What Is Dogecoin? A Complete Guide
What is Dogecoin (DOGE)? What does the world of cryptocurrencies, a Japanese hunting dog, and the Jamaican bobsled team all have in common? A simple answer: Dogecoin. But is there more than meets the eye of this meme-fuelled crypto?
WHAT IS DOGECOIN? A BRIEF HISTORY
Created in 2013, Dogecoin was born from a joke satirising the hype surrounding two of the internet’s most talked about topics at the time: cryptocurrency and Doge. At the peak of the Doge meme’s popularity, marketing agent for Adobe, Jackson Palmer, made a tongue-in-cheek tweet. Despite Palmer’s joking intentions suggesting “investing in Dogecoin” is the “… next big thing”, the tweet gained significant attention – despite the fact nobody developed Dogecoin just yet. For humour’s sake, the joke lived on with Palmer purchasing the Dogecoin.com domain, but development of the cryptocurrency never took off – yet.
Unbeknownst to Palmer however, Billy Markus, a software engineer for IBM, was underway rebranding Bitcoin’s open-source code to Dogecoin – again, out of humour’s sake. After making a number of minor changes to the source-code with regards to increasing the supply of Dogecoins and making them easier to mine, Dogecoin official launched.
From this point, Dogecoin rapidly gained popularity amongst online crypto communities. The main driver for Dogecoin’s rise to crypto stardom came from Reddit – the true testing ground for any budding cryptocurrency. Almost immediately, the influx of users brought the necessary infrastructure any cryptocurrency requires to become successful: mining pools.
DOGECOIN VS LITECOIN – A COMPARISON
At its heart, DOGE is a cryptocurrency based on Litecoin. However, lacking any major platform updates since 2015, DOGE lacks any significant features that differentiates itself from other cryptocurrencies. As such, DOGE relied on having a greater emphasis on its community, rather than the services and capabilities it offers.
A key issue with Litecoin is that its supply limits to 84 million coins. Further, the Litecoin network aims to process a block every 2.5 minutes, although quicker than networks such as Bitcoin, it was still slow during periods of high transaction volumes. DOGE seeks to rectify these issues by processing individual blocks within 1 minute, a 250% improvement over Litecoin.
Unlike a vast number of other prominent cryptocurrencies, DOGE has a significantly more accessible mining process. Bitcoin and a number of other prominent cryptocurrencies are designed with hard limits on the supply of coins. The result of this is that once cap is reached, it may no longer be profitable for minters to continue to sustain the system. Higher fees to incentivise miners or longer transaction times would eventuate to process network transactions. DOGE rectifies this issue by ensuring miners are always rewarded with new DOGE. This also introduces an inflationary effect, which will also replace lost coins and keep the supply relatively constant.
IS DOGECOIN SAFE TO INVEST IN?
DOGE is a token that has gained significant popularity since its launch, having built a loyal following in crypto communities on the likes of Reddit. Aside from this, some of its popularity is thanks to the founders sponsoring the Jamaican bobsled team, who generously raised and donated 26 million DOGE to the team. Gestures like this symbolised the early spirit of Dogecoin, and maintained the token’s relevancy to today.
Unlike conventional crypto currencies such as Bitcoin, there is no hard cap on the total supply of DOGE. Although approximately 113 billion DOGE are already in circulation, an additional 5 billion coins added per year. This design choice ensures there is a consistent inflationary effect over time.
In summary, given its similarities with larger cryptocurrencies such as Bitcoin, DOGE would be a token to include in a diversified crypto portfolio. Although having a strong core supporter base who trade it and use the token to tip alternative purposes, the yearly issuance of DOGE will likely place downward pressure on its price.
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