Exploring Dogecoin. What is Dogecoin?
It started as a joke, and while you might still want to laugh at this cryptocurrency emblazoned with a dog’s face, the profits some people are making are serious! The current circulating supply of dodgecoin has surpassed 129 billion and shares are at a record high, with users getting an incredible return on investment. So how does dodgecoin work, and how did it go from a meme to one of the highest value cryptocurrencies on the market today?
How Dogecoin Was Created
Software engineers Billy Markus and Jackson Palmer combined two internet phenomena—Bitcoin and a popular dog meme—to create dodgecoin in 2013. Bitcoin was rapidly growing in popularity and the cryptocurrency craze was laughable at the time. The two engineers created dodgecoin as a satire, without intending for it to be used for investments or other real-world uses. Instead, it was designed to poke fun at Bitcoin and the traders going all-in on this new currency. The internet virality of the cryptocurrency explains how it’s grown since its initial conception as a joke.
Reddit has been an incubator for some of the more creative, and at times bizarre, social movements in the last decade. Dogecoin is no exception. In fact, even the meme that inspired the coin’s name got its start on the social media site. A picture of a Shiba Inu dog expressing its thoughts in comic-style speech bubbles went viral around the time of dogecoin’s creation. The social website was also the main driver behind dogecoin’s success. Reddit users began giving each other Dodgcoin payments as a ‘thank you’ tip on posts. Reddit users also raised dodgecoin as a charitable donation to fund the Jamaican bobsled team’s trip to the 2014 Winter Olympics. Plus, Reddit created a dodgecoin fund that helped bring potable water to a Kenyan village. At the time, each dodgecoin was worth less than a fraction of a penny.
Dogecoin’s Current Rise
Since then, celebrity endorsements and internet trends have continued to grow the cryptocurrency’s popularity, and therefore its worth. Some of the bigger names who have jumped on the bandwagon are Elon Musk, Snoop Dog, and Mark Cuban. Their tweets about the cryptocurrency were major contributors to its recent surge in market value.
Additionally, Reddit has continued to boost the coin’s market value. The site has a subculture that tends to surface anti-Wall Street economic trends. Stock such as GameStock, AMC, and Dogecoin are all examples of this internet culture. For example, this past January, Dogecoin surged over 600% driven by Reddit’s GameStop investment craze.
How Does Dogecoin Work?
Dodgecoin is based on the open-source software project, Litecoin. Ownership of dogecoin is managed on a UTXO model (Unspent Transaction Outputs). The UTXO model means that coins exist on the blockchain, and are owned by addresses. Rather than moving from wallet to wallet, they’re stored in the same place, but the address of the owner will change. The cryptocurrency can be stored on a variety of wallets for multi-currency users. Dogecoin also has its own proprietary wallet, much like Bitcoin and Litecoin.
Dogecoin mining is managed by a Proof-of-Work (PoW) mechanism on an algorithm called Scrypt. Scrypt is easier to use and less expensive than many other popular cryptocurrencies. This has also been a contributor to the rapid rise of dogecoin’s popularity since it’s easier for the average user to get started.
When mining dogecoin, it takes an average of one minute to confirm a block. Each block is worth about 10,000 dogecoin. Therefore a miner will produce around 10,000 dogecoins per minute. There isn’t a limited number of dogecoin available, so the circulating supply continues to grow. While the value of one dogecoin is still below a US dollar, in 2021 dogecoin earned 10,000% returns.
Bitcoin Versus Dogecoin – What is the Difference?
When you hear about cryptocurrencies one of the most popular is Bitcoin. Dogecoin is similar to Bitcoin in some ways, but there are some significant differences as well:
- Dogecoin does not have a limit on the number of coins that be produced in the system, while Bitcoin does.
- There is around 18.69 million Bitcoin in circulation versus the 129 billion Dogecoin.
- Dogecoin’s mining method based on Scrypt is less expensive and less complex than Bitcoin’s SHA-256. This makes it easier and cheaper to get started with cryptocurrency when using Dogecoin.
Value is subjective, and Dogecoin’s value has mainly been derived from the attention it has received. A dog meme that became a joke within the crypto community, continues to gain notoriety and value. As one of the top 10 cryptocurrencies by market value, it’s no longer just a satire on Bitcoin. It has risen to be a real contender in the crypto marketplace.
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