Emerging as the hottest new trend in the cryptocurrency world is Dogecoin, one of the most bizarre cryptocurrencies that have ever existed. As of May 6, 2021, the complete value of the dogecoins in circulation was almost $78 billion, which is wild for a digital currency that actually originally began as a joke.
On the same date, Dogecoin actually emerged as the fifth most-valuable cryptocurrency on the market, as per CoinMarketCap, having risen to over 6,000 per cent in this year.
As of May 9, 2021 dogecoin’s value plunged considerably following the statement of Tesla’s chief who termed it as a “hustle” in the "Saturday Night Live" comedy sketch TV show where he essayed the role of a guest host.
Prior to the show, the value had been $0.65 which dipped to $0.47 on crypto exchange Binance after the show, collapsing by nearly 28%.
Similar to Bitcoin or Ethereum, Dogecoin is a cryptocurrency while also being starkly different from these leading coins. Interestingly, Dogecoin had actually kick-started as a laid-back joke for crypto fans, with its name having been derived from an old famous meme. In spite of its unexpected origin story, the coin rose to fame in 2021.
What is Dogecoin?
"It's the future of currency. It's an unstoppable financial vehicle that's going to take over the world."
- Elon Musk
Like all cryptocurrencies, dogecoin is a digital currency that can be purchased and sold in the manner of an investment and spent like money. The cryptocurrency’s mascot is a Shiba Inu, an oft-memed dog breed.
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While every crypto is special, Dogecoin also shares some resemblances with the other cryptos such as its code being based on litcoin’s script. Yet at the same time their cryptocurrency has several integral differences.
While bitcoin has set 21 million aside to be mined in total, dogecoin already has around 130 billion coins in circulation and will also be resuming to make fresh blocks of coins accessible for mining every year. This is why a single dogecoin is presently valued at around three dimes while the value of a bitcoin is presently around $57,000.
Yet while most cryptocurrencies have been paving the way towards being accepted as the common currency to buy goods, this is not really the case with Dogecoin. This cryptocurrency has lesser mainstream adoption and has a couple of niche markets, such as being leveraged for tipping online artists.
What makes this currency stand out the most is largely its active online community. The cryptocurrency’s online group, which is mainly active on the platform of Reddit, has hoisted dogecoin coins for charitable causes.
"Dogecoin is not so much an alternative deflationary numismatic instrument as it is an inflationary leisured exploration of community-building around a cryptoasset,"
- Usman Chohan, Economist at the University of New South Wales Business School
Dogecoin can generally be purchased at exchange platforms for cryptocurrencies such as Kraken or Binance. These exchanges enable users to set up accounts through cryptocurrency or via U.S dollars. With these accounts, the users can then purchase or exchange cryptocurrencies such as Dogecoin.
A few online brokers, such as Robinhood and TradeStation, allow people to purchase Dogecoin alongside conventional assets such as mutual funds and stocks. Dogecoin is one of the currencies normally available on such platforms, even if some cryptocurrencies may not be offered.
The Story of Dogecoin
Dogecoin emerged into existence on December 6, 2013, by two software engineers, namely Billy Markus and Jackson Palmer.
The former, Billy Markus, an IBM programmer from Portland, Oregon, was all aboard, intent on separating his crypto from bitcoin. The cryptocurrency had been invested in mystery through an anonymous creator, attracting a tiny miner group at that time. Markus had wished for his cryptocurrency to be exposed to the masses.
On the lookout for aid to make his bizarre dream a staunch reality, Markus discovered Jackson Palmer, an employee of Adobe (ADBE). Jackson brought the dogecoin.com domain, offering a nod of approval for the "doge" meme which was exploding online during that time.
Funnily enough, the website embraces its joke origin fully by making the cryptocurrency’s Shiba Inu mascot, the page’s front image and imitating the meme which probed it, the meme that features the same dog surrounded by a bunch of Comic Sans text inscribed in broken English.
