josh Wise who sported the icon on his car and jacket at the 2014 Talladega All-Star race. Another notable project was Doge4Water which successfully funded the creation of a clean water well in Kenya.
While Dogecoin’s community, which believes in the coin’s potential to become a global currency, has driven its value and adoption up consistently throughout the years, one notable figure to help with that has been billionaire Elon Musk. In early 2021, he said in an interview that, “Dogecoin was made as a joke to make fun of cryptocurrencies, but fate loves irony. The most ironic outcome would be that Dogecoin becomes the currency of Earth in the future.”
This comment was followed by several tweets of endorsement that sent the price of Dogecoin soaring to an all-time high of USD 0.73 in May 2021. In the wake of this popularity, an increasing number of online merchants started accepting DOGE as a payment method. Additionally, many cryptocurrency exchanges made DOGE the first “joke” cryptocurrency that they listed, paving the way for many other meme-inspired tokens that appeared in its wake.
Aside from Musk, another big fan of Dogecoin and, more importantly, its community is fellow billionaire Mark Cuban, who is also the owner of the professional US basketball club the Dallas Mavericks. The club started accepting cryptocurrency payments for their merch, with special discounts for users paying in DOGE, as of 2021. Cuban added that the DOGE community is “the strongest when it comes to using it as a medium of exchange,” with Musk agreeing with him on Twitter.
All of this means that as far as the community goes, Dogecoin has very strong backing from various public figures who appreciate its different use cases.
As we mentioned in the previous section, the two main people behind the Dogecoin project are Jackson Palmer and Billy Markus. However, Palmer left the project in 2015 due to what he called a “toxic community” and is now one of the most outspoken critics of the cryptocurrency industry as a whole. He is still involved in cryptocurrencies, but does not partake in anything related to Dogecoin. Markus, on the other hand, is still part of the project, but claims only to own the DOGE that other people have given him.
The force behind many of the project’s charitable contributions, both within its own ecosystem and outside of it, was the Dogecoin Foundation. It was formed in 2014 and touts the motto “Do Only Good Everyday,” which is a backronym of DOGE. The foundation’s board is made up of three Dogecoin developers, a community advocate, and a legal counsel. There are also four Board Advisors: Jared Birchall, who represents Elon Musk; Max Keller, Dogecoin Core developer and technical advisor; Billy Markus (known as Shibetoshi Nakamoto in a nod to the pseudonymous Bitcoin creator); and Vitalik Buterin, Ethereum founder who acts as a blockchain and crypto advisor.
The team states in their Dogecoin Manifesto that, as they’re creating a currency for the people, they value the following things:
- “Being useful, we value utility over technical brilliance.
- Being personable, we value individuals and interactions over profit-driven economics.
- Being welcoming, we value collaboration and trust over competition and exclusivity.
- Being reliable, we value working solutions over speed of delivery.”
The Board Advisors are heavily involved in various projects in the cryptocurrency space aside from Dogecoin itself.
Dogecoin Offshoots and Wannabes
In 2021, as Dogecoin reached its peak of popularity and spawned many similar projects that either played on its name or its meme origins. A number of these coins (like Baby Doge, for example) were created by the Dogecoin community as homage to the original DOGE, but none of them were made by the founders of Dogecoin itself. Another notable example is the Shiba Inu token, which was initially supposed to act only as the mascot for Dogecoin, but evolved into its own token on the Ethereum blockchain after a while.
Most of these offshoots are not meant to be used in a transactional manner, but rather hoarded (“HODLed”) in the hopes that they will appreciate in value. In fact, since many of them are priced extremely low, their creators and communities are counting on the fact that early adopters will be more likely to purchase them and therefore drive up the demand. Many come pre-mined, which means there is a fixed supply, so a heightened demand could theoretically boost the price up.
All of these coins—Dogecoin itself included—are highly speculative, and the success of DOGE does not guarantee or even imply the success of any of its offshoots.
The price of DOGE was relatively low for a long time. Until January 2018, it had traded at less than USD 0.0003 most of the time, but at that point, it very briefly peaked at USD 0.017. Although this was still a low price, it was an increase of more than 5,500%, but it quickly crashed down to around USD 0.005.
Dogecoin reached its all-time high on May 8th, 2021, when it got to USD 0.73. It has since fallen by more than half, and trades around USD 0.25 as of September, 2021.