Can a joke be taken seriously? In 2013, Dogecoin was created as a way to poke fun at an industry that took itself too seriously. Now it's one of the world's biggest cryptocurrencies, but how did it get here? We take a look below.
What is Dogecoin?
Dogecoin is a cryptocurrency that takes its name from an internet meme. It started as a way to mock the industry, but quickly built up a lively community of enthusiasts. It has come a long way since 2013, hitting a $2 billion market value at its peak in the January 2018 crypto craze.
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 the Shiba Inu dog meme that was popular at the time.
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.
A brief history
- Dec 2013 – Dogecoin was founded by Jackson Palmer
- June 2014 – The Dogecoin Foundation is established to preside over the currency's code
- April 2015 – Co-founder Jackson Palmer leaves Dogecoin
- January 2018 – It briefly surpasses $2 billion market cap
What’s so special about it?
- Speed and cost – It boasts fast transactions and low transaction fees – both essential for wide adoption.
- Unlimited supply – Originally the coin 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 100,000 members on Reddit 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.
How is it produced?
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.
Miners can mine Dogecoin by themselves, or as part of a mining-pool.
Since there is an unlimited supply of Dogecoin tokens, the value of a single token is very low compared to other altcoins. That means mining isn’t very profitable, so there isn’t much incentive. The low reward doesn’t deter Dogecoin enthusiasts, though. To them, it was never intended to be an investment; it was meant to be a dynamic currency.
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 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 exchange to another.
For something that started out as a joke, Dogecoin has established a legitimate reputation. Even co-founder Jackson Palmer is critical of how seriously people take it. He left in 2015 after scammers fleeced the fun-loving members of the Dogecoin community. 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 tweeted, “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.”
That said, the Dogecoin community remains active and loyal. With the ease of acquiring Dogecoin, the low trading cost, and the relatively stable price, it could very well stick around long into the future.