The mascot is captioned "Dogecoin is an open source peer-to-peer digital currency, favored by Shiba Inus worldwide."
The Tale of Dogecoin’s fame
What began as a joke is no longer so, what with the cryptocurrency becoming the name on everyone’s lips in early 2021. Half of the boost was the result of the wide adoption of cryptocurrencies like Bitcoin by the public.
Yet the most influential and conspicuous supporter was Elon Musk. The SpaceX and Tesla founder’s in the month of April 2021 tweeted, “Dogs barking at the moon” and the painting created by a Spanish artist Joan Miro was shared, which was named, "Dog Barking at the Moon." The tweet was the principal incident that boosted the popularity of the cryptocurrency by heaps and bounds.
Being extremely popular and discussed on the platform of Reddit, Dogecoin received a massive boost through a popular Reddit group, boosting its value past 600% after that push.
Many celebrities have been following suit. For instance, the cryptocurrency was mentioned on twitter by the rapper Snoop Dogg as well as Lil’ Yachty. The billionaire technology investor Mark Cuban, stated in a tweet that he would choose to purchase Dogecoin over a lottery ticket. Even Mia Khalifa joined the bandwagon by announcing on Twitter that she has invested in Dogecoin.
How does Dogecoin work?
Similar to our Ethereum and Bitcoin, Dogecoin is a cryptocurrency that operates on blockchain technology. Blockchain, which is also termed as a Distributed Ledger Technology (DLT), makes the history of any digital asset unalterable and transparent via the adoption of decentralization and cryptographic hashing. It is basically a distributed, secure digital ledger where all the undergone transactions are stored through a decentralized digital currency.
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Each holder carries an identical Dogecoin blockchain ledger copy, that is regularly updated with all fresh transactions in the cryptocurrency. Similar to cryptocurrencies, cryptography is enabled for ensuring that all the transactions remain secure.
People we call miners, adopt computers for solving complicated mathematical equations with the aim of processing transactions and recording them on the Dogecoin blockchain. In return for processing transactions and supporting the blockchain ledger, miners earn extra Dogecoin, which can then be held and sold on the open market.
Dogecoin may be adopted to make purchases and payments yet the cryptocurrency is not really an effective store of value. The miners are rewarded by the blockchain for their work by generating millions of fresh Dogecoins each day, making it difficult for speculative price advances in Dogecoin to be maintained over time.
How is Dogecoin different from Bitcoin?
Dogecoin vs Bitcoin
Dogecoin’s got several considerable differences when contrasted with Bitcoin. The foremost difference is the ease and swiftness miners encounter while solving the mathematical equations that carry out and record transactions on the transactions, making Dogecoin a more efficient medium for processing payments.
As there’s not really any sort of lifetime limit regarding the number of Dogecoins which can prevail, many fresh Dogecoins are launched into markets each day, with there being very less motivation for holding the cryptocurrency in terms of the long term. As opposed to this, Bitcoin’s value continues to increase owing to the system’s lifetime cap regarding the number of generated coins.
“Where it takes 10 minutes for the process to ratify new blocks on the Bitcoin blockchain, it takes only one minute on the Dogecoin blockchain,”
- Gary DeWaal, Special Counsel and Chair, Financial Markets and Regulation
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Yet another highlighted difference is the one mentioned above regarding the absence of the lifetime cap on the number of Dogecoins that can be mined. The lifetime cap of 21 million in case of Bitcoin restricts the finite number of the cryptocurrency that can be mined. This generally implies that miners have to resort to working harder and longer over time for earning fresh Bitcoins, which in turn enhances the cryptocurrency’s capacity of maintaining and growing in the future.
Of course, the question of Dogecoin being a prudent investment decision still prevails. With even a currency as widely traded as Bitcoin being highly erratic in nature, the same could apply to dogecoin, with the possibility of the currency collapsing at any point remaining. Yet at the same time, the unexpected stunning rise of it in 2021 cannot be denied